guinnessgurl

How do I get a secured credit card?

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NoSoup

I would contact a local bank or credit union to see if they offer them. Most Do, although if you are unable to find one that offers one, there are many that you can find online. Basically, what happens is this:

You take $X and put it into an account at that institution, and they freeze the funds. Basically, that means that you can't withdraw them as long as that credit card is open. You will, however, earn interest on it. In return, they give ou a credit card for $X - usually regardless of credit, as they don't have anything to lose. If you neglect to make your payments, they simply can take it out of the frozen funds at the institution.

Secured cards, however, generally report to the Credit Reporting Agencies as typical credit cards, they are just easier to qualify for.

Once you have a semi-established history with that secured credit card (usually six months or longer) you can probably re-apply for that some card and get your funds returned to you. If you are comfortable with them just earning interest, you can obviously keep the credit card if you like.

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bodypainter

Forgive me for not reading this whole thread to see if this has been asked.

Do you have much experience with commercial credit? I'm looking for a business to buy for my wife to run. A bar or convenience store or somesuch. I have another thread now in this forum about it.

We are both in our late 40's and have pretty good credit and no debt other than our mortgage and one car payment. I'm sending her to our bank tomorrow to start a dialog with the loan people and if it's possible I'd really like her to do this whole thing herself - for it to be her business.

Any thoughts on this?

Dawson70

Oh man...do I need your advice!
Why do the 3 different credit bureau's have different scores? This is fustrating as hell. I know that most lenders use Transunion, but more and more are using the others. I paid a service to look at my scores and found tons of errors!!!!. I am going through the dispute process now. My biggest complaint are the companies that look at my credit without my permission. My Transunion score is about 70 points lower than the others.
Is there anything I can do to speed up the dispute process? It is going on 3 months here.
Thanks
Dawson70

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NoSoup

I have dealt in some small commercial loans, but not a ton, so take this with a grain of salt.

Generally speaking, a tavern or a convienence store are the two most difficult types of small businesses to get financing for. Usually, unless you have a significant down payment (read: a minimum of 20%, usually 30%) it is unlikely you will find a loan for you without very creative financing.

What do you mean by "do this whole thing for herself?" Are you trying to finance this with only her on the loan? Or simply trying to have this business "be her baby"...

How are you guys sitting financially right now? Do you have a significant amount of cash left over each month?

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NoSoup

Well, to answer your first question, usually the scores are a bit different because of varying degrees of accuracy and detail, as well as different scoring mechanisms.

I see that you are in Central WI, so it isn't surprising that people use TransUnion the most. The Credit Reporting agencies are based (and most accurate) in different areas. TransUnion is most accurate in the Midwest.

Although many companies do glance at your credit without your permission, it doesn't hurt your score. Only companies that you allow to look will damage it...

As far as disputing goes, it does take forever, but I believe there is a required period of time that they need to take action in or take it off your bureau. There are companies out there that will charge you to dispute them for you, and usually they'll get it done much more quickly. It really depends on if you need it done quickly or just want it done quickly...

If you need any more clarification, please ask

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bodypainter

We are okay financially - I think we scored around 800 last year when we refinanced our house and again a few months ago when we bought the car. I make good money, more than enough for us to live on. As for the down payment, I figured we'd probably take a 2nd on the house. As for money left over each month, I max my 401(k) and we probably throw $500 a month in savings. Of course about once a year we buy something that depletes that so it's not like we have huge buckets of money in the bank. If we really tried I think we could save $1000 a month.

This convenience store we're looking at has a $149,000 asking price. The agent says it nets about $65,000/year for the current owner. I am hoping that means bottom line profit after everything but of course I haven't seen their books or tax returns yet. Anyway, 20% would be $30K and I believe we could swing that for a good bet.

As for this being 'her baby' I mean I want it to be her store. I will do whatever needed financially but this is to be her job, her business, her baby. I'll keep my job. I like that concept because she wants to contribute to the household and if she could really pull in $65K a year after taxes and all that effectively doubles our income (as opposed to her working for someone else for peanuts). That would greatly help with my true goal of not having to work for wages until the day I die.

I also thought there might be some loan guarantees available to her as a female owned business. I've crawled the SBA website but there's an overwhelming amount of stuff there. I guess I need to spend a chunk of this weekend and make a business plan. Sounds like I'll need a convincing one to take to the bank. Also, I'm a veteran so I should probably check the VA to see if they can help.

Thanks for the advice and feel free to throw out any pearls of wisdom you care to share.

yellowgowild

I just caved in and started a 4 year lease on a 2005 volvo s40 base model for $1,000 down, and $330 a month, 12,000 miles a year.

Four years seems like an uncommonly long time, but the contract states there are no penalties when I close the lease, and I get an allowance of $1,000 to cover any dents and scratches it has when I turn it in.

I know nothing about how most lease deals go, and was wondering if that seems like a good deal.

DEI37

It's a lease, so that should answer your question. It's like renting. Not a good deal.

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NoSoup

Well, it sounds like you are in a pretty decent position to start this then. An 800 credit score, by the way, isn't okay, it is excellent. Be sure, however, that you are able to support this business without the income from it, as there certainly may be tough times ahead. I would imagine that it would be relatively safe to say that it pays for it's own operating expenses, but make sure that the loan payment would be manageable with just your income.

The only help I can offer with actually getting the loan, is to make sure that you have everything in order. If you are denied due to "policy violations, Loan to Value Ratios, ect" from a larger institution, try a smaller one. Smaller institutions generally don't have a large amount of commercial loans, so they are more likely to look at them on a case-by-case basis, instead of using blanket policies to govern their decision.

Another helpful hint on getting the loan: Sheer quantites of information can intimidate smaller institutions into giving in, in some cases. Come up with as much information as you can, regarding the books, statistics of the area, development, ect that support the business. A vast quantity of information will show that you have the dedication to make it work, as well as the information itself will help you argue your side.

Pearl of Wisdom- Do not let emotions into this at all. Having your wife run a business and all might be a goal, but make sure that you examine this business thoughoughly and logically. If there is a descrepency in the books, take what the owner says with a 10 pound bag of salt, remember, (s)he is trying to sell you this business. Come to your own logical conclusion, and although this may seem like the "perfect" business, don't become emotionally attached. More opportunities will present themselves, and it is better to wait for the right one that jump into something that will turn into a nightmare.

Also, it is not uncommon for small commercial loans to go sour rather late in the game. This varies from institution to institution, of course, but there will by times that a piece of information will arise that will bring the loan process to a screeching halt. If you do stumble upon some additional info, make sure to let the bank know. It very well may destroy the chances of the loan, but they have statistics from thousands of others just like you (via credit bureaus) and if it didn't turn out of a large percentage of them, it very well may come and bite you in your nether region as well.

Other than that, good luck, and let us know how it goes.

If you have any more questions, post 'em

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NoSoup

Well, with leasing, it basically is up to you whether or not it is a good deal. If the volvo is worth $330 a month with the restrictions to you, it was a fine deal. My only advice with leasing (and I am not all too knowledgeable about it, mind you) is do not, do not, do not go over the mileage allowed. I had a friend of mine that drove it too much and it would quite literally sit in his garage 3-4 months a year, instead of risking paying the obsene $0.10 per mile or whatever it was over. He had leased it, and not too long after got a much higher paying job but needed to commute. If it isn't likely that your circumstances are going to change in the next 4 years, it shouldn't be much of an issue, but should they, that car may be a thorn in your side.

However, I am not particularily fond of leasing myself, unless there are extenuating circumstances. I'll give you an example of why. We'll use a 2000 Volvo S40 (base) for an example, as it should reflect the approximate depreciation of your 2005.

MSRP of 2000 Volvo S40 $22,900.00

$1000.00 Down leaves a loan balance of 21,900.00
Loan payments on a 6 year (72 month Loan) at 4% interest - $342.63/month

After Four Years of Payments (same as your lease) the principle balance on your loan is $7890.09, providing you paid on the date that it was due, and never a cent more than you needed to. The retail value (taken from www.kbb.com) is approximately $11,720.00. If you sell it at this point, you walk away with $3829.91. Had it been on a shorter term (read: higher payment) you would have more equity. And all this with no mileage restrictions.

Four years from now, you'll likely have the option to buy out something for a higher than market value when you have made payments on it for the last four years.

___
Note:

Keep in mind, you may actually come out ahead on the deal, if they difference of the lease payment vs the loan payment is greater than the equity you have in your car at the time the lease ends. I was unable to find a "typical" lease payment for the 2000 volvo, so I am unable to give a truly accurate synopsis of which, in this case, would be "better"

Personally, I never buy brand spankin' new cars because I'd prefer someone else takes the hit on depreciation than I. I drive newer cars, (currently a 2003) but never brand new. Basically, I am probably a bit biased that way. I would prefer to have something to hold onto after I have been shoveling out hundreds of dollars a month for years and years, but some people would prefer the simplicity of leasing, or the nicer, more attractive cars than they can afford with a loan buying it outright.

Hope that helps a bit, I didn't try to be too confusing

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yellowgowild

Thanks for your research into this, I really appreciate it and I want everyone to know I signed the lease today, and the car rocks

After looking at the fine print and whatnot, I think it turned out to be a good deal since Volvo covers more in their leases than most other car companies. The residuals on this car will be 10k which is about what I would owe after paying the same amount to a loan I think.....

Anyways I was a little apprehensive before signing the papers since I've heard so many nightmare stories about evil lease contracts that really screw you at the end, but everything here seemed okay to my limited financial reasoning thanks.

Yakk

When looking at car purchase/lease finance papers, the interest rate on the leases was a good 2-3% higher than on the purchases. Ik.

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Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.

NoSoup

Congrats on your purchase, I hope you enjoy it

Indeed, the value of a lease is determined strictly by the person signing it. There are a million arguements for and against them, but it all comes down to whether or not you find the use of the vehicle with the terms agreed upon a good deal for the monthly fee. As you are not gaining equity in the car, if you find that a fair price to "rent" the vehicle for, go for it.

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cocounselor23

HELP! Wife and I are looking at getting a credit line up to 100% of home value. Wife recently had surgery and has been unable to work, so we have maxed out our credit. FICO score is about 630, I have been getting all kinds of different offers and not sure what to do. Home is worth at least $290k and existing mortgage balance is $262k. We have about 20k in revolving debt and I was really just looking to consolidat that. Some companies have offered to refinance the entire loan, which is fixed at 5.5%. I know the interest rate will go up if I do this, but these companies are also proposing to get rid of mortgage insurance (right now we pay $150 a month for this). The idea would be to improve credit score and do another refinance in a year or so. Have been quoted a 2/28 loan (fixed for 2 years and adjustable thereafter) with interest rate of 6.4%. This company claims it can value my house at over $300k but I know that is high. The would loan 302k, which would pay off the first loan, all credit cards and even give us about $5k cash out to pay some of our legal bills. The loan discount/origination fee is VERy high at 3.4% (over $10,000!!). I definitely have reservations of this loan for both the overstated value of our home's value and the high loan fees. I know I am going to pay a little bit more due to lower FICO score. I feel more comfortable just doing a second. What do you think? Thanks for your help.

NoSoup

Do not do that loan. If you take out a loan higher than your home is valued at, you'll have a very tough time selling it in an emergency.

630 for a Credit score is not too bad, so $10k+ in closing costs is outrageous. If your score were 500-580 I could understand such a large fee, but I can't even imagine what would cost that much for a 630 score.

I would check into getting a second, possibly a HELOC (home equity line of credit) Most HELOCs have variable interest rates, but offer an interest only payment just in case you guys have a difficult month.

If you have any more questions, please ask

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cocounselor23

Thanks No Soup!

NoSoup

No Problem, it's what I'm here for

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Corneo

I got a question if you don't mind. I am a college student here in California. My projected cost of living in my college town is in the neighbor hood of $14K per year. I am thinking about getting a student loan to pay for my remaining 3 years. How does the interest work because I heard interest does not begin untill I graduate/drop out/ kicked out. Say I took the money and invested it could I pay the loan people back interest free?

NoSoup

Well, I am no expert when it comes to student loans, but I'll attempt to give you good info anyway

If you get a subsidized loan, interest as well as payments don't begin until you no longer meet the requirements of it being subsidized, such as remaining at a certain GPA, not dropping out, taking full time credits... ect.

If you took the money from the loan and made money with it, you could potentially have the money itself pay for the intererest, so yes, you could pay it back interest free, theoretically.

However, keep in mind that the higher the return, the higher the risk. Unless you make substantially more than the rate you are paying, it would be better to just pay off the loan. Also, keep in mind that if you are planning on making more, there certainly is a chance that you can lose some (depending on the type of investment) If that is the case, you should be prepared to pay it back the old fashioned way.

If you can pay for everything without taking out student loans, I'd recommend doing that, as it will make life after college a lot easier. However, if that is not feasible, do what it takes to get your degee.

I hope that helped, if you have any more questions, please ask!

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Corneo

Thanks cleared up a lot of my questions.

phredgreen

okiedokie. i've read through this entire thread (you're the man, nosoup), so i'll drop a coupla questions that weren't already answered.

first off, i'm gonna need to pull credit reports from all three agencies for me and the new wife, so we can peruse them and make sure that the info is correct. where would you reccomend i go to get the best price? i'd do a google search, but the word "credit" in any google search brings up a mass of rubbish results that i don't feel like wading through.

next, some background. i have a pretty rough credit history, as does the missus. i'm not sure of the specifics in hers, so i'll just detail mine for the time being. in 1997, when i went to university (ha! an american just called it that!), started out with some student loans from the government, i think the total on those loans was about 2400. shortly after that begun, i did the typical fill out the credit form, get a free university teeshirt thing and found myself with an mbna card and a providian card, 2000 and 1500 limits, respectively. i started out being good with them, and used them for a while without issue. end of the school year rolls around, and because i've had much more fun than do real schoolwork, i'm back at mom's house. i found a job that paid very well for someone my age and responsibility level (almost nil), so i started using the cards. i soon maxed both of them, and just as my school loans were coming out of the 6 month grace period, i found myself fired from the job. no money, no bills get paid, lots of phone calls from collectors and the like. for the most part, i ignored them, because i was stupid and just didn't know better. basiclaly, i just kind've let them rot, ignoring the letters sent from them, and then from collection agencies, asking, requesting, and finally demanding my money. to this day, i still haven't paid anything back to them. so here comes the next question:

will the credit card debts fall off my reports 7-10 years from the date of original collection by the lending institution, or does that 7-10 year mark get extended every time a new collection service buys the debt and attempts to collect?

as far as the school loan is concerned, i'm gonna try to get ahold of them soon and try to avoid payroll deductions, which the latest threat letters from them have talked about. it's just the issue of putting the missus through school right now, which dosen't leave much for my bills.

secondly, i have a couple of rental issues that i don't feel should be on my credit reports, but are. firstly, i rented an aprtment with a roommate, whose cousin decided that the closet would be a great place to grow weed plants. after the roomate up and left for colorado in the middle of the lease, leaving behind no money and a pothead cousin, i brought the issue up to the leasing office, telling them that the roommate was in violation of the drug-free housing lease terms and that i wasn't willing to be financially responsible for the damage that the roommate's ferret did to the place (he failed to house-train the little bastard, so he fucked up a good percentage of the carpets). what recourse do i have in trying to remove that mark from my record?

secondly, in the rental department, i roomed with another friend whose credit was much better than mine by the time we got into that situation (can you tell why?), so she was listed as the actual leaseholder and i was listed as an occupant, not financially responsible for the apartment in anu way, shape or form. after being forcibly removed after an altercation, i expected to be done with the apartment, but instead found a judgement on my credit report for that apartment that i supposedly had no financial obligations toward. what would you suggest in that situation?

next on phred's big red list of credit boo-boos, i owe bank of america a bit over 400 for some stupid desicions on my part. as of right now, there's a chex-system mark that prevents me from opening any sort of checking account, anywhere. beleive me, i've tried. after paying off the money owed to bank of america, how can i be assured that i won't have any further issues opening an account, as i've heard horror stories about how even after paying off accounts, a person's chex-systems hold wasn't removed for years.

finally, a question about the missus' accounts. among some of her other credit goodness, there is a reposession resulting in a judgement against her. question. if the lender reposesses a car, how can she owe money on it? if they have the item against which a loan was taken out, beyond some fees and devaluyation, how can the demand more and what needs to be done to clear that up?

thanks in advance for your taking the time to read this endless tirade of "what not to dos" from someone who wishes he could do it all over again with what he knows now.

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NoSoup

Alrighty Phred, here we go

First of all, I would suggest purchasing your credit bureaus directly from the credit reporting agencies. When purchasing them, see if you can find one with minimal information, as it will cost less. Also, try and purchase it directly from the company, instead of one of the affiliates that will generally charge you a lot more. For example, to get the "no frills" credit bureau from TransUnion you'll have to go the website, click on personal solutions, then TransUnion Personal Credit Report.

Here are the links for the websites:
TransUnion
Experian
Equifax

One final note, as far as that goes - although it would be a bit cheaper, don't buy the "3 bureaus at once!" or anything mentioning more than that specific agency's respective information. If you purchase a merged report, you'll get the information listed from all the bureaus, but it won't differentiate on which or how many agencies are reporting what. If there is an error, you would likely have to get seperate reports to see who is listing the error.

The clock starts ticking when the collections are first filed. However, occationally there will be an error and the collection may or may not have that clock restarted when it is purchased by another agency. It seems that they are getting more and more desperate, which is very likely, as that 7 year mark is coming up rather rapidly

If you want to avoid hassles with trying to get them removed from the credit bureaus when they are resold (most will sell them a few months before that 7 year mark) try contacting them and offering them a sum that would suit you. They buy that at a much reduced cost, so offer them only a fraction of what you owe them. If they refuse, simply contact the next company. I would suggest seeing if the people with the student loans would be willing to work with you to set up payments or something to avoid having payroll deduction. That way, you still are able to maintain some control. If an emergency comes up, you'll still be able to not pay them, whereas if they are taking it directly from your check, you won't have that choice.

Concerning your first rental issue - you said there was a "mark"... is there a judgement filed against you? Or something else?

Regarding your second rental issue - Double check to make sure that in the state you are living in that being listed as an "occupant" carries no obligations towards the financial aspects of the apartment. It may be as simple as getting a copy of your old lease. If it doesn't, contact the agencies that are reporting that and refute it. If they can't confirm the validity of it within 30 days, they are required to take it off your bureau. What likely happened is that the owner got a little overzealous and filed against both of you, just to make sure that he got his money.

Chex Systems... a banks best friend, the publics' worst nightmare...

Alright, I have bad news and more bad new for you. First of all, it is very standard practice not to allow anyone with Chex Systems records that are not payed in full to not open an account. Unfortunately, it is fairly standard to not let anyone with Chex Systems records, paid in full or not, open a checking account. Once you have paid the account in full, it will probably take 30 days or less for Chex Systems to report it closed. They are, in all actuality, pretty good about keeping everything up to date in a timely manner. These "Horror Stories" that you have heard, although they could be legit, are most likely people that were under the impression that once the institution is paid off, the Chex Systems record just dissappears. In fact, it simply reports as paid in full, and many institutions have policies regarding any record at all, open or closed. Once you have paid the account in full, I would call around to local, smaller institutions and see what their policies are regarding Chex Systems history. See if they allow accounts that were paid in full, or if that record will keep you from obtaining a checking account. Your best bet would be small credit unions in the area... the less technologically advanced they are, the better chance that you'll be able to get an account there, as they may not even consult Chex Systems.


Regarding the Mrs. Phredgreen...

As far as repossession goes, it works like this.

John, our imaginary friend, goes out and buys a car. Not just any car, a Brand new one! He's very excited, but instead of going to work he decides that it is more fun to drive around. With no job, he can't pay the bills, and the institution is going to repossess the car.

We'll say that John is going to make one of the two choices that most people in his position make.

Choice A) John decides he want revenge. He scratches the car, pours motor oil all over the inside, drops 3 pounds of sugar in the gas tank, and takes a sledgehammer to the engine. John goes to sleep that night, sleeping soundly, dreaming of the look on that bank guys face when he sees that car. That'll teach em.

Choice B) John realizes his error, and due to whatever reasons he cannot make his payments. John brings the car, title, and keys to the bank to surrender them.

After the choice has been made, the bank now wants to recoup their losses. There was an original loan on the car for $25,000.00. The moment he drove it off the lot, it depreciated $5,000.00. He put quite a few miles on, so now it is worth $16,000.00. His loan right now is still $24,000.00, which includes the original loan amount, late fees, and accrued interest. The bank wants their money back ASAP, so they try and sell the car. To get people interested in it, they will knock a bit off the actual value of the car, so they put it up for $15,000.00. Some random fellow takes a look at the car, sees what a good deal it is, and buys it.

So, we have $24,000.00 - 15,000.00 = $9,000.00

John still is going to owe $9,000.00. However, if John chooses Choice A, he'll owe much, much more.

Basically, Mrs. Phred will owe the bank whatever they were unable to recoup from reselling the car. It is in your best interest to get that car sold at the highest price... The numbers in the above example are likely not accurate, although they are similar to what a new car purchase would probably be like. Used cars depreciate much less quickly, but you can still see the general idea behind it.

So, there you have it - If you woudn't mind responding to the few questions that I have, I would be happy to give you some answers regarding them. If I missed anything, or aroused any more questions, please feel free to ask

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itlain

Ok, lets see what advice you have for me. I thank you first off for helping everyone out.

Myself and my wife recently filed bankruptcy in Jan of this year. I had made quite a few bad choices with credit cards when I first enlisted in the army and ended up on the wrong side of a bad car deal. Together our debt was close to 30,000$. I know this isn't a lot but we could barely pay the interest payment each month on everything. We eventually decided to file bankruptcy. Everything was cleared. I voluntarily turned in one vehicle to not have to re-affirm that vehicle. We re-affirmed the debt on our remaining vehicle and paid the remaining loan off in 3 months (about 3500$) or so was left on it. We also re-affirmed a computer that we had purchased through Dell and paid that off in 2 months. Before when I had looked at my credit score it was in the bottom 2 percentile. Now, 7 months after filing it is around the 50% mark or so. My wife's is slightly higher I think around 650. I am currently deployed in Iraq and we are saving every penny possible for when I get out next June. I'm hoping that we will be able save close to 10,000 or so for living expenses and a down payment on a house. We currently have no bills other than the normal monthly revolving bills such as food, phone, gas and insurance. We haven't opened any new credit cards or had any loans of any type.

When I get out I know I am eligible for a VA loan but I am curious if this will be my best bet. We are planning on moving to the western slope area of Colorado where I know house prices can be a little high (100k or so). I'm just looking for advice on how I can maximize my chances of getting a good interest rate on a house loan or in general improve my credit rating. After being in debt once in our lives it is something that we have vowed to never happen again. Any advice would be appreciated. Thank you

NoSoup

Well, I would suggest getting another credit card, preferably 2 of them to begin building your credit. After bankruptcy, one thing that potential lenders look for is credit that has been established after the bankruptcy. Make sure, though, that once you get them you NEVER charge over 50% of the limit on the card, and if you pay them off in full every month you can avoid paying interested. It is important that you try to begin establishing credit as soon as possible, as you have a much better chance to get a loan, as well as improve your scores sufficiently to get a decent rate if you have good credit after a bankruptcy rather than no credit.

If you need anything else, just ask

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90degree

make sure you have NO late payments on anything.. especially a mortgage if you have one after a bankruptcy... creditors.. especially in regards to mortgages frown heavily on lates after the banko.. for obvious reasons.

Cynthetiq

buying a business...

I'm looking to buy a business. I plan on being an absentee owner...

any info on qualifications for loans? same terms as regular mortages?

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NoSoup

Well, the same general principles will be applied, but there are some differences. Basically, if your personal income can support both your expenses and the business expenses with a lower than 50% debt-to-income ratio, you'll be sitting pretty.

However, if you are unable to, some companies will give loans out based on the owners credit, as well as the business plan. Make sure that when you apply for your commercial loan, you have a well thought out, accurate business plan drawn up. If the bank believes that it will be profitable, they are far more likely to lend money out. If it is a well established business, you'll need accurate "books" for the business, likely for the last 2 or more years.

Depending on how much the business is going to cost, as well as the amount of equity you have in your home, you may want to take out a second mortgage to finance the business. Although you would want to speak with a tax professional to be sure, from my understanding it may be more advantageous tax-wise.

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Tulkinghorn

Nosoup-

This is a great thread! I think you are providing a quite valuable service.

My request is not for specific information, but to see what the general attitude in the retail banking world is like. I live in one of the areas with overheated housing costs, and I have gotten so tired of worrying about a collapse in the housing market that my wife and I are going to sell our home and move into a rental for a few years and save the equity for investing in something more promising.

Am I out of my gourd? I was the eternal pessimist when I worked in the financial securities business, bailed out of my investments in the summer of '99. I avoided the crash, but also avoided some good returns in the mean-time, too!

Right now, in my area, the cost of renting a home is something like half the cost of buying, without the sacrifice of a decent down-payment. You can not buy event slum-style rental without being underwater with your first tenant.

If you work with any mortgage underwriters, how do they manage to write loans with such craziness? Is the secondary market still so strong that all sorts or irrational prices are still supported at the retail level? What is a (supposedly) rational investor like me supposed to make of all this?

90degree

... my advice is keep the home.. as far as a long term investment.. I would be surprised to find one that is better...


If you are worried about the market.. lock your interest rate on your home.. and be prepared to sit on it for awhile if in fact the market drops off.. it should only be a matter of years before it turns around again.. I happen to work in the mortgage industry btw.. in case you were wondering what good my advice may be.

Merlocke

Actually - Primerica isn't all bad.
They do have good ideas regarding financial management.
The only issue is that yes, it is somewhat of a pyramid - and therefore they charge far too much for their services.

So my two cents? - Go to a seminar - learn what they have to offer you in terms of free advice - then go ahead and do what makes sense ON YOUR OWN. Eg: Life insurance as a vehicle for tax free investment growth. This is a reality. It actually works. Just go get a real life insurance product and not theirs.

If anyone is interested in Tax Savings (sorry - I can only help Canadians on this issue, there's only enough room in my brain for ONE set of laws) PM me and I can help you out as I don't want to take over this thread.


-=-

Now for a question for NoSoup.
First - thanks for all of the advice you've given everyone. You're a great benefit to this community.

Now for the question:
Do you have any experience with ForEx trading at the banks? Any tips you could throw my way would be beneficial.

I've got a thread on this - but not too many replies

Thanks for anything you can show me!

P.S. take a look at my thread if you want to see a link to the website I got my training from. Not sure if you know too much about the different businesses offering training etc, but I seem to like this site better than the most.

__________________
-=[ Merlocke ]=-

NoSoup

Well, I am going to agree with 90Degree on this one. Your home is an excellent investment - and regardless of the dips and gains in the market, over time the value usually appreciates.

As far as the general attitude of the mortgage industry... I can only speak for myself, although I would imagine that my views extend to at least some others in this industry.

First and foremost, we are entering market conditions that have never (at least not in recent history) existed before. There (at least in this area) is a huge surplus of homes that are currently empty simply because there were so many new homes built. Legions of new subdivisions went up, and those middle class families that were living in $125,000-$150,000 are building brand new homes with approximate values of $200,000-$225,000. Appreciation in this area -and I would imagine all over the U.S. - has been phenomonal. 10%, 12%, 15% a year!. On a 200k house with 15% appreciation you increase the value by 30k a year.

Now, with this huge flurry of new construction and upgrading to bigger homes, there are quite literally thousands of additional homes for sale. With so few buyers left the prices on homes nowadays are being driven down - the owners are competing with each other because it is no longer a quick sale - it is difficult enough to sell a home at all...

This is where my speculation comes in.

I would imagine that most people are going to get a wake-up call rather quickly. They purchased homes for far too much in hopes to make some quick dough with the crazy appreciation. They also took really crazy loans out - with really, really tiny payments. For instance, I have one client that took out a $423,000.00 Loan - on a 3.25% balloon with an interest only payment. Basically, his payment on that huge house is only $1145.00 a month. On a typical 30 year mortgage at 8% (just about the historical average rate) his payment would be over $3100.00 a month. His plan was to buy it, sit on it for a couple years letting it appreciate like mad, then sell it before the balloon payment - it has been on the market now for almost a year for the price he bought it for, and he still hasn't been able to sell it. He only has a few months to go before his balloon payment is due. There is absolutely no way he can pay that each month, so he will likely have to declare bankruptcy or take some other drastic measure, unless rates continue to stay low. People that "bought the most house they could afford" with the ultra-low interest rates being the only reason they were able to afford so much, are going to have a rough time coming up with these payments when the interest rates rise or when their ARMs or Balloons are up.

The huge amount of empty homes and the high number of people now supporting two mortgages are going to have to crack at some point. I think that these people will become desperate to sell, at which point the "real estate bubble" will pop. I have no idea if there is going to be a catastrophic crash in real estate prices or not, but I am nearly certain that they will drop significantly. The only reason (in my opinion) they haven't so far is because the public doesn't really understand the dire situation the market is in. We are still under the impression that we are in the same situation we were in a few years ago, when the rates had first dropped.

As far as the mortgage underwriters being able to underwrite with all these crazy conditions, they simply use the only information they have available - current information. It is very difficult to speculate on what will happen in the future with any degree of certainty - and if history repeats itself, the real estate market will always bounce back.

Real estate has always been a most excellent investment - seldom does it ever take large dips, and when it does, it generally, providing you sit on it long enough, will come back - and even continue to appreciate.

If you do decide to sell your home, I wouldn't sell out of fear. Sell it because you are getting an excellent price on it, or it requires too much maintenence, or because you prefer to rent, ect. The market may drop, but it generally comes back. This is especially important to remember if you were planning on staying there for a while. If you are, regardless of the drop, I can almost guarantee that over the long run you won't lose money on real estate, as long as there are no extenuating circumstances.

However, with all of the above information - make sure you take it with a grain of salt. I am but a mortgage lender, not an economist. Our situtation may be unique here in Green Bay as well.

Good luck with whatever you decide - and if you have any more questions, just ask!

__________________
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NoSoup

My apologies -

I have woefully little experience with the foreign market exchange - Therefore, I cannot really say anything much about it. Good luck on your search - there may be others here that can help

__________________
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Just in case you were wondering...

NoSoup

For you regular visitors, I updated the first post of this thread -

I created a couple more specific threads to let people find information a bit easier than sifting through this monster - feel free to continue posting in this one, though

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Just in case you were wondering...

Mr. Pink

NoSoup,
Wow, what a great thread!

Here's my situation and question:

I have had a bank account with one institution for some time, and about 6 months ago, shortly after my 18th birthday, I overdrew. Due to various demands on my time (school, and various extracuricular activities aimed at college scholarships), I was unemployed, and so it was some time before I was able to rectify the situation. When I once again I had some money I went to the bank and worked out a deal to pay off the balance to the collection agency they had recruited, and put some money back into the account.

When I went in, it was the Thursday or Friday before the 4th of July and sort of late in the afternoon. The guy I talked to said he would take care of what he could that day, but some things would have to be taken care of Monday, and while he would be out Monday, someone would handle it.

Fast forward a couple of months, I had assumed the debt was taken care of, and had since had a fairly fluid bank account that I was never sure of exactly where it was, due to the adding and subtracting of funds related to student loans, and the costs of moving into a college town. I was home one weekend when I recieved a phone call, asking me fairly politely something to the effect of "where's our money?" I did some investigation, and the debt was never taken care of... Which leads me to my current perdicament. I am riding a razor edge, balancing my phone payment, my rent payment, and some other expenses, (no car, thank God) and waiting on some funds to clear the University so I can be back in the clear. I don't have the funds to take care of the debt right now, but (hopefully) within the next 2 weeks I will. When I do have it, what should my course of action be? Should I, and how would I, apprach them about coming to some terms about a reduced payment, or some sort of payment plan? Any extra advice?

Thanks so much!

Cynthetiq

I'm going to chime in with...

you should ALWAYS follow up. It is your responsibility to do so. Never trust anyone to complete some task without double checking at the deadline that it complete and you have some record or receipt.

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NoSoup

Well, debt collections agencies buy your debts for a reduced price, so hopefully you will be able to negotiate a lower price.

Basically (assuming you have a phone number) just give them a call and tell them that you are a student, have many debts out there, and can't afford to pay them. However, you would likely be able to come up with $X to give them on X Date if the debt would be cleared. Make $X be whatever you feel comfortable paying - but it is unlikely they will accept anything less than... oh, 70%, simply because the account is newer. If you want to give less a try, go ahead, but I would imagine the chances of them accepting less are going to be slim.

If they don't accept, you have a couple of options. The first option would be to pay the balance off in full, the entire amount they are asking for. The second option would be to let the account just sit there for a while, while they get more and more anxious that they aren't going to get any money at all. After a period of time, give them a call, and it is likely that you can settle the debt for much less, maybe even only 50% of what you owe. However, the second option does come at a price, the cost being your credit.

It's pretty much up to you to decide if paying the extra would be worth your credit rating, especially considering the current state of it. If they refuse your initial offer, ask them if they would be able to accept any less. When on the phone with the agency, make sure you sound like you are doing your best to pay them as quickly as possible, but you are just in a really tough situation. Maybe the person you are talking to has a bit of a heart, though in that business it will be unlikely.

I hope this helped out - if not, feel free to ask again!

Good luck

__________________
I have an aura of reliability and good judgement.

Just in case you were wondering...

NoSoup

Oh, and for future referance, I am going to have to agree with Cynthetiq here - he's right on the money. If you don't follow up on something that someone was supposed to when it concerns yourself - it's your loss, not theirs, unfortunately...

__________________
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Just in case you were wondering...

toverfie

Hi Soup,
Here's my story......1997 was a bad year and I sought legal advice for relief on a credit card (approx $3k). The attorney said don't pay another nickel to them, instead pay us for two years ($39.00 per month) and we will settle with them for you at pennies on the dollar. In June of 2002 the lawyer contacted me with an offer to settle for about $1700. They did the deal but I never recieved any correspondence (that I recall) stating that this matter was resolved. The only thing I saw was that the credit card company had reduced the amount they were reporting I owed on my credit report. Also, the lawyer had moved out of state and then out of business....Obviously I made some poor choices and then some more after that....

In the summer of 2003 I began the process of cleaning up my act and paying off old debts and judgements in order to buy a house. My mortgage broker went through my credit report line by line and told me what I would have to pay off in order to qualify. For this particular debt, he said that the card had probably accepted the payoff and the balance stayed in some type of write-off status....Anyway, I got the mortgage and never sent another dime to the card company. My credit score is about 640 and I have opened other credit accounts since then, but also have been turned down by one. Now, that old debt has apparently been bought by some collection agency and they are hounding me for about $1k to pay off the debt or send them in writing that I dispute (I'm guessing it will be impossible to prove I settled with the card in 2002 since the only thing I have is the payment that they recorded). I don't need any credit in the near future and expect that this thing will drop off my report soon. Will it drop off soon? I quit paying them in 1997 except for the one lawyer payment in 2002. Will it go away 7 years from 97 (which is perhaps why it got bought and someone is trying to make a buck off it) or 7 years from 2002? Maybe I need to look at my credit report to determine this...if so, can you tell me what I should look for regarding this account? I'm thinking they can rot in hell since my credit isn't too bad, I don't need any credit right now, and it might be dropping off my report real soon. Please let me know what you think and how I can make sure it goes away in the proper amount of time....

Cheers

Cynthetiq

toverfie, there's some really aggressive collectors out there now.

I have something that was written off over a decade ago come back to haunt me. There's federal laws re: collection and these companies have been skirting around them by selling them back and forth to each other then claiming that the cease and desist or proof of documentation request doesn't extend to them anymore.

Unlike your situation, mine aren't on my TRW/Equifax or whatever it's called, and didn't appear over the past 13 years.

__________________
I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not.