Your Debt Threat

Posts Tagged ‘Equity’

Article by Brad Stroh

Consolidate Credit Card Debt

When managing your existing credit cards seems overwhelming, one effective way to ease both the financial and emotional burden of the cards is to consider the option to consolidate credit card debt. There are several ways to consolidate credit card debt, and there are many benefits that arise from the choice to consolidate credit card debt.

First, what does it mean to consolidate credit card debt? One way to consolidate credit card debt is to take out a new personal loan and use the proceeds to pay down your existing credit cards. Another way to consolidate credit card debt is to perform a balance transfer; this involves applying for a new credit card which will allow you to transfer all the balances from your existing cards onto this one new card.

Both of these methods to consolidate credit card debt involve opening an additional unsecured credit account. Another alternative to consolidate credit card debt is to look into borrowing against your home equity. One way to do this is to take out a Home Equity Line of Credit (HELOC), which is credit line against the equity in your home. You would then use the proceeds of this to pay down all of your credit cards. Another way to take advantage of the equity appreciation in your home to consolidate credit card debt is to refinance your existing mortgage. As part of this refinance, you would use some of the proceeds to pay off your existing credit cards. This type of refinance is often called a debt consolidation refinance – you are consolidating both your old mortgage and your existing credit cards into one new mortgage.

Now that you understand how to consolidate credit card debt, it is important to understand the benefits of this strategy.

*Lower Interest Rate: Perhaps the most significant benefit that results when you consolidate credit card debt is that the new account that you are opening will carry a lower interest rate than the rates on the credit cards that you are paying off. This means that it will cost you less over time to pay off your debt. If your credit is strong enough, you may even qualify for a 0% balance transfer, which means that you will not have to pay interest charges on your debt for a set period of time. Moreover, a secured loan (e.g. mortgage refinance, HELOC, etc.) will generally have a lower interest rate than your existing credit cards.

*Faster Repayment Period: Along with saving money over the long term by lowering your interest rate, you will also more than likely be offered a lower monthly payment. This may be very attractive given your current financial situation. However, if you are able to maintain your present monthly payment amount after you consolidate credit card debt, you will be able to pay off the new balance much more quickly than you would have with the old credit cards.

*Ease of One Bill: Another very important benefit that comes with choosing to consolidate credit card debt is the simplicity of having one monthly bill that comes with the new account that you have opened. With multiple credit cards you are receiving multiple bills, more than likely with different payment due dates throughout the month. Not only is this difficult to keep track of, it also increases the likelihood that you will miss a payment and end up paying late fees and incurring higher interest rates. It is easy to see how one monthly bill can lower your stress level considerably!

These are just some of the many attractive reasons to consolidate credit card debt. Be sure to examine all of the financing options available to you before deciding on the right one. You may be eligible for a loan or credit card with very low interest rate relative to what you are paying.

Article by Dan M. Kennedy

Can you improve your money situation by remortgaging with an FHA insured loan? Can you get a home loan re-mortgage?

As you read every word of this article you begin to see that there is a way out of the stress for you.

You probably already know that FHA mortgages are not for the rich and perfect-credit-score people. Maybe even that FHA has different rules than the banks, more relaxed rules. But there’s much more to know.

Banks don’t have to do any FHA home loans and they do not have to give you one even if you meet all FHA criteria. That said, a lot of banks give mortgages and re-mortgages all the time. The loans are insured!

Here is how it works: You, the borrower, pay 2.25% upfront mortgage insurance and a small monthly insurance payments (0.50% to 0.55% a year or around per month for every 0,000 your borrow). You can borrow up to 97% of the value of your home if your credit score is 580 or higher. If it’s 579 or less, you can borrow only up to 90%.

FHA insures only primary homes, the house you live in, never an investment property. The primary home can be a condo, a house, a townhouse, a building with up to 4 apartments. There is a limit to the loan amount, though. In some counties the limit is higher than in others. Visit https://entp.hud.gov/idapp/html/hicostlook.cfm to find out the limits for your county.

So remortgaging with an FHA home loan costs more than regular remortgaging but it allows people who do not qualify for a regular remortgage to get a home loan.

Once you’re done remortgaging, if you did get a home loan re-mortgage that’s FHA insured, you may have another benefit: FHA streamline process.

FHA’s Streamline Program is a newer program that applies only to people who already have an FHA-insured mortgage. Remortgaging or refinancing under this program is done without a new appraisal, or verification of income or of credit. To qualify for this program you have to have paid on time for the 12 months prior to applying. It seems that FHA has learned that if you’ve qualified once for an FHA-insured mortgage loan and have been making payments on time, you’re a good risk still. And since you’re a good risk, they don’t have to strain your nerves or their resources.

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Morningstar is maintaining our issuer credit rating of BBB+ for Comerica CMA , a billion company with more than 400 banking branches primarily in Michigan, California, and Texas. These states are home to roughly 35%, 30%, and 15% of Comerica’s loans, respectively. Comerica is primarily a commercial lender, with more than 80% of its loans in the commercial market. While several of its regional banking peers continue to face significant credit quality challenges and remain indebted to the government, Comerica redeemed its entire .25 billion of Troubled Asset Relief Program preferred shares in March 2010. Comerica funded it with cash on hand and 0 million in new common equity. From a credit perspective, the equity issuance improved Comerica’s capital ratios significantly. It also improved its deposit mix dramatically, benefiting margins.

In our Stress Test analysis, we assigned an average underwriting rating for most of Comerica’s loans and securities, as credit quality has held up well relative to peers. We assigned a below-average rating to its construction and commercial real estate loan portfolios, primarily to reflect its California and Michigan exposure. Comerica received a good Stress Test score despite burning capital under our assumptions, as its capital raise boosted its starting position. Comerica also achieved a good Solvency Score thanks to its strong credit quality, improved capital position, and earnings power. We awarded the company a because of its deposit-funded balance sheet, size, business line, and geographic diversification, in addition to its narrow economic moat. These factors led to a rating of BBB+.

http://mycredit-score.org/credit-scoring-and-car-loans/