Debt-to-Income Ratios

August 30, 2008 – 12:18 pm

The lenders use few guidelines in order to know the maximum mortgage amount that one can afford. These guidelines are known as Debt-to-income ratios. A percentage of the gross monthly income is used to pay the debts that occur monthly, here monthly income is that portion of the income from which the tax not yet being deducted. In this case two ratios are considered the housing ratio and the debt –to-income ratio which are the “front end” ratio and the “back end” ratio. The general format to denote these two ratios are 33/38.

   

                                 

 

In these two debts the auto and the life insurance are not taken under consideration. The cost price of the house along with the principal, rates, taxes, insurance, insurance on mortgage and fees of the homeowners association are paid with the front ratio. The portion of the salary (before the taxes) which is used to pay the above expenditures is known as the front end ratio. In the same way the back end ratio includes all the above expenditures along with the monthly consumer debt. The payment that is made for car, debt due to credit cards, installments paid for loans and few expenses of the same nature comes under consumer debt.

 

Generally followed guideline for the debt-to-income ratios is 33/38. 33 % of the total monthly income (before tax) is used for the house loan. If the housing cost and the consumer debt to the housing cost are summed up then also it should not rise above 38 % of the monthly income.

                     

These are very flexible guidelines. The rigidity of the guidelines depends on the amount of down payment one makes and also on the credit he has. The guidelines become rigid if one makes a low amount of down payment. If there is a marginal credit then also the guidelines becomes rigid. If one can afford to pay large amount of down payment then the flexibility of the guidelines increases. The natures of the guidelines are also dependent on the type of loan program.  The guidelines vary with the type of the loan program. According to the FHA guideline the ratio should be 29/41 on the other hand in the VA guideline there is no indication of front ratio at all but there is an indication of the back ratio i.e. 41.

 

Let me explain the above guideline with the help of an example. Suppose an individual earns $10000 each month. Then according to the 33/38 ratio guidelines his monthly housing cost would be $ 3300 and the maximum debt-to-income ratio should not exceed $3800.

 

 

 

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Instant payday loans for bad creditors

August 23, 2008 – 9:18 am

Many people now-a-days are in need of urgent cash loans but due to their bad credit history they thinks that they are not eligible for a loan. To fulfill the financial requirements one may always be in need of instant cash loans. The credit history is not always an obstacle for the bad creditor. One can have an immediate cash loan even if he/she has a bad credit report.

In order to solve the money crisis immediately one can apply for a bad credit pay day loan. People having good credit rating can get a payday loan very easily and also at a low and reachable interest rate in spite of the fact that interest rates of the pay day loans are very high. An extra amount is charged from them who are not having a good credit report, so for them the interest rate is high. If one has a short term money crisis then payday loan is the best possible solution.

There are few points that the lenders will want to be fulfilled by the person in bad credit and asking for a loan. Following are the points:

1)The borrower must be an adult, should be 18 years of age.

2)The borrower has to be an employer.

3)The salary of the borrower should be more or equal to $1000.

4)He should also have a checking account.

These types of loans are available very easily and also instantly as the lender doesn’t have to check the borrower’s credit report. No need of verifying the employer also. Within hours these types of loans are available as these loans are taken at the time of immediate requirement. Now-a-days there are so many companies offering online payday loan facility. Taking loans in this way becomes easier as one has to fill an application form online and the money will get deposited by the lender in the borrower’s checking account.

Posted in Payday loan | 2 Comments »

Few reasons for foreclosures

August 15, 2008 – 12:53 pm

Everyone in this world wants to have his own home or property. Any individual will go to any extent to keep his home safe. Unavoidable situations may arise for which any one can loose his or her home. If any one looses his or her home for foreclosure then it is clear that he/she might not have handled his/her loan seriously or may be have bought a home beyond his limit.

I am trying to accumulate some of the reasons for not being able to pay a loan or for foreclosure:

1) Separation

 If a family splits up then a major crisis may come on the financial situation of a family. In most of the cases the poor communication between the couple’s ends up to defaulted loan payments. The family may have to go for a foreclosure on their home.

2) For medical reasons or hospitalization

This is another unavoidable expense that comes in an individual’s life. Sudden illness or health problem may cause a person to pay lots of unexpected bills and which may delay the loan payments. It is very obvious that no one wants to be in such a situation where one may have to pay thousands of dollars. These unpredictable situations sometimes lead to foreclosure.  

3) Job loss

This is a very common reason for foreclosure. The economic condition of a person is directly related with his workforce. If the later increases then naturally the other will increase. Everyone wants to keep the economic condition stable but unfortunately there are times when one may go through such a situation. These unfortunate situations may also lead to foreclosure.

4) Death

A family may loose everything for the sudden death of the breadwinner of the family. If the homeowner dies then it becomes a hectic life for the rest of the family members. The economic condition of the family comes to a very bad position.

The above mentioned reasons may lead to foreclosure and knowing them can benefit both the homeowner and the investor. The home owner may sort out ways to stay away from such situation and the investor can find out ways on how to provide a best possible way for such a situation.

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5 ways to get a cheaper loan

August 11, 2008 – 4:28 am

Sometimes we are in need of quick loans or may be there is an urgent need of loan for several months. These are the crucial phases of life that one has to go through. Here comes the need of fast and dependable company that can help you. The terms and condition of the company and the interest rates should also be convenient. Now-a-days it’s very easy to get these companies from a research on the web. You may be very curious to know from where to get the good loan deals. I can summarize some points with the help of that you can figure out an appropriate loan for your situation. Instead of having a huge bad credit you can go for a loan.

Check out the following points:

• First of all you have to understand one thing very clearly that if you don’t take initiative by yourself, nobody will be able to help you. Start searching for the loan sources by your own.
• Compare the various agencies that offers loan. Compare the rates of the loans and try to sort out the best rate for you.
• Make your mind prepared to disclose all your past financial situations to the lenders that might have put you into such a situation. Don’t forget to make a pre-research on this from before.
• Keep one thing in mind that the interest rate of the secured loan is much lesser than the unsecured one.
• You should not feel shaky while inquiring on the different kinds of loans that are available in the market. Such as home loans and social networking loans, payday loan, advance checking.

The main point that I wanted to explain is that you need to give some time to your loan hunt. Now-a-days there are lots of options of getting loans so there is no need to feel bad if the financial situation is not OK. The only thing is that you need to give some time to your search for the right loan provider.

 

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