card debt PAY DAY LOANS - WHAT IS THE COST? Several sources, including a consumer report by the FTC (Federal Trade Commission) and the CFA (Consumer Federation of America) state that usual the usual APR is between 350 - 650% with some as high as 780%. A loan of $100 ranges in cost between $15 - $30. If the loan is not repaid by the pay date then it can be renewed with another fee due at each renewal. A loan of $100 can cost $60 in fees after 3 renewals. What’s the Deal with Interest Only Mortgages? Have you heard that commercial about interest-only mortgages...the one where you’re told about what a wonderful benefit it is to have a low, low mortgage payment and all the wonderful tax write-offs you will receive? Before you decide to buy now and pay later, that is pay “big time” later, take a moment to enlighten yourself a bit more about these so-called “interest only mortgages.” Think about it for a moment. If you just pay the interest on your home, will you ever start paying on principal and will you ever earn any equity into your property? By definition, a mortgage is a temporary, conditional pledge of property to a creditor as security for performance of an obligation or repayment of a debt. Simplified, that means you borrow money from a financial institution and they essentially buy your house and you pay it back. How can this happen if you’re just paying interest? More accurately, interest-only mortgages are a temporary reprieve for paying off a traditional mortgage. You may actually be prolonging the inevitable and eventually making it even more costly to pay off your mortgage. Far too many people are in debt way over their heads because of interest-only mortgages. They took advantage of attractive offers to buy now and pay later. With an interest only payment you’re keeping the principal at minimum value while continuing to pay interest at 100%. With a more conventional mortgage you’d be slowly dwindling down the total interest amount. Most interest-only payment schedules are offered on Adjustable Rate Mortgages (ARMs), but they can also be found on a fixed rate mortgage. Interest-only payment periods almost never run for the entire term of the loan which is typically 15 or 30 years. Depending on the terms of your contract, you could be expected to start paying on the principal in five, seven or ten years. Once the interest-only period ends, your monthly payment will go up because then you’ll be paying on both principal and interest. Conversely, interest-only mortgages can be a good thing for some people. For those people wanting to purchase a bigger/better home for a lower down payment AND who anticipate moving within seven years, the interest-only payment method may be the way to go. However, keep in-mind that in a "down" realestate market you generally won’t be building equity and making money by doing it this way. The majority of the money made from investing in real estate comes from an increase in value to the home. The average person moves every seven years anyway. Gone are the days when people stay in a home thirty years. Hence, if you anticipate moving before you’ll have to start paying on the principal, then an interest-only payment may be ideal for you. There’s a great deal of fine print to any mortgage. Evaluate your own goals; be vigilant when reviewing the terms on the loan you’re considering before acting. Save Time, Money, and Frustration and Get the Right Credit Score You go into a lender's office prepared to apply for and receive a loan. After all, you've done your homework, you've pulled your credit reports and you know what your credit scores are--you even got one score from each of the three major credit bureaus: Equifax. Experian, and TransUnion. You are shocked when your loan is denied, or maybe you were approved, but the interest rate is much higher than you anticipated. How can that be you say? My credit score is good, I know I checked. Maybe it's not as good as you think. It all depends on there you got it and what kind of credit score it is. The fact is there are several different credit scoring methods. Credit scores calculated from the same credit reports can differ substantially from credit scoring method to credit scoring method. So how can you ever know what your credit score really is? Well, luckily, 75% percent of lenders use FICO scores exclusively and you can purchase FICO scores yourself--you just have to know where to go. (www.myfico.com) FICO credit scoring is a numeric method of scoring your credit worthiness developed by Fair Isaac and Company. Your credit score is a number between 300 and 850 that tells creditors how likely you are to pay your bills. The higher the number, the better it looks to potential lenders and creditors. The three major credit bureaus each have their own version of the FICO score: Equifax uses the Beacon system, TransUnion uses the Empirica system, and Experian uses the Experian/Fair Isaac system. Despite each credit bureaus' use of their own versions, all systems are based the original Fair Isaac FICO scoring method, so each credit score calculated with these systems are generally called FICO scores. However, although most lenders do use FICO scoring, some lenders may have their own scoring methods. There is only one place where you can get your FICO score from all three bureaus and that is at www.myfico.com. If you order your credit score from anywhere else, again be aware that these scores are "FAKOs" (or "fake") and can differ considerably from your FICO credit scores. Adding to the confusion is the credit bureaus themselves. Recently, Experian revealed that the national average credit score of its consumers is 678. This is very misleading to the average consumer. When you buy your credit report and score directly from Experians website, you are getting what they call the "PLUS Score," which is NOT a FICO score, and is NOT used by lenders anywhere. (Equifax is the exception--you can buy your FICO score directly from them at their website; however, the only place to get all three scores together is at www.myfico.com.) The 678 PLUS Score reported by Experian is actually the average of consumers' PLUS Scores, not their FICO Scores. Clearly, the PLUS Score (and all Non-FICO scores) are useless. Not only that, but such hype misleads consumers into purchasing their PLUS Score thinking that they are getting the same credit score that their lender will use. Non-FICO scores are worthless not matter what the credit bureaus or any website selling non-FICO scores claim. Even a few points difference in your credit score can mean confronting the reality of the loss of thousands of dollars out of your pocket--a loss that you probably didn't plan for. The next time you want the most accurate credit score available, do yourself a favor and get the industry standard: the FICO credit score. Debt Consolidation – The Common Approach Unfortunately debt consolidation is the most common solution people think of when they fall victim to financial problems. It is a sad fact that about 75% of people who consolidate their debt find themselves in much deeper financial trouble than they were in to begin with. All consolidation loans do is transfer debt from one place to another and is invariably a short term fix with long term pain. A debt consolidation loan will not reduce the amount you owe. You will still pay back 100% of the loan plus interest. This is not going to get you out of trouble and most of the time will only make things worse. Again, consolidation is not a plan to get out of debt but is instead just getting new debt to pay off old debt. If you were to decide to consolidate, you would need to qualify first. Qualifications include equity in a home you own or other valuable, good credit and debt to income ratio. Most people burdened by debt find that even if they wanted to consolidate their debt they couldn't qualify for the loan anyway. Once you have taken out this loan, you have just gone from an unsecured debt to a secured debt - and gambling with all your assets. Consolidation loans are spread out over a 15 - 30 year period, leaving you exposed to losing your assets over the life of the loan. If you run into further difficulty in the future you stand to lose your home, car, and valuables. The fundamental problem that people run into is that once the debts are paid off by the loan, they discover they have a new line of spending potential: empty credit cards. It's not long after these accounts are cleared that they are run up to the limit once again. This will leave you with both the consolidation loan and maxed out credit cards to repay. How are you going to repay the loan and the credit cards when you were unable to pay the previous debt in the first place? You will find yourself back in the bank for a second consolidation loan, extending your debt and making your debt problem even worse. Bear in mind that being in debt leaves you with less cash you need to buy and plan for life's necessities. Although a consolidation loan may give you a lower payment and a little more breathing room, consolidation is not going to leave you with the cash to get you and your family through the next 10 to 30 years. Consumer Credit Counseling Services (CCC) – Feeling of False Security Consumer Credit Counseling Services (CCC) programs have a failure rate of 85%. They simply aren't effective. Here's why; you meet with a counselor who analyzes your monthly budget. The counselor will submit a proposal to your creditors for a reduction in the interest rates. You would then pay a monthly payment to them and they would then distribute that monthly payment to your creditors. These programs generally take 5-7 years to complete. The theory here is that your overall payment per month is lower due to the counselor's success at obtaining lower interest rates and more favorable terms with the credit card companies and banks. This approach is most often recommended by the banks themselves. Here are the facts: CCC Services were created in the late 1970’s when credit card and loan companies began to notice that many people were having problems making their minimum payments and defaulting on their debt. In short, the so-called "non-profit" companies are owned by the credit card companies and banks! CCC agencies are funded by commission by the credit card companies based on the debt recovered from you, normally around 12 - 15%. This means that for every $1,000 you give them, they can take as much as $150. If you're paying them a service fee of $20 per month, and the creditors are paying them $75, you can quickly see that CCC agencies are not working for you but for the creditors. In addition, you have no insight into what the CCC agency is doing on your behalf and no control over the repayment process. They send in their single monthly payment, with no idea of how much is going to which creditor. Since most counselors are busy people who work based on high volume, getting a return phone call can be difficult. It’s key to know that with CCC programs, you still pay 100% of the debt plus a lower interest rate. The debt you walk in the CCC is what you walk out with. With all things considered, it works out to be about the same as your current minimum payments. Bankruptcy – The Last Straw Today more people than ever are turning to personal bankruptcy as a way of solving their financial problems. Estimates indicate that 2003 will see nearly 1 in 70 Americans filing for bankruptcy. People owing as little as $5,000 are unknowingly filing, not knowing of alternative methods of eliminating their debt. The reason people take this hasty action with such a low debt amount is the harassment and overwhelming pressure from impatient collectors trying to recover their money. In the case of Consumer Credit Counseling agencies, once they find that they are unable or unwilling to help, they will suggest bankruptcy as the answer – unconcerned of the effect it will have on your future. In bankruptcy, a court order forces all commercial creditors to cease and desist from attempting to collect the debts you owe them. Depending on the bankruptcy declared (Chapter 7 or 13), it stops wage garnishment, reverses judgments, and generally wipes out debt. For some people, bankruptcy is the only sensible option. If you have $60,000 in debts, and you'll never earn more than $1,200 per month, then you're broke! The sooner you eliminate the debt, the sooner you'll have a fresh start. With more than 1.4 million bankruptcy filings in 2000, Congress is passing legislation that will make it tougher to declare bankruptcy. In bankruptcy, certain personal property is treated as exempt. The banks and creditors cannot touch that property in attempting to recover the money owed to them. Your home, car and other personal effects like clothing, and other assets are considered exempt, but this varies from state to state. Any property that is not exempt is liquidated and distributed to the creditors under the supervision of the court. Since most people entering bankruptcy have only exempt property anyway, there's usually nothing left to distribute, so the creditors typically get nothing. Seems like a good deal? Many people mistakenly see bankruptcy as a good, low cost way to rid themselves of debt. There are other costs associated with bankruptcy that make it a very bad solution for most people. The cost of filing bankruptcy itself is minimal. Depending on what state you live in, you can expect to pay anywhere from $400 on up to $1,600 for the whole process. That’s just the beginning. The bankruptcy will stay on your credit report for 10 years – and on your court records for 20 years. The seemingly “low cost” method will cost you dearly as it will follow you for the rest of your life. If you ever apply for a loan, job, apartment or insurance, one of the first questions normally asked is "Have you ever filed for bankruptcy?" And, for the rest of your life, you'll have to answer "Yes." You might be able to eliminate your debt, but the effects emotionally and the effect on your personal life will last for many years to come. Consider applying for a terrific job after you have filed bankruptcy. These days, employers will run a credit report to determine how you faired financially. This will effect whether the employer will give you that dream job or not. Even if you do get the job and your employer later runs a credit report on you, you will still have to explain the bankruptcy. While employers can’t fire you because of a bad credit report, they can certainly limit your future promotions. Future purchases are affected as well; after several years, you may opt to purchase a home. If you're in sufficient shape at that point to qualify for a mortgage, you'll pay a higher interest rate than the average consumer who has never filed for bankruptcy. Assume you want to purchase a $100,000 house a few years after filing bankruptcy. You make a $10,000 down payment. This will result in applying for an $80,000 mortgage. While your “good credit” neighbor would obtain an interest rate of 4.5%, you would get a rate of 7%. While it seems that the extra 2.5% difference is not bad for having filed bankruptcy in the past, it’s what you will pay monthly where you will feel the pinch. That extra 2.5% on a mortgage will increase your monthly payment by $200 per month with the total of your payments reaching more than $70,000 over the 30-year life of the mortgage. Besides being a devastating blow to your credit, a bankruptcy can also be a very stressful and embarrassing decision to continually have to explain to every potential lender. If you have no choice, then you should proceed, understanding the consequences. However, the majority of people who take this method of debt elimination don't know what they're getting themselves into or the consequences thereafter. They are desperate, and they get talked into filing bankruptcy by the collectors or attorney without understanding the impact on their financial future. Keep in mind that personal bankruptcies are usually unnecessary as there are better options available. Many people are forced, against their wishes, to file bankruptcy to protect themselves from aggressive creditor tactics or attorney. Ultimately, bankruptcy still means failure to employers and creditors. Debt Negotiation - Light at the End of the Tunnel Few people realize that there is another solution to burdensome debt, an approach that levels the playing field between you and your creditors, without having to go to court. The debt negotiation strategy will put you back on the road to financial freedom and in control of your life again. The Negotiation Strategy allows you to turn that $25,000 of credit card debt into $12,500 or even as little as $9,000. In most cases, our clients have debts totaling $8,000 and have successfully saved them thousands while maintaining a reasonable credit rating. With a professional debt negotiator working for you, your debt can be cut in half or less. How it works: Put yourself in the shoes of a manager of a collection department for a major credit card company. You know that bankruptcies are at an all-time high and that the chances of collecting on the outstanding debt worsen as the debt ages. You have the opportunity to close your books on a delinquent account by collecting 50 pennies for every dollar owed by the debtor, or take a chance on never collecting a single penny by trying to hold out for the full value. You also realize that once the debt leaves your bank (usually after six months or so), it will go to a third-party collection agency. The agency will take at least 15%-20% commission right off the top of whatever they collect, and they are unlikely to collect more than 70% of the debt even with the most aggressive tactics. So you'll probably never retrieve much more than half the money anyway. When you look at it this way, collecting 50% now doesn't seem like such a bad deal. The way it’s described, it sounds easy. You might be thinking, “I’ll the collectors and do this myself." You'll reach the "customer service team" and the representative will inform you that other banks may settle for 50%, but their bank never settles under any circumstances. Of course, they do have that “great” hardship program for you. After you've called a few times and received the same treatment, you’ll probably end up with the idea that debt negotiation doesn't work. The banks will rarely take a debtor seriously. They simply don't believe you and they think your hardship story is phony. The banks are quite prepared for the amateur do-it-yourself negotiator. They have the telephone scripts set up so that by the time the conversation is over, you will feel guilty about the money owed, and their lame hardship plan sounds like a great deal after all. Having a third-party professional on your side makes all the difference in the world. Once your creditors realize that they are talking to a professional, someone who knows the laws and regulations, they quickly change their tune. A negotiator will obtain better results than you could ever obtain on your own, simply because all of the bank's tactics are stymied by the fact that they can't talk directly to you. They can't apply psychological pressure to you since this is filtered out by your Professional Debt Negotiator. Consider this: Creditors pull out all the stops when you fall behind. They have gangs of collectors ready to pressure you with carefully scripted techniques and mind games. They have attorneys and collection agencies ready to step in and go after you full throttle. You need to level the playing field. The best and only way you can concentrate on improving your financial future is to let a professional deal with the aggravation of the nonstop phone calls. Bottom line - If you're looking for the most effective, low-cost, and fastest way to terminate your debt problem once and for all - Negotiation is the answer. About The Author Drakeport Financial will host a free Debt Management Seminar for people who wish to correct existing debt problems or avoid the possibility of such problems developing in the future. Seminars are held Saturday mornings from 9 to 11 a.m. at locations throughout the United States. Call Drakeport Financial today toll free at 866-676-4945 for more information. You may also visit the website: www.drakeport.com Debt Consolidation for Homeowners By Ann Gibson You cannot understand the importance of being a homeowner until you enter the loan market for debt consolidation. Debt consolidation for homeowners is a responsible way of getting out of debt. Your financial statement is overflowing with debt. Debt management begins with debt consolidation. Being a homeowner will enable you to see dissolving your debts faster than any other debt consolidation hopeful. Every month your money is lost while paying for the loan amount you owe. And every month your peace is lost attending the harassing phone calls of the loan lenders. Homeowner debt consolidation seems a pretty good idea. You deal with one loan, one monthly payment, one loan lender, low interest rates –you are just going to fill that application form. But wait there is more to debt consolidation than that. Debt consolidation for homeowners is a secured loan, secured on your home. Being a secured loan, homeowner debt consolidation comes with great benefits like lower interest rates, lower monthly payments, easy repayment options and capacity to negotiate terms. The disadvantage is repossession can result in view of the fact of non repayment. If you don’t pay a credit card debt – all you get is bad credit. If you don’t pay homeowner debt consolidation – you are no longer a homeowner. Understanding your debts will enable you to know what kind of debt consolidation you will be requiring. Answer such questions as – What is your present debt amount? What is the nature of your debts? How old are your debts? What is your credit score? Do your creditors still have your account or it is transferred to collection agency? Credit score is decisive while determining loan rates. Since you are a homeowner, the emphasis on credit score will be less. But a good credit score can get you lower interest rates on debt consolidation for homeowners. Debt consolidation for homeowners is possible with bad credit also. But it will affect your chances of getting lower interest rates. On the internet there are various sites offering homeowner debt consolidation with bad credit. You can ask for quotes from these sites so as to know how much it might cost you. There is loads of information available on the net. Take this as your medium to finding the right homeowner debt consolidation. Debt consolidation can very easily be a source of further debt problems for homeowner. With no debt problems on hand, after debt consolidation, a homeowner might be tempted to spend more and get further into debt. Debt consolidation for homeowner usually has a loan term of 10-30 years. Therefore, your secured loan would mostly be spend in paying off your previous debts. It is strongly recommended that you try taking homeowner debt consolidation for shorter loan term. Even though your monthly payment is less, a longer loan term will cost you more. Debt consolidation is dependent on circumstances of a homeowner. So, not every debt consolidation plan would work for every homeowner. Debt consolidation for homeowners includes the formation of a debt management plan. This plan would be formed after carefully studying the income and expenditure of the homeowner. This affordable plan makes debt repayment possible without stretching the budget. Debt consolidation for homeowners is ideal for those who have debts exceeding £5000 with three or more individual creditors. Debt consolidation for homeowners would work if they have expendable income of £100 or more. Debt consolidation for homeowner is best for large amounts like £25,000. If you don’t have the necessary disposable income, then take small loan amounts. This way you would clear some of pending debts and be in a realistic position to pay back homeowner debt consolidation. If you have doubts about keeping up with monthly payments of debt consolidation for homeowners, it is better you take out insurance. You can find good insurance schemes elsewhere and don’t have to comply with loan lender for insurance policy. A good debt consolidation for homeowner would be that which fits beautifully in their financial situation. Stick to your plan and you will repay your debts. Otherwise you know where it will lead you. Right into the slippery surface of debts. So, how many benefits are there of being a homeowner? Keep counting till you are debt free. Loan borrowing is like once in a life time decision and much is at stake. It is indeed not a good thing that many people are misguided into taking loans that are not appropriate to their financial situation. This leads to many allied misgivings. As a financial consultant the only driving force of Ann Gibson is to provide proper knowledge. Because knowledge in respect to loan borrowing is power and exudes financial benefits.He works for uk debt consolidation web site uk debt consolidations.To find a uk debt consolidation loan,debt management that best suits your need please visit http://www.ukdebtconsolidations.co.uk