Why Bad Credit People Pay Higher Rates
Why Bad Credit People Pay Higher RatesbyLet's face it. People with credit problems pay higher rates for the same reason people pay higher auto insurance premiums - risk. Virtually everyone knows if you receive a traffic ticket, you get points on your driving record and an increase in your insurance premium. Why? Because the traffic ticket has created an emerging pattern of risk. If you got one traffic ticket, the chances of receiving another one are now greater than when you had no tickets.
Therefore, there is a greater likelihood of you filing a claim in the future. A speeding ticket can lead to accidents, property damage or even vehicular manslaughter. All of which pose a real risk of the insurance company paying a claim. The more claims the company pays, the less money they have to pay other claims and make sound investments to pay future claims.The credit world is similar. If you pay your bills late, your credit score decreases and the interest rate on your next financing increases.
Why? Because the late payment has created an emerging pattern of risk. Whatever the reason for your late payment is the basis for future late payments. For example, if you have been living beyond your means buying items on credit because you can't afford to pay cash, this causes larger monthly payments. When it gets to the point of causing a late payment, it's most likely to continue because you have demonstrated you don't have enough money to pay your bills. Hence, there is a greater chance of frequent or severe delinquency in the future.
But the real world credit market differs from the insurance comparison due to one more factor - opportunity.Lenders are not required to loan you money. Afterall, from their perspective, they are comparable to annuity investors. That's right - investors. Suppose you were buying an annuity that would pay you monthly for 30 years. You could choose Annuity X that pays in full and on time every month with a rating of "A." Or you could select Annuity Z that sometimes pays late and sometimes misses a payment completely with a rating of "B." As an investor who may not get paid entirely by choosing Annuity Z, it's only fair that you require a higher yield - or return on investment - in exchange for accepting the extra risk of losing your money.
If the investor is not comfortable with the added risk, they could exercise their right of opportunity and choose Annuity X. It pays a lower yield. But they are relatively assured they will receive all their money in full and on time. Now let's flip the perspective back to lending. In the above investor example, replace the words investor with lender, yield with interest rate and annuity with mortgage loan.
Now we see a more clear picture. Borrower A who pays in full and on time every month is a low risk and receives the lower interest rate because the lender is relatively assured of receiving their money. Borrower B is a much higher risk and pays the higher interest rate because the lender is accepting the chance they may not be repaid all their money. Now let's take it a step further. Imagine you had $100,000 to invest and had to choose between Borrower A and Borrower B.
Which one would get your money? Moreover, why not loan $100,000 to Borrower B at the same rate as Borrower A? Afterall, "B" borrowers often claim they no longer have the same problems that caused their delinquency. "They turned a new leaf." Yet, they haven't proven it. They still pay their bills late. Would you take them at their word and give them the same rate as Borrower A? A true investor would not.In conclusion, it's as simple as risk and opportunity. Contrary to the divisive manipulation of data from the media and organizations with an agenda, people with credit problems pay higher rates because they are a higher investment risk - period.
It has nothing to do with race, religion, ethnicity or national origin. From my experience in the mortgage business, loan officers only care about one color - green!? 2003 SonicPoint.com.
Tricks To Getting A Low Mortgage Rate
It's obvious - we all want to have a low mortgage rate.
After all, a low mortgage rate means spending less on monthly payments throughout the life of the mortgage.
A lot mortgage rate can save you thousands of dollars.
It also means you're more likely to have funds available to spend on opportunities that could prove profitable.
In recent times, low mortgage rates have begun to rise, but even so, rates today are still low enough to make it worth considering refinancing your home, if you're stuck in a high rate loan.
The internet is a wonderful place to do your research on finding a low mortgage rate.
Included here are some websites where you can start looking.
Interest.com
This website is a great place to start you research.
You can compare the rates from a variety of lending companies in your state, so that you can improve your chances of getting a low mortgage rate.
For example,...
Mortgage > Tricks To Getting A Low Mortgage Rate
Mortgage Glossary of Terms
Adverse CreditThe term used if the borrower has a poor credit history. This could include previous mortgage or loan arrears, bankruptcy or CCJ's. Other terms used to describe an adverse credit mortgage include:
- Bad credit mortgage
- Poor credit mortgage
- Non status mortgage
- Credit impaired mortgage
- No credit mortgage
- Low credit score mortgage
Mortgage > Mortgage Glossary of Terms
EhomesDenver.com Launches free Home Listing Real-estate Service and Loan Qualifying
(ContentDesk) June 3, 2005 -- www.EhomesDenver.com is helping New home owners find properties in the Metro Denver area as well as providing mortgage loan services, The free service is Designed to eliminate headaches and frustration while searching a specific area for homes, listings in the Denver Metro Area and surrounding cities such as Parker, Castle Rock, Highlands Ranch and 18 other cities surrounding the Denver Metro area." We feel that providing a free Home search is a necessity for a realtor in this day and time, Online home searching is a valuable tool to home buyers, I feel providing free access to MLS listings here in Metro Denver is important and I personally like being able to provide daily updates of new home listings through the MLS" says Karen Baumgardner. Best of all this Service is free to anyone looking to move into the Denver area. "A large percentage of people looking for homes using my website are from out...
EhomesDenver.com Launches free Home Listing Real-estate Service and Loan Qualifying
Mortgage > EhomesDenver.com Launches free Home Listing Real-estate Service and Loan Qualifying
Credit Communications Inc. Ranks #19 on East Bay Business Times FAST 50 List.
SAN RAMON, CA, (ContentDesk) July 29, 2005
-- Credit Communications Inc. (CCI) provides credit reports and other mortgage settlement services to mortgage brokers and lenders nationwide.
The ranking recognizes Credit Communications' three-year revenue growth rate of 89.8% over the 2002-2004 time period.
Revenue through the first half of 2005 also grew 23% over the same period last year."Our rapid growth continues to be supported through strong client retention as well as acquisition of new accounts.
We continue to lead the way in training and educating our customers on how to maximize operational efficiency and close more loans using CCI's credit analysis and simulation tools," said Marty Flynn, CCI President and CEO.
"Our success is a result of a lot of hard work and our team's commitment to provide the best customer service in the industry," he added. About Credit Communications Inc.Credit Communications Inc. is a privately held company headquartered...
Credit Communications Inc. Ranks #19 on East Bay Business Times FAST 50 List.
Mortgage > Credit Communications Inc. Ranks #19 on East Bay Business Times FAST 50 List.
What is debt consolidation all about?
Debt consolidation is a very common thing in the western countries. It basically means getting a loan to pay off any other loans or debts. Usually, when people get a debt consolidation loan, they look for the lowest interest rate they can find and for something that can make their financial life easier to handle. This means they are interested in uniting all their loans into one and paying their debts faster and easier.
Well, debt consolidation sounds pretty good until now, but is it perfect?
First let's look at the positive aspects of a debt consolidation loan:
1.
Instead of having to make a lot of payments to a lot of creditors you only have one creditor and one monthly payment. This greatly reduces the stress in your life because you aren't forced to figure out who you should pay, when or what the specific amount is. You just have to remember the company that helps you with debt consolidation.
2. The interest rate for a debt consolidation...
Mortgage > What is debt consolidation all about?
Minnesota Businessman Teams with International Boxing Legend, Roberto Duran
Minneapolis, MN (ContentDesk) June 26, 2006 -- John Laub founder of Minnesota Lending and the newly established Minnesota Mortgage Network is teaming with Panamanian patriot and boxing legend Roberto Duran to launch Blue Bridge Media.
On a trip to Panama Laub noticed the lack of advertising on taxicabs in Panama.
Imagine the landscape of New York City without its beloved taxi tops.
Panama is covered with billboards, television and poster advertising but had yet to capture the essence of taxi top advertising.???? Blue Bridge Media is bringing taxi top advertising to Panamas 25,000 taxicabs.
Major corporate advertisers and taxicab operators have lined up for the opportunity to touch the masses with their message.
Each taxi cab driver will be paid an upfront fee of 10 plus a monthly contract fee of 30 to attach the taxi top to their vehicle.
Blue Bridge Media will maintain and monitor advertising on all of the vehicles. Laub and Duran...
Mortgage > Minnesota Businessman Teams with International Boxing Legend, Roberto Duran
Sub-Prime Mortgage Loans - Things You Should Know About Sub-Prime Mortgages
Sub-prime mortgages are not that much different from average mortgages. They have interest rates, points, and fees. They can be compared online, and they have seasonal trends. The only real difference is that as a borrower with a less than stellar credit record, you will have to pay a slightly higher rate for the lender's increased risk. What is important is that you prepare yourself with information about sub-prime mortgages and compare lending companies to make sure you get the best deal.Paying For RiskIf you have bad credit or declared bankruptcy, a mortgage lender is taking a big risk that you will pay back the loan.
People with bad credit are seven times more likely to default on loans, so lenders make up for this loss with higher interest rates and fees. However, some companies take advantage of people with poor credit, so you should compare companies.Look OnlineYou don't have to meet with a lender face to face to negotiate a mortgage loan. You can go online...
Sub-Prime Mortgage Loans - Things You Should Know About Sub-Prime Mortgages
Mortgage > Sub-Prime Mortgage Loans - Things You Should Know About Sub-Prime Mortgages
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