Low credit score – Killer Kash http://killerkash.com/ Wed, 06 Jul 2022 09:30:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://killerkash.com/wp-content/uploads/2021/07/killer-150x150.png Low credit score – Killer Kash http://killerkash.com/ 32 32 We all have a credit score. Where do we do? https://killerkash.com/we-all-have-a-credit-score-where-do-we-do/ Wed, 06 Jul 2022 09:30:00 +0000 https://killerkash.com/we-all-have-a-credit-score-where-do-we-do/ At the age of nine, José Quiñónez and his family emigrated from Mexico to the United States. He was undocumented. Once he got his permanent residency as a teenager, he was thrilled to get his first job and his first salary. “I opened a checking account just to, you know, help save or manage the […]]]>

At the age of nine, José Quiñónez and his family emigrated from Mexico to the United States. He was undocumented. Once he got his permanent residency as a teenager, he was thrilled to get his first job and his first salary.

“I opened a checking account just to, you know, help save or manage the money I was making at the flea market,” Quiñónez said. This was all new to him. Growing up, her parents never had a bank account.

“We all worked and got paid in cash, and were able to pay our bills in cash as well,” he said. Quiñónez getting her own bank account as a teenager was an important first step towards establishing a credit score.

The credit score system relies on traditional banking to calculate creditworthiness. Credit scores can range from 300 to 850, and they help lenders determine whether an applicant should be granted a loan, credit card, or mortgage. In other words, these three-digit numbers can rule a person’s financial life.

But there is one group that is excluded from this system: people who do not have access to basic banking services, such as undocumented immigrants. They cannot qualify for most credit cards or other traditional loan services. This means they simply don’t have a credit score and establishing one isn’t always easy.

Michael Clements, director of financial markets and community investment at the Government Accountability Office, said these consumers are seen as “invisible credit”.

“These would be people who don’t have a record with the three major consumer reporting agencies,” Clements said. (That’s Experian, Equifax, and TransUnion.)

A 2015 Consumer Financial Protection Bureau report showed that some 45 million Americans had no credit score. It also looked at which groups typically don’t have access to banks. “Lower-income households, those with less education, and finally minorities, especially African-American and Hispanic households,” Clements said.

Without a bank, it’s hard to get a credit card, which starts your credit history.

Growing up with parents who were unbanked, Quiñónez experienced this firsthand. He is now the CEO of Mission Asset Fund, a financial technology company that formalizes what is called lending circles where undocumented and credit-blind borrowers lend each other money.

These loans are modest by many people’s standards, in the low four figures. One person receives the loan amount each month until everyone in the circle has a turn. This loan then becomes reportable to the credit bureaus, helping these borrowers establish a credit score.

“We work to help our immigrant communities basically become visible, active and successful in their financial lives,” he said.

Quiñónez’s company is not alone in doing so. More and more fintech companies are getting into the lending space, claiming they want to “democratize” banking and credit. But undocumented immigrants should exercise caution – some companies have come under fire over allegations predatory lending practices.

And borrowers who participate in the Quiñónez Lending Program must have cash on hand to be part of a Lending Circle. Getting a credit score this way, if you’ve been invisible to the system, still requires work and resources.

Michael Clement wrote several reports for the Office of Government Accountability. In report on the 45 million Americans who have no credit score, Clements focuses on how mortgage lenders could better utilize borrowers alternative data; for example, rent payment history, to increase “access to mortgages” for credit-blind borrowers.

Technically, you can have invisible credit even if you have a credit score. For example, if you only have a file in one or two of the three offices, for some reason. Credit.com published an explainer earlier this year about this:Are you one of the credit invisibles?

And finally, to learn more about the real consequences of living as an invisible consumer of credit, The Washington Post has a story about how it takes into account the huge gap between black and white home ownership.

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Credit rating is broken – buy now pay later can help https://killerkash.com/credit-rating-is-broken-buy-now-pay-later-can-help/ Mon, 04 Jul 2022 17:00:00 +0000 https://killerkash.com/credit-rating-is-broken-buy-now-pay-later-can-help/ Credit is a basic fact of life, yet millions of Americans lack access to affordable and responsible credit options. As consumer rights advocates rightly point out, our country’s broken credit-scoring system is in desperate need of an upgrade. Indeed, traditional credit scoring can be patchy in whether and how it collects relevant data and can […]]]>

Credit is a basic fact of life, yet millions of Americans lack access to affordable and responsible credit options. As consumer rights advocates rightly point out, our country’s broken credit-scoring system is in desperate need of an upgrade. Indeed, traditional credit scoring can be patchy in whether and how it collects relevant data and can generate opaque and unfair results.

Credit scores are essential for more than getting a loan. They are increasingly important when it comes to renting an apartment, taking out home or car insurance or even getting a job. Still, 45 million ‘credit-invisible’ Americans have thin credit recordsand millions more live with poor credit, excluding them from mainstream financial services and exposing them to predatory actors.

Some argue that the path to credit should only be through traditional financial products, including credit cards. But we believe that real consumer creditworthiness should include more than just one type of payment, and we advocate for another path: buy now, pay later, a product with zero or low consumer fees, more transparency and greater potential for building strong credit. register, but only if the credit bureaus can upgrade their systems.

Imagine a young person trying to build a credit history for the first time. Credit cards often come with a high limit that facilitates overspending, double-digit compound interest rates, and excessive late fees. The Consumer Financial Protection Bureau (CFPB) estimates that credit card companies earned $14 billion in late fees in 2019 alone and just launched a new review of credit card penalty policies. In addition, Americans pay approximately $1,000 per year interest on revolving credit card debt. This is not a winning formula for our youngest consumers.

Today, thanks to the innovation of fintech companies, people have an alternative. The traditional pay-in-four buy now pay later (BNPL) model allows consumers to spread a payment over four installments, often with little or no interest and low fees, over six to eight weeks. Unlike a credit card company, which can earn considerable sums even when a consumer misses a payment, BNPLs earn their money primarily through merchant fees. Consumers cannot continue to use the Service if they fail to make a payment. And, instead of starting a new customer with, say, a $10,000 limit, BNPL offers limited credit initially based on a single transaction, usually under $250then extend it after the customer has repeatedly made on-time payments.

But the current credit scoring system registers only one of these payment options (the credit card) as a positive transaction – and that’s a problem. Credit bureaus would currently view short-term payments on a BNPL as negative because the consumer is maximizing their available credit and lowering a consumer’s credit score rather than reflecting the positive nature of a successful short-term repayment.

That’s why the BNPLs I represent at the Financial Technology Association – Afterpay, Klarna, Sezzle and Zip – are in active talks with credit reporting agencies to modernize their scoring models to properly account for BNPL payments. The CFPB agrees that BNPL data could provide a more complete picture of consumer creditworthiness. The Office has recently urged BNPL and the credit reference agencies to collaborate on a uniform reporting scheme and have asked the agencies to build models that take into account the unique characteristics of BNPL.

Of course, limiting innovation because legacy credit score providers like FICO and Vantage can’t or won’t process this BNPL data in a user-friendly way isn’t best for American consumers. . Credit scoring algorithms should serve consumers, not the other way around.

There is growing evidence that our credit reporting and scoring system needs to be upgraded. Legacy score providers rely on limited data that could reinforce historical inequalities while ignoring data points – like rent and utilities – that would benefit underserved communities. These limitations mean that credit scores are not suitable for a growing and increasingly diverse population. For example, six in ten black Americans have low or missing FICO score compared to just over three in ten white Americans.

Reform is needed, but relying on revolving debt products – with their high fees, high interest rates and debt traps – is not the solution. When used responsibly, alternative payment options like buy now pay later are a powerful tool to help people manage their finances and build a strong credit history. We should encourage innovation and update archaic credit reporting models to enable more people to have fair and responsible access to credit.

Penny Lee is the Managing Director of Fintech Associationa trade association representing the industry leaders shaping the future of finance.

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Bad credit? You can buy a house, but is it a good idea? https://killerkash.com/bad-credit-you-can-buy-a-house-but-is-it-a-good-idea/ Sat, 02 Jul 2022 10:00:52 +0000 https://killerkash.com/bad-credit-you-can-buy-a-house-but-is-it-a-good-idea/ If you are applying for a mortgage, lenders will look at your credit score. If you have bad credit, they may deny you a loan entirely. Or they may charge you a higher interest rate if they are willing to let you borrow at all. This can make becoming a homeowner more expensive. Since bad […]]]>
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Best Small Business Loans for Gigsters https://killerkash.com/best-small-business-loans-for-gigsters/ Sat, 25 Jun 2022 23:53:39 +0000 https://killerkash.com/best-small-business-loans-for-gigsters/ As a gigster, you probably come across many situations where you need money that you don’t have on hand. You want to start a new business, but you need an expensive machine or equipment. Or maybe you want to expand a current business but don’t have the necessary capital. Whether you want to launch a […]]]>

As a gigster, you probably come across many situations where you need money that you don’t have on hand. You want to start a new business, but you need an expensive machine or equipment. Or maybe you want to expand a current business but don’t have the necessary capital.

Whether you want to launch a new business idea, invest in real estate for an ongoing business, or need funds for another reason, a small business loan can help you achieve your professional goals.

This article discusses some common types of small business loans and the best lender options for finding financing today.

Key points to remember

  • With the wide variety of small business loans, you’re sure to find one that meets your needs.
  • Kabbage offers the most flexible loan options for small businesses.
  • Fundera offers low-risk SBA loans to help businesses build credit.
  • BlueVine provides small business loans to those with low credit scores.
  • FundingCircle offers the best term loans for small businesses.
  • Kiva provides the best microloans to unbanked borrowers.
  • OnDeck offers term loans with the possibility of disbursement on the same day.

Types of Small Business Loans

Many financing options exist for small business loans. What’s best for you depends on your credit, collateral, and situation. Review the types of loans below to learn more about some of the more common types.

Term loans

When they hear the word loan, most people think of a term loan. The lender gives the borrower a lump sum, which the borrower repays in fixed monthly installments with interest. Most auto loans, home loans, and personal loans fall into the term loan category.

Unlike some types of loans that limit where the money goes, term loans offer flexible financing for anything you might need. You can use a term loan to finance large equipment purchases, pay new employees, or cover day-to-day expenses.

Commercial mortgages

Business owners purchase commercial real estate using commercial mortgages. These loans work the same way as other term loans with the lending of a lump sum and the repayment via fixed monthly installments. You can use a commercial mortgage to purchase commercial property, renovate an existing property, or even refinance another commercial real estate loan.

SBA Loans

Backed by the government, Small Business Administration (SBA) loans provide capital at lower interest rates and less risk to the borrower. These loans are very useful, but the application process is often long. Approval for an SBA loan can take months, so reconsider this option if you need cash fast.

Commercial lines of credit

Many business owners are opting for lines of credit over traditional loans to borrow only what they need. Lines of credit offer revolving credit limits and only charge interest on what you withdraw. If you need variable amounts of money over a long period of time, a business line of credit can help you maintain your cash flow.

Microcredits

Business owners who need a small amount of money take out microloans of up to $50,000. Some microloan lenders charge ridiculously high interest rates, but you can find affordable microloan with the right lender.

The type of small business loan you need depends on your business and your circumstances. For example, an SBA loan may be the perfect financing option if you need a low-risk loan with low interest rates and fees.

Small Business Loans for Gigsters

Below you will find a list of the best small business loans offered by private lenders. These options include term loans, lines of credit, SBA loans, microloans, and loans with low credit score requirements.

Kabbage: the most flexible loans

If you need capital but aren’t sure how much, Kabbage offers a great solution. Kabbage customers are approved for a certain amount of financing, provided through a line of credit.

Since you don’t have to take out the entire loan amount all at once, you only pay interest on what you’ve spent. Kabbage provides maximum flexibility by allowing business owners to borrow what they need when they need it rather than taking out an over-term loan.

Fundera: Best SBA Loans

If getting into debt makes you nervous, try an SBA loan for government support, lower interest rates and reduced fees. Fundera offers SBA loans to help small business owners with limited credit histories and lower credit scores.

BlueVine: Best loans for bad credit

BlueVine is another small business loan option if your credit score needs improvement. This private lender offers financing for small businesses with FICO scores as low as 530. If you need capital but don’t qualify for many loans, BlueVine can provide the financing you need.

FundingCircle: Best Term Loans

FundingCircle offers small business loans up to $250,000. They only require a minimum credit score of 600 and can offer same-day disbursement depending on where you live and your loan amount. However, business owners in Nevada, North Dakota, and South Dakota are not eligible for loans from FundingCircle.

FundingCircle doesn’t charge prepayment fees, so you won’t be penalized for making prepayments on your loan.

Kiva: the best microloans

If you’re an unbanked business owner, you’re probably struggling to qualify for business loans. Kiva offers interest-free microloans between $1,000 and $15,000 to help these business owners get the financing they need. Kiva does not require a minimum credit score, but they do need investors in the form of friends and family members.

OnDeck: the best loans on the same day

If you need same-day financing, consider OnDeck. This private lender offers business owner loans with same-day disbursement (up to $100,000 in some states). OnDeck only requires a minimum credit score of 600 and offers loans up to $250,000.

Find a small business loan from these top lenders to jump-start your efforts to achieve your goals, whether you’re starting a new business or need capital for a current small business. If you’re looking for more tips for running a small business, click this link to check out some of them. essential business finance advice Nearside small business banking experts.

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The average amount of debt of high credit score borrowers is consolidating https://killerkash.com/the-average-amount-of-debt-of-high-credit-score-borrowers-is-consolidating/ Fri, 24 Jun 2022 20:15:00 +0000 https://killerkash.com/the-average-amount-of-debt-of-high-credit-score-borrowers-is-consolidating/ Select’s editorial team works independently to review financial products and write articles that we think our readers will find useful. We earn commission from affiliate partners on many offers, but not all offers on Select are from affiliate partners. Personal loans offer people a flexible way to borrow money to pay for various expenses or […]]]>

Select’s editorial team works independently to review financial products and write articles that we think our readers will find useful. We earn commission from affiliate partners on many offers, but not all offers on Select are from affiliate partners.

Personal loans offer people a flexible way to borrow money to pay for various expenses or to consolidate multiple debt balances. Debt consolidation works best when you can turn your multiple debt payments from multiple lenders into one monthly payment with a lower interest rate. This helps you get better organized and get out of debt a little faster.

A recent study by LendingTree collected data on how borrowers with high credit scores and low credit scores tend to use their personal loan money, based on personal loan data between April 2021 and March 2022.

The study found that the majority of high-scoring borrowers – 39.7%, to be exact – took out a personal loan to consolidate their debts. The average amount they borrowed was $19,991.

These high-scoring borrowers may actually enjoy better interest rates because creditworthiness is a big factor in the interest rate you receive for debts. A lower interest rate means you can save more money on payments.

Many financial experts actually recommend paying down debt to prepare for a recession, because freeing up your lines of credit can give you more flexibility in the event of job loss or a pay cut.

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The best personal lenders for debt consolidation

Marcus of Goldman Sachs offers some of the best personal loans for debt consolidation because this lender makes the process as easy as possible. Once you have requested the amount of money you will need, you can ask this lender to send direct payments to up to 10 of your creditors. You will only need to provide the creditors name, payment information and the amount of money you wish to send and Marcus will handle this transfer process for you.

Plus, if you’ve made 12 consecutive monthly payments on time, you can earn a one-month period when you don’t have to make a payment and your balance won’t accrue additional interest.

Marcus by Goldman Sachs Personal Loans

  • Annual Percentage Rate (APR)

    6.99% to 19.99% APR when you sign up for autopay

  • Purpose of the loan

    Debt consolidation, home improvement, wedding, moving and moving or vacation

  • Loan amounts

  • Terms

  • Credit needed

  • Assembly costs

  • Prepayment penalty

  • Late charge

LightStream is another solid option for debt consolidation, especially considering that this lender gives you up to 144 months to pay off your loan. This can make it extremely flexible for those who would prefer a much smaller monthly payment in their budget. You can also apply for up to $100,000 from this lender.

Borrowers who sign up for autopay (to have their monthly payments automatically deducted from their bank account each month) can also enjoy a 0.5% APY rebate.

LightStream Personal Loans

  • Annual Percentage Rate (APR)

    3.49% to 19.99%* when you sign up for autopay

  • Purpose of the loan

    Debt consolidation, renovation, car financing, medical expenses, marriage and more

  • Loan amounts

  • Terms

  • Credit needed

  • Assembly costs

  • Prepayment penalty

  • Late charge

And even if you don’t have a good or excellent credit rating, there are some personal loan options available to you. Reached generally accepts applicants with a FICO® or VantageScore of 600 or higher, however, this lender also considers those with poor credit history. Just keep in mind, though, that if you apply for a loan with a lower credit score, you’ll be subject to interest rates above the lender’s APY range.

Beginner personal loans

  • Annual Percentage Rate (APR)

  • Purpose of the loan

    Debt consolidation, credit card refinancing, marriage, moving or medical

  • Loan amounts

  • Terms

  • Credit needed

    FICO or Vantage score of 600 (but will accept applicants whose credit history is so poor that they have no credit score)

  • Assembly costs

    0% to 8% of target amount

  • Prepayment penalty

  • Late charge

    Greater of 5% of monthly amount past due or $15

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff alone and have not been reviewed, endorsed or otherwise endorsed by any third party.

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Predatory lenders make money from rising gas and food prices https://killerkash.com/predatory-lenders-make-money-from-rising-gas-and-food-prices/ Thu, 23 Jun 2022 17:29:00 +0000 https://killerkash.com/predatory-lenders-make-money-from-rising-gas-and-food-prices/ Most want to avoid payday loans, which offer quick cash against future paychecks without a credit check and come with an interest rate of over 500%. But rapidly rising prices for food, fuel and rent leave them with few options. To predatory payday lenders, Nevertheless, they announce happy days and good times to come. “Low […]]]>

Most want to avoid payday loans, which offer quick cash against future paychecks without a credit check and come with an interest rate of over 500%. But rapidly rising prices for food, fuel and rent leave them with few options.

To predatory payday lenders, Nevertheless, they announce happy days and good times to come.

“Low unemployment and inflation generally mean that consumers may need loans to obtain additional capital to manage unexpected spikes and expenses while earning money to repay those loans,” David said. Fisher, CEO of the short-term subprime lender. Enova (ENV) said during a call for results in May. The company beat quarterly earnings estimates by 7.7%.

Given the economic dynamics at play, Fisher said his company “significantly leaned into demand through our marketing efforts” and spent more to attract new customers. It paid off. About 44% of all loans went to new customers in the last quarter, he said.

This surge in new borrowers came as U.S. consumer inflation hit its highest level in more than four decades and Americans struggled to put food on their tables and gasoline in their tanks.

Work to get to work

The national average for a gallon of gasoline is just under $5, a 61% increase since last year. The jump comes as many employers require workers to return to work in person. The federal minimum wage, meanwhile, still sits at $7.25 an hour, where it has been since 2009. Low-wage workers must work for about 14 hours to fill their reservoir.
About two-thirds of Americans now live paycheck to paycheck, a June LendingClub survey found. This figure jumps to 82% among workers earning less than $50,000.
The average credit score of low-income people in the United States is also falling, according to LendingClub data. About 40% of Americans earning less than $50,000 and living paycheck to paycheck have a subprime credit score below 650, which prevents them from getting a loan from a traditional lending institution. or qualify for additional credits. credit. The average credit score in the United States is 714, according to Experian.

For these Americans, high interest payday loans are still readily available. These small loans, usually between $100 and $1,000, are available in more than half of lightly regulated US states. Proof of income and a bank account are all most borrowers need to walk out with cash in hand.

Current data that tracks the number of payday loans has yet to be released, but based on past trends, there’s likely an increase in borrowing, said Alex Horowitz, senior consumer finance project manager. from Pew. “Our survey data shows that approximately 70% of payday loan borrowers use the loan primarily for day-to-day expenses and to meet increased or volatile expenses.”

The debt trap

These loans are often incredibly expensive, but borrowers either don’t have the financial knowledge to research alternatives or don’t think they have any other option. There is currently no federal cap on maximum interest rates for small loans. Not all states allow them, and it is up to those states to decide whether they will implement their own caps.

In the 32 US states that allow payday loansaverage annual interest rates range from 200% in Minnesota to 664% in Texas.
Borrowers often cannot repay the full loan amount when due, usually in two to four weeks, leading them to take out a second loan with additional fees. This creates a cycle of indebtedness that is difficult to break. Nearly 1 in 4 payday loan recipients take out additional loans nine times or more, found the Consumer Financial Protection Bureau.
Studies show that black and Latino communities are disproportionately targeted by high-cost loan providers. In Michigan, where the average payday loan interest rate is 370%, there are 7.6 payday stores per 100,000 people in areas with more than a quarter of the population black and of Latinos. This is about 50% more than in other fields, according to data provided by the Center for Responsible Lending.

Companies that offer high-cost loans say they are providing a needed service to low-income communities by providing loans to Americans that traditional banks refuse to serve. They claim that high interest rates are necessary because of the high risk of default. But consumer advocates say it’s a false narrative.

Seven major U.S. banks, including Bank of America, Wells Fargo and Truist, have created programs that offer small-dollar borrowing options with low annual interest rates, Horowitz said. They plan to look at bank history — not credit scores — to determine who qualifies for loans.

“There are 18 states and the District of Columbia that have banned payday loans and have survived very well without these predatory loan products,” said Nadine Chabrier, senior policy adviser at the Center for Responsible Lending. “There are fair and responsible loan products that have low interest rates and fees that are available for people to use.”

Shortly after the Covid-19 pandemic hit the United States, the Consumer Financial Protection Bureau repealed significant parts of a 2017 rule that required lenders to assess consumers’ ability to repay their loans. The rule, they said, would have wiped out much of the money they make from borrowers who default on their loans. By repealing parts of the rule, the CFPB said it would ensure “the continued availability of low-cost loan products for consumers who demand them.”

In a blog post, Former CFPB director Dave Ueijo expressed concern about the rule changes, saying he had issues with “any lender’s business model that depends on consumers being unable to repay their loans”.

Buy now pay later

Proponents are also concerned about new forms of lending that have emerged in recent years that are generally far less regulated than even payday loans.

According to the Center for Responsible Lending, Buy Now, Pay Later (BNPL) companies have seen their total market share increase by 200-350% over the past two years. Now, companies like Klarna and Zip are teaming up with Chevron and Texaco to let Americans fill their tanks now and pay in installments over six weeks.

BNPL’s clients tend to be Millennials and Gen Z and two-thirds of applicants are subprime borrowers, According to research by Marshall Lux, researcher at the Harvard Kennedy School.

These companies do not present themselves as lenders. BNPL is not credit but debit, with refunds taken automatically from customers’ bank accounts and without interest or charges.

In California, 91% of consumer loans issued in 2020 were BNPL loans, and 24% of financially vulnerable BNPL recipients report difficulty making payments.

BNPL’s lenders are not required by law to determine a borrower’s ability to repay their loans. There are no regulations regarding the disclosure of late payment fees, account reactivation or rejected payments.

“If people are using a credit product like this for their basic needs, I’m worried,” Chabrier said. She is concerned that BNPL clients may open several loans at once, they might lose track or have trouble repaying them all.

“A lot of people use buy now and pay later to stack their purchases from multiple vendors,” Chabrier said. “Because of the lack of subscription and whether or not they can afford these items, it becomes really unaffordable for them.”

Klarna caps late fees at 25% of the purchase amount, a far cry from the 400% interest rates charged by payday lenders, but Chabrier sees this as a lesser symptom of a larger problem.

“They’re continuing this process of extracting money from low-income people,” she said. “If people have less purchasing power with their salary, it will only get worse.”

Back in Mississippi, which has the highest poverty rate in the nation, Jones struggled to keep distressed callers out of the hands of loan sharks and into financial education programs sponsored by local banks. But it’s hard to work against so many payday lenders with huge advertising budgets, she said. The state has the highest concentration of payday lenders per capita in the nation, mostly in low-income areas or in communities of color.

Payday lenders are so prevalent in Mississippi, Jones said, that they outnumber McDonald’s restaurants by more than 5 times.

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Navigating the Mortgage Market – theMReport.com https://killerkash.com/navigating-the-mortgage-market-themreport-com/ Tue, 21 Jun 2022 22:21:22 +0000 https://killerkash.com/navigating-the-mortgage-market-themreport-com/ This piece originally appeared in the June 2022 edition of MReport magazine, online now. June is National Homeownership Month. While this is a time to celebrate homeownership and the benefits it brings to families, neighborhoods and communities, it’s also a time to examine the barriers that many homebuyers may face. . It almost goes without […]]]>

This piece originally appeared in the June 2022 edition of MReport magazine, online now.

June is National Homeownership Month. While this is a time to celebrate homeownership and the benefits it brings to families, neighborhoods and communities, it’s also a time to examine the barriers that many homebuyers may face. .

It almost goes without saying that borrowers today struggle to buy a home. Prices are reaching new highs for many reasons. First, the demand for housing exceeds the available supply, which contributes to a sharp appreciation in home values. Additionally, rising labor and material costs, as well as supply chain challenges, have led to higher construction costs for new homes, so adding new inventory always poses a problem of affordability. Additionally, all-cash offers, institutional buyers, and frequent bidding wars drive home prices even higher — sometimes above asking price and even above appraised value — and drive up inventory. faster than some buyers can get around.

As if that weren’t enough, rising interest rates are reducing homebuyers’ purchasing power and rising inflation rates are reducing home affordability.

While this long list of challenges affects all buyers, it particularly affects first-time homebuyers. Some of them may not have enough savings and certainly do not have the equity in their home to help them in today’s hectic market.

However, whether it is a borrower’s first time buying a home or not, the lender is undoubtedly one of the greatest resources to help the borrower navigate through the rough seas until the desired destination of home ownership. Therefore, lenders need to be better prepared than ever to help borrowers address their affordability issues so they can realize their dream of home ownership.

Sharpen product knowledge to match shoppers with their most affordable option
One of the most important things lenders can do is hone their knowledge of all products. As guidelines develop and market changes affect the appeal of different products, it is important for lenders to understand the different options available to best meet the borrower’s mortgage financing needs, particularly the options which may be outside the norm or outside the lender’s usual comfort zone. . Today’s complex market requires some creativity on the part of the lender to find the right solution for each borrower’s unique situation.

Take adjustable rate mortgages (ARMs), for example. Due to rising interest rates, ARMs may be a better alternative to a traditional 30-year fixed rate loan for some borrowers. An ARM can help borrowers get a lower rate and therefore a lower payment for the initial fixed-rate term, whether it’s five, seven, or even 10 years. ARMs are great for borrowers who will likely sell their home during this initial fixed-rate period and are also great for those who expect strong earnings growth in these early years.

Lenders should also be familiar with their low down payment products that can help borrowers be affordable. There are a plethora of options that lenders should be familiar and comfortable with, such as the United States Department of Veterans Affairs (VA) loans, the United States Department of Agriculture’s Rural Housing Program, the Indian Housing and Urban Development (HUD) Section 184 Home Loan Guarantee, Fannie Mae’s HomeReady and Freddie Mac’s Home Possible programs, standard 97% loan-to-value (LTV) products offered by Fannie Mae and Freddie Mac, and Federal Housing Administration (FHA) loans.

Additionally, there are state, city, and county Housing Finance Agency (HFA) programs that can provide down payment assistance, some as high as 5%. Portfolio loan programs offered by lenders or investors are another great option to help alleviate affordability issues. Since the lender sets the standards, portfolio loan programs can help borrowers who might have a lower credit score or little or no savings.

Of course, mortgage insurance products also provide borrowers with an affordable home purchase option. While some are paid monthly, others can be paid upfront. Some of these upfront options, such as a single premium paid by the borrower, can even be funded into the loan and will actually reduce the borrower’s payment without increasing cash-to-close. Split premiums present another option, requiring less upfront money than a single premium and, instead, a smaller monthly payment.

Another type of homebuyer assistance program designed specifically to help low-income families afford homeownership are Mortgage Credit Certificates (MCCs). The programs offer eligible homebuyers the opportunity to claim a dollar-for-dollar tax credit (up to $2,000 per year) for a portion of the mortgage interest paid.

This credit is available as long as the borrower lives in the home, so borrowers who want to stay in their home for a while can see significant savings with MCCs. If none of these options are enough to help a particular group of shoppers manage affordability, there are still other products that might hold the answer. Non-qualified (non-QM) mortgage products are a great solution for borrowers who might not qualify using traditional underwriting standards. And for homebuyers who are struggling due to inventory issues, a permanent building product or even a remodeling product could be the answer to getting a home that meets their specific needs.

Each borrower’s situation will be different. Some may lack savings while others have low credit scores or have affordability issues. Whatever the case, lenders should be aware of the variety of product options they can offer for the specific situations of different borrowers. There is no single product that will solve the affordability problem for everyone, but there are many products that borrowers can benefit from.

Next steps
Once lenders become familiar with the wide options they are available to match borrowers with the products that best suit their needs, there are a few other things they can do to help borrowers get into the houses.

First, lenders need to set and manage expectations, especially in today’s home buying market.

Educating borrowers on their specific process will also help lenders prepare their borrowers on how best to navigate the home buying process. Be sure to provide borrowers with loan product and structure options, explain the features of those options, and outline the pros and cons so they can make an informed decision. Communicating clearly and consistently from start to finish makes a huge difference in ensuring high customer satisfaction and successfully getting borrowers into their homes.

Lenders should also work closely with referral partners and interested parties such as real estate agents and builders. Setting and managing expectations along with timely communications are key to creating a smooth transaction and increasing the likelihood of future referrals.

To strengthen a borrower’s negotiating position with a potential seller, it is essential that a lender obtains solid pre-approval. Once the borrower is ready to make an offer on a home, the lender can work with the realtor to ensure that the terms of the contract match the borrower’s goals and unique situation.

Lenders have vital information about the borrower’s financial situation that may not be seen on paper and this information can help the real estate agent make an offer that is not only affordable but also sustainable for the borrower.

To have an impact
Many factors continue to contribute to a tough market for homebuyers.

Lenders must be well prepared to match borrowers with the right product solutions to help them get into homes.

Education is essential for lenders, borrowers and referral partners.

In today’s market, it’s easy for buyers to count themselves before they even get started. However, knowing the options available to them can help borrowers access an affordable home so they can start enjoying all the benefits that come with home ownership.

Everyone in the industry has a role to play in helping to tackle the affordability issue. Whether you’re a lender, realtor, or builder, everyone has the power to help borrowers find an affordable path to homeownership, not just during National Homeownership Month , but for each month in the future.

The statements in this article are the opinions of Chris Garagusi only and do not necessarily reflect the views of Enact or its management.

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June 20, 2022 – Rates Rise – Forbes Advisor https://killerkash.com/june-20-2022-rates-rise-forbes-advisor/ Mon, 20 Jun 2022 13:25:58 +0000 https://killerkash.com/june-20-2022-rates-rise-forbes-advisor/ Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors. 30-year fixed mortgage rates rose today. The average rate for a 30-year fixed mortgage is 6.04%, according to Bankrate.com, while the average rate for a 15-year mortgage is 5.26%. On a 30-year […]]]>

Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.

30-year fixed mortgage rates rose today.

The average rate for a 30-year fixed mortgage is 6.04%, according to Bankrate.com, while the average rate for a 15-year mortgage is 5.26%. On a 30-year jumbo mortgage, the average rate is 5.91% and the average rate on a 5/1 ARM is 4.10%.

Related: Compare current mortgage rates

30-year mortgage rates

The average rate on the benchmark 30-year fixed-rate mortgage rose slightly to 6.04% from 6.02% yesterday. Last week, the 30-year fixed was 5.97%. Today’s rate is below the 52-week high of 6.10%.

The APR on a fixed 30 year is 6.05%. This time last week it was 5.98%. The APR is the overall cost of your loan.

At an interest rate of 6.04%, a 30-year fixed mortgage would cost $602 per month in principal and interest (taxes and fees not included) per $100,000, according to the Forbes Advisor mortgage calculator. You would pay approximately $116,765 in total interest over the life of the loan.

15-year mortgage interest rate

Today, the 15-year fixed mortgage rate is at 5.26%, which is lower than it was yesterday. Last week it was 5.06%. Today’s rate is above the 52-week low of 2.28%.

The APR on a 15-year fixed is 5.28%. This time last week it was 5.09%.

A $100,000 15-year fixed rate mortgage with a current interest rate of 5.26% will cost $804 per month in principal and interest. Over the term of the loan, you will pay $44,793 in total interest.

Giant Mortgage Rates

On a 30-year jumbo, the average interest rate sits at 5.91%, lower than this time last week. The average rate was 5.88% at the same time last week. The 30-year fixed rate on a jumbo mortgage is currently above the 52-week low of 3.03%.

Borrowers with a 30-year fixed-rate jumbo mortgage with a current interest rate of 5.91% will pay $594 per month in principal and interest per $100,000. This means that on a $750,000 loan, the monthly principal and interest payment would be approximately $4,453, and you would pay approximately $853,197 in total interest over the life of the loan.

5/1 ARM interest rate

The average interest rate on a 5/1 ARM sits at 4.10%, above the 52-week low of 2.82%. Last week, the average rate was 3.95%.

Borrowers with a 5/1 ARM of $100,000 with a current interest rate of 4.10% will pay $483 per month in principal and interest.

How to calculate mortgage payments

For a large portion of the population, buying a home means working with a mortgage lender to secure a mortgage. It can be difficult to determine how much you can afford and what you are paying.

You can use a mortgage calculator to estimate your monthly mortgage payment based on factors such as your interest rate, purchase price and down payment.

Here’s what you’ll need to calculate your monthly mortgage payment:

  • house price
  • Deposit amount
  • Interest rate
  • term of the loan
  • Taxes, insurance and all HOA fees

What you can afford depends on a number of factors, including your income, debt, debt-to-equity ratio, down payment, and credit score.

You should also factor in closing costs, property taxes, insurance costs, and ongoing maintenance costs.

The type of loan you choose can also affect how much home you can afford. When shopping for a loan, consider whether a conventional mortgage, FHA loan, VA loan, or USDA loan is best suited for your particular situation.

What is an APR and why is it important?

The annual percentage rate, or APR, takes into account interest, fees and time. This is the total cost of your loan and includes both the interest rate of the loan and its finance charges.

The APR can help you understand the total cost of a mortgage if you keep it for the full term. Keep in mind that the APR is often higher than the interest rate.

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Bank credit cards vs fintech https://killerkash.com/bank-credit-cards-vs-fintech/ Sat, 18 Jun 2022 08:34:57 +0000 https://killerkash.com/bank-credit-cards-vs-fintech/ When was the last time you received a credit card sales call from your bank? Or have you been approached by a salesman at a subway station or an airport? Or you may have noticed the return of credit card ads in your call logs, social media, email, SMS Box or even WhatsApp. Surely you […]]]>

When was the last time you received a credit card sales call from your bank?

Or have you been approached by a salesman at a subway station or an airport?

Or you may have noticed the return of credit card ads in your call logs, social media, email, SMS Box or even WhatsApp. Surely you haven’t missed the credit card presentations at the recently concluded IPL and other events now? If your answer is yes, then welcome to the new world of fintech credit cards.

Despite all the hype from banks and credit card issuers, Indians haven’t really embraced credit cards. According to RBI Datanearly 62 million credit cards were in use in India in FY 2021, which is less than 6% of our total population.

Many have argued that the lower card penetration rate is yet another marker of the true “consumer” class in India, estimated at between 120 and 300 million valid users, depending on the product/service category.

Difficulty in getting one played a role, but users in India can now apply, get approved, and get a ready-to-use credit card in less than 5 minutes. Thanks to the recent revolutions in data analytics and the tremendous development of the Indian fintech ecosystem.

What does this ecosystem look like?

Fintech is one of the hottest sectors in India and abroad, and has attracted record amounts of money, burning heavily on aggressive social media advertising, performance marketing, paying influencers to promote their product and engaging celebrity or cricketers for brand endorsement.

According to Invest India reportthere were 6,636 fintech startups in India in 2021 and the market size of the country’s fintech industry was $31 billion during the year and is estimated to grow to around $150 billion by 2025.

Fintechs can now access and verify candidate data with the use of Aadhaar e-KYC using offline OTP or XML consent, and APIs are available for multiple validations such as PAN verification, office verification credit, etc This eliminated a significant portion of the cost of verifying potential card users and their creditworthiness.

Not only that, but there are a few B2B SaaS companies, such as Zeta and M2P Fintech, that help fintech companies build products, allowing them to take out loans and credit cards faster.

How to subscribe to a credit card through a bank versus a fintech

SBI Card is a publicly traded credit card company which along with HDFC Bank, ICICI Bank, Axis Bank and others dominate the Indian credit card market.

Under two conditions, someone can obtain a credit card from a traditional bank.

➤ If you already have a banking, payroll or loan relationship with them and the basis of your financial activities. Banks offer pre-approved offers from time to time

➤ If you do not have a pre-approved offer, you must apply for a new application with a list of documents online or offline.

In the second case, fintech companies have a competitive advantage since they revise the entire application process and speed up its integration.

One can download their application, enter their details and OTP, and if approved, start using the credit card within minutes without submitting any physical documentation.

How do fintechs compete successfully?

This is where things get interesting; Fintech credit card companies assign a credit limit with the help of their lending partner (which can be a bank or an NBFC) and offer you a prepaid card backed by that credit limit.

So technically you get a prepaid card backed by a loan account created in your name by fintech companies

With the new RBI circular, even NBFCs will soon be able to issue a credit card, but currently, if you use fintech credit cards such as Slice, Uni, LazyPay, PostPe and others, there is a high probability that you will have a loan account operating in your name because they are not full-fledged credit cards.

How do fintech credit cards differ?

Because fintech companies want to serve the (youngest) customer first, the focus seems to be on product experience, design, marketing, and making using the card more exciting.

Fintech credit card companies are known for great discounts, referrals and cash back on everyday services we use such as ordering food, recharging, paying bills, groceries, travel or even your favorite D2C brands. Yes, if this reminds you of the good old days of e-commerce and payment businesses, then yes, venture capital funding is the common factor here too.

They invest heavily in marketing and partnerships with the aim of acquiring more and more users, and consider the expense as CAC (Cost for Acquiring Customers in abbreviation Startup).

Prospects need to resist multiple offers, fancy wrappers, and the risk of being left out to say no.

Although banks also handle similar transactions, they are generally more seasonal but may not offer as aggressive offers as fintech companies. Or the willingness to lose money on “mature” businesses for them now. Remember, SBI cards went public in 2020, when a lot of current fintechs were barely around.

Is there a catch?

Credit cards are a type of subsidized loan that should be managed responsibly; without financial discipline, one can go into debt and possibly damage one’s credit rating. A low credit score can haunt you for a long time as lenders reject you or charge you higher rates on larger loans when you need them.

In general, there are a few things to keep in mind when applying for fintech credit cards.

➤ Who is lending you exactly? In the case of banks, there is often only one entity that issues credit cards, whereas a fintech will issue a loan rather than a credit card account in the name of its borrowing partner. Read the MITC (Most Important Terms and Conditions), as well as any agreements between you, the card issuer, the lending bank/NBFC and the fintech. You need to be very careful while signing up, as this is only an OTP.

➤ Billing cycle: A regular credit card usually has a credit-free period of up to 45 days, but a fintech credit card has a credit period of 30-40 days, where the due is supposed to be paid within 7 days of the generation of the invoice.

➤ 1/3 bill payment and EMI free of charge: You may see fintech credit card companies offering the option to pay your bills in three easy, no-fee installments; although it may seem like a more attractive choice than conventional credit cards, it could land you in a debt trap. Pay special attention to EMI offers and free GST components.

➤ Customer Support: To get a better idea, review the quality of customer support and the escalation matrix. You can also check social media sites such as Twitter and LinkedIn, as well as Play Store ratings and online complaints. This will help you in case of any complications as there will be financial transactions involved.

➤ Interest rate: Credit cards are an expensive affair that comes with high interest rates of up to 48% per year. Read the terms and conditions carefully.

➤ Fees and charges: There can be many fees such as membership or annual fees, card replacement fees, account closure fees or even over limit or forex transaction fees when you use your card outside of India.

Credit report and office update: Always periodically check your credit reports to detect and report discrepancies.

Who can help with major escalations?

Remember that a late payment can lead to a significant drop in your credit score, which can significantly reduce your creditworthiness in the eyes of financial institutions. For a period of up to 5 years sometimes.

Even if you made payments on time, if you discover a discrepancy in your credit reports, such as a late payment, default, wrong loan, or credit card limit, raise it immediately with your credit card or your fintech company, as well as credit bureaus, and if they don’t take care of it, you have the choice of complaining to the CMS Office of the RBI Regulator or Consumer Forum.

Safe practices

➤ In accordance with RBI Guidelines, the three major credit bureaus such as TransUnion CIBIL, Experian and CRIF must provide consumer credit reports upon request at no additional cost. Use the facility.

➤ To avoid fraudulent calls, avoid accessing your credit reports on any promotional website or application.

➤ Never disclose your personal and financial information on an unauthorized communication channel such as WhatsApp or Telegram; instead, always verify the identity of the applicant and submit the documents through an official email or website.

➤ Always countersign documents and use a masked Aadhaar card, you can also lock/unlock your Aadhar card and check your authentication history from the UIDA official website

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Citibank Personal Loans Review | the ascent https://killerkash.com/citibank-personal-loans-review-the-ascent/ Tue, 14 Jun 2022 21:03:44 +0000 https://killerkash.com/citibank-personal-loans-review-the-ascent/ Main advantages Loans for as low as $2,000 It’s handy to be able to borrow as little as $2,000, especially for those who only need the funds to cover a much-needed home or car repair. Relatively low APR Borrowers with a good credit score can benefit from a competitive fixed rate. This is ideal for […]]]>

Main advantages

Loans for as low as $2,000

It’s handy to be able to borrow as little as $2,000, especially for those who only need the funds to cover a much-needed home or car repair.

Relatively low APR

Borrowers with a good credit score can benefit from a competitive fixed rate. This is ideal for anyone looking to consolidate high interest debt into a single loan.

No setup fees or prepayment penalties

An origination fee is an amount added to the total amount borrowed. It is intended to cover the administrative costs associated with the loan. A prepayment penalty is sometimes charged to a borrower if he repays his loan earlier than expected. The fact that Citibank does not charge origination fees or prepayment penalties automatically saves borrowers money.

Long repayment plan

With 12, 24, 36, 48 or 60 month repayment terms, borrowers can pay more each month and withdraw the loan sooner or pay it off at a slower rate with lower monthly payments.

What could be improved

Must have a Citibank deposit account

A huge hoop to jump through is Citibank’s rule that only current account holders can apply for personal loans. Unless a borrower has held a Citibank deposit account for at least 12 months, they are not eligible to apply.

Mailed checks can take five days or more to arrive

The only way to receive funds in one day is to opt for direct deposit. Customers who prefer to receive a check can wait five or more business days from the time the loan has been approved.

No opportunity to prequalify

With most personal loans, borrowers can prequalify. They provide the lender with basic information and the lender runs a “soft” credit check that does not impact their credit rating. Once a lender has completed the due diligence, they let the borrower know if they are likely to be approved for the loan, and if so, what their APR will be. With Citibank, a borrower must complete an application and go through the entire approval process before knowing if they qualify or how much they will pay in interest on the loan. This rigorous credit check will reduce their credit score by a few points.

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