How to Take Advantage of Your NJ Home’s Equity

NJ home equity loan

Your home is likely the biggest investment you will ever make and it can be an extremely valuable asset. The best way to take advantage of the full value of your home is to utilize your home equity. Equity is the difference between what you owe on your mortgage and what your home is worth. Every time you make a payment on your home, your equity grows. Changes in the market value of your home can also increase your equity, as can certain home improvement projects. Here are three ways to tap into your NJ home’s equity.

1. Home Equity Line of Credit (HELOC)

A home equity line of credit is a great way to borrow money that will fund smaller home improvement projects. Like a credit card, a HELOC has a set limit on how much you can borrow and you will pay interest only on the exact amount you have borrowed. A convenience factor of a home equity line of credit is that you can withdraw money as you need it instead of all at once as a lump sum. The interest rate for most HELOCs is variable, but you can usually get a lower rate than you’d get using credit cards or personal loans. You will have a predetermined time frame to pay back the HELOC, at the end of which the balance must be paid off in full. Keep in mind that the more you borrow, the higher your monthly payment will be. Like credit cards, HELOCs are flexible. Also like credit cards, it can be easy to get in over your head with overspending and rising interest rates.

2. Home Equity Loan

These are less common than HELOCs. A loan will allow you to borrow a lump sum at one time and pay a fixed interest on the amount over a predetermined period of time. This is also a type of second mortgage. Home equity loans are great because they offer a fixed interest rate, meaning your monthly payments will not change and you will know ahead of time exactly how long you will be paying off the loan. However, homeowners should be careful when tapping into all of the equity in their home at once. If property values in the area decline, you could end up owing more on your home than it is worth. Loans are great for big home projects and one-time expenses.

3. Cash-Out Refinance

This option allows you to get a new mortgage for more than the unpaid principal balance on your old loan. You use the new loan to pay off your old loan and then have additional money left over. You can use this to renovate your home, pay off other debts, or even finance college. Since you are essentially replacing your mortgage, be sure to closely review the terms of your new loan. Double check the interest rate and fees of the new loan before you agree to the terms. You will also be responsible for closing costs, so make sure you can afford to pay between 2% and 5% of the mortgage.

Whenever you borrow against the equity of your home, your home is being put up as collateral. With that in mind, it can be a great way to borrow money as long as you carefully consider the best option for your unique situation!

What To Do With Your PPP Loan

$349 billion have been dispersed to small businesses as forgivable loans through the Paycheck Protection Program. Now those businesses have to decide how to use the money. The borrowed funds are restricted to payroll costs, rent, mortgage interest, interest on other loans, and utilities. If you are trying to make sure you receive the maximum amount of loan forgiveness, there are a few things to keep in mind as you spend these funds. Here is what we can infer from the available guidance on PPP loans.

1. Set Up an Audit Trail

You will inevitably have to provide a record of how you spent your money when you apply for forgiveness. One of the best ways to do this is to deposit the funds into a separate business checking account to keep them separate from your other business funds. Only use this account to pay for expenses that qualify for forgiveness. Keep all your payroll records, invoices for health insurance, mortgage statements, a copy of your lease, any canceled checks, and evidence of rent/utilities payments in an electronic file.

2. Pay Attention to the Calendar

From the date the loan is funded and the money is deposited into your account, you have eight weeks to spend the money on forgivable expenses. Even money spent one day outside of the payout period will not be eligible for forgiveness.

3. Restrict Non-Payroll Expenses

No more than 25% of the loan can be used to pay for non-payroll related items. So while you can use the money towards rent, mortgage interest, and utilities, if those costs exceed 25% of the loan amount they will not be eligible for forgiveness.

4. Avoid Overpaying Wages

The maximum amount you can pay each employee and still have it forgiven is $15,385 during the payout period. This amounts to roughly eight weeks of payroll for an employee making $100,000 a year. Group health insurance premiums, retirement benefits, and state unemployment tax are not included in this cap.

5. Hire Back Employees

There are penalties for businesses who made workforce reductions after February 15th. Unless those workforce reductions are restored by June 30th, the amount of the loan that can be forgiven will be reduced. So, if you had to let people go before receiving the loan, it might be worth it to hire those people back before June 30th to maximize the forgiveness you are eligible for.

6. Restore Pay Cuts

There is another penalty stipulation in the law that says if you have cut any individual employee’s pay by 25% of what they earned in the first quarter of 2020, that cut of pay must be restored by June 30th or some of the loan will not qualify for forgiveness. This only applies to employees who did not earn more than $100,000 in 2019.


If you follow the guidelines and keep a detailed and complete record of your expenses, you can maximize the forgiveness of your PPP loan. For businesses lucky enough to acquire this loan, it is a great opportunity to protect your business and your employees during the coronavirus crisis. Veitengruber Law is here to support small businesses as they navigate these new financial obstacles. If you need help deciphering the stimulus loan guidelines, reach out to us at any of the phone numbers listed on our website. We are all working daily, as a team, but from our respective homes. If you need our help, we are ready and able to give it!

Stimulus Loan vs. Tax Relief: Which is Better for Your Small Business?

stimulus loan

The recent stimulus legislation has provided support for small businesses facing economic hardship during the coronavirus crisis. There are two choices: 1) a combination of tax credits and the deferral of payroll deposits and 2) a loan known as the Paycheck Protection Program (PPP). These two options are mutually exclusive, meaning if you take the PPP loan you cannot take the tax credit or defer payroll tax deposits and vice versa. It can be difficult to determine which would be best for your business, but there are some key differences that can make a big difference. Let’s take a closer look.

PPP Loans

Administered through the Small Business Administration (SBA) and applied for through banks or other financial institutions, the Paycheck Protection Program loan can be converted into a grant and is available to businesses with 500 employees or less. For restaurants and hotels, the 500-employee limit applies to each individual location, not the business as a whole.

While the business cannot fold, it does not have to be open and operational during the crisis in order to qualify for the loan. Employees don’t have to work in order to receive their payroll. The ultimate goal of the PPP is for businesses to be able to continue paying employees throughout the crisis.

A PPP loan will be forgiven and turned into a grant if the small business can sustain its payroll for a minimum of eight weeks and use the loan proceeds only for salaries and essential operating expenses like utilities and rent. No more than 25% of the loan can be used for non-payroll costs in order to be forgiven. If the loan is eligible to become a grant, the interest (initially set at 1%) still has to be paid by the business. The maximum loan amount is either $10 million or 2.5 times the monthly payroll, whichever amount is less. The payroll for each employee is capped at $100,000 per employee. Terms of the loans are set by the Small Business Association.

ERTC

The second option is called the employee retention tax credit (ERTC). This credit is taken against payroll taxes. To be eligible for the ERTC, a business’s operations must be suspended by a government authority OR experience a 50% or greater decline in tax receipts for any quarter in 2020 compared against the same quarter in 2019. Eligibility ends when the business’s gross receipts are greater over one quarter of 2020 than 80% of if its receipts for the same quarter in 2019.

The credit includes up to 50% of wages paid from March 12th through the end of the year. The maximum a business can receive is $5,000 per employee against 2020 payroll taxes (both Social Security and Medicare). Since the credit is refundable, a business will receive a payment from the government if the credit exceeds the payroll taxes due. In addition to the ERTC, a business can defer deposits of payroll taxes due in 2020. One half of the deferred taxes must be paid by the end of 2021 and the other half by the end of 2022.

In order to determine which of the above options is right for your business, it’s important that you have a thorough understanding of both. Generally, businesses with higher-salaried employees will benefit more from the PPP loans/grant option while businesses with lower-salaried employees will get more out of the ERTC, but this is not always the case.

IMPORTANT: How fast do you need the money? The PPP requires an application and approval process. You can take advantage of the ERTC option immediately, but you will have to wait for any refunds from the tax credits.

Reach out to us if you need help deciding which option is best for your small business. We are excited by how many small NJ business owners we have been able to help stay afloat thus far!

 

 

 

 

 

 

 

 

 

6 Tips for Getting a Loan Modification

Remember the day you made settlement on your house? The excitement of walking through your front door for the first time? Hanging your beloved artwork in just the right spots, shopping for the perfect TV to fit the space, enjoying life in your new home.

If financial troubles have turned what used to be your little slice of heaven into a burden of anxiety and you’re struggling to make your mortgage payments, a loan modification may be the answer.

Through a loan modification, the lender agrees to permanently restructure one or more terms of the existing loan, resulting in a more affordable monthly payment. The goal is to prevent foreclosure, which can be devastating for the borrower and costly for the creditor.

A loan modification may involve reducing the interest rate, increasing the length of the loan, converting to a different type of loan (for example from variable to fixed-rate), or a combination of these options.

A loan modification is not a forbearance, which would allow you skip or make partial payments for a little while. It’s not refinancing, in which you’d close out the old loan and get a new one. Rather, it’s a way to adjust your current loan to provide long-term relief for your financial troubles.

Taking this step may mean that you end up paying more in interest and waiting longer until your home is fully paid off. But if you want to save your home, here are six things to consider to help you successfully navigate the loan modification process.

  1. Make Sure You’re Eligible

Not every borrower will qualify for a loan modification. Typically, you’ll need to prove that you’re in a significant state of financial crisis or hardship, perhaps caused by job loss, divorce, or a serious physical or mental health situation.

  1. Talk to Your Lender

Owning up to financial difficulties is not easy, but it’s the first step in digging out of the hole. Reach out to your loan provider right away. Check out your latest loan statement or the company’s online contact information for departments such as “loss mitigation.”

And if you’re dealing with a financial hardship and the phone starts ringing – answer it. It could be your lender proactively trying to help.

Be sure to clearly describe your situation, ask about options, and don’t be afraid to propose your own ideas – it shows you’re interested in finding a solution.

  1. Let the Paperwork Begin

If the representative agrees that you’re a candidate for a loan modification, complete the application paperwork in a timely manner.

You’ll need to accurately verify your income, expenses, loan payment history, and other financial circumstances to demonstrate your inability to meet the current loan commitment. You may need documents such as tax returns, bank statements, pay stubs or contracting checks, and/or a hardship letter detailing the reasons you are requesting new loan terms.

  1. Keep Your Records – and Keep Your Cool

Know that this can be a time-consuming process; you’ll be dealing with multiple representatives and a multitude of forms.

Remember that we’re all human – mistakes happen. Documents can get lost. People can interpret things incorrectly. Copy and date everything you submit. Put your name, contact information, and loan number on each page. Also keep records of anything your lender sends you. Whatever happens, be polite; people are more likely to want to help someone who’s being nice to them, so in this case, kindness really does matter.

  1. Look to the Long-Term

If you and the lender come to an agreement over your loan modification – congratulations! Make sure your expectations are realistic. Understand that the proposal may not be as favorable as you had hoped. Before you finalize anything, make sure it’s an arrangement that you are willing and able to keep.

Know that your credit score will be affected, making it harder for you to obtain other loans until your score goes back up.

  1. Don’t Give Up

If at first you don’t succeed, try, try again. Determine why the application was rejected and what you can do to get the resolution you want.

You may want to work with legal expert to help you understand your options to challenge the decision, make a counteroffer, or pursue a different solution entirely.

If you want to appeal, if you get stuck on the paperwork, if you believe your rights aren’t being upheld, or if you don’t even know where to begin, we can help. Contact Veitengruber Law, and we’ll be glad to work with you to tailor and pursue a comprehensive debt-relief plan to help you get your loan modification and financial situation back on track – all while you stay in the home you love.

Financing a Home as a Single Parent: What are my Options?

home ownership

Being a single parent isn’t easy. There are many unique financial challenges single moms and dads face as a one income household. For many single parents, buying a home can truly seem like an impossibility. But don’t give up on your dream of homeownership just yet. There are plenty of loan and assistance programs single parents can take advantage of, you just need to know where to look. In New Jersey, there are many state and federal assistance programs for home buyers with specific circumstances. While none of these categories explicitly list “single parents,” they can be a great benefit for those looking to buy a home with one income.

HUD 

One of the best places for single parents to start their home search is the U.S. Department of Housing and Urban Development (HUD). Contacting your local New Jersey HUD office can give you access to resources that will help you find housing options as well as demystify the home-buying process. A HUD housing counselor can fill you in on local home buying programs you might not be aware of or help you obtain a loan. Some single parents may also qualify for subsidies and extra assistance that will help you afford decent housing (depending on your income and employment).

FHA

Federal Housing Administration (FHA) loans are popular for many first time home-buyers, including singles on their own as well as single parents. FHA loans are government insured and easier to qualify for than other similar loans. There are many benefits associated with FHA loans that make them appealing to single parents, including a 3.5% down payment, lower credit score minimums, and low monthly mortgage insurance rates. FHA loans are also flexible about how a first-time homebuyer is defined. If you are recently divorced or become a displaced homemaker, you can qualify as a first-time homebuyer as long as the only residence you’ve ever owned was with a former spouse.

VA

Veteran Affairs (VA) loans are also an excellent resource for single parents. If you are a single service member, a veteran, or the surviving spouse of a veteran, you could be eligible for VA loan programs. There are a number of benefits for qualified buyers, including waived down payments and mortgage insurance, low-interest rates, and on-going support throughout home ownership. If you are facing foreclosure, the VA can step in to help you keep your home or find a new residence. In the event of a work-related disability, there may be additional Veteran’s benefits you can take advantage of.

USDA

The United States Department of Agriculture (USDA) offers a few different programs for low- and moderate-income home buyers in rural areas. Even if you aren’t sure that you live in a “rural” area, the USDA’s programs are still worth looking into. Many of the regions where programs are offered are located just outside major cities. USDA loan programs offer low interest rates and zero down payment options. Qualified borrowers can get 100% financing and the mortgage insurance premium is one of the lowest offered in any program. USDA loans do have an income maximum, but most single parents do not meet this maximum.

Private Lenders

Some private lenders will offer loan programs for single income borrowers. These custom loan programs can cater terms to your specific needs to help ensure that loan applicants get pre-approved for a mortgage. These custom loan programs can include help with your credit score or assistance with your down payment, among other things. While not all lenders will offer these kinds of programs for single parents, it is worth looking into as you begin your home search.

 

As a single parent, you aren’t limited to these programs. Your county, city, or even township might offer their own programs to help the single parent home buyer. Don’t lose hope in your dreams of owning a home. If you would like help getting started or with the application process, Veitengruber Law is more than happy to help you get on the path to home ownership!

 

 

 

 

 

 

 

What Teachers Should Know About Loan Forgiveness Programs

Last year, students loans made up the highest delinquency rate of any kind of household debt. It is safe to say that many graduates are struggling to pay back their school loans. But if you’re a teacher, you might be in luck! The Teacher Student Loan Forgiveness program may allow you to have some of your student loan debt forgiven—but there are specific rules and strict repayment schedules you will need to follow. Today’s blog post takes a look at loan forgiveness rules for educators in New Jersey.

 

In order to take advantage of the Teacher Student Loan Forgiveness program, you need to have one of these loans: a Subsidized Federal Stafford Loan, an Unsubsidized Federal Stafford Loan, or a Federal Direct Consolidation Loan. It’s also important to note that you cannot qualify for loan forgiveness if you are in default on your loan unless you have previously made arrangements with you loan provider for a repayment plan going forward. Under the Teacher Student Loan Forgiveness program, administrative staff, school counselors, librarians, and other school staff are not considered “teachers” and therefore are not eligible for loan forgiveness.

 

However, even if you meet all of the above criteria, you must have worked as a full-time teacher at a low-income school for five academic years consecutively after the 1997-1998 school year to qualify for the program. (Did you catch all that?) The award amount you will receive depends on the subject you teach, how long you have been teaching, and what level of qualifications you have. The maximum award for science, math, and special education is $17,500, while all other subject educators can receive a maximum of $5,000. You can apply online at ifap.ed.gov.

 

Considering not many teachers will qualify for the Teacher Student Loan Forgiveness program, and those that do may still have a lot of debt left, it is a good idea to look into alternatives for teacher loan forgiveness. Luckily, you can stack loan forgiveness programs, but typically you cannot apply for more than one loan simultaneously. Take the time to look over all of your options to ensure that you are choosing the right loan forgiveness program or programs for you. Here are some of the more common loan forgiveness programs for teachers:

 

Perkins Loan Teacher Cancellation: This forgiveness program is specifically designed for teachers with Perkins loans. While the Perkins Loan Program ended in 2017, if you have outstanding Perkins loans, you could qualify to have 100% of the loan canceled over a period of time. You must teach at either a low-income school or within the following subjects: math, science, foreign languages, special education, or a subject that is experiencing a shortage of qualified teachers in your state. To apply, you will need to contact your alma mater for the specific rules of the Perkins Loan.

Public Service Loan Forgiveness: With only 1% of applicants getting accepted to the program, there is a very specific criteria that must be met for Public Service Loan Forgiveness. While teachers are not limited to specific schools or subjects, there are four major criteria that must be met.

1. Your loans must be federal direct loans.

2. You must have an income-driven repayment plan.

3. You must be employed by a qualifying employer, AND

4. You must have already made at least 120 payments (or 10 years of monthly payments). The online Public Service Loan Forgiveness tool will help you determine if you qualify and allow you to apply if you meet all qualifying criteria.

State and School Forgiveness Programs: Every state has at least one student loan forgiveness program for those who work in public service fields. Colleges and universities also sometimes provide teacher loan forgiveness programs. Reach out to your alma mater’s financial aid or alumni office to find out if they sponsor and loan forgiveness programs.

If you are a teacher struggling to pay back your student loans, these forgiveness programs can help you get ahead of your debt. If you have student loans that do not qualify for these forgiveness programs, Veitengruber Law can help. Our debt resolution team offers individualized advice and comprehensive debt solutions to get you back on the road to financial health.

Is an FHA Loan Right for Me?

FHA loan

The standard mortgage loan down payment of 20% can be a huge sum of money to many prospective homeowners. If this big number is the main reason you have put off buying a home, consider applying for an FHA loan. An FHA loan will help you finance the purchase of your home without having to put down a huge down payment.


FHA loans prevent would-be home owners from getting priced out of the real estate market.

An FHA loan is backed by the Federal Housing Administration, an agency of the U.S. government. The FHA does not lend you money; instead, they insure the loan used to purchase your home. In the event that you are unable to make payments on your mortgage, the FHA will step in to pay your lender. This makes it less risky for lenders to grant mortgages to buyers with lower down payments or poor credit scores. As long as your credit score is 580 or higher, you can qualify for an FHA loan with a 3.5% down payment. If your credit score is between 500 and 579, your FHA loan will require a 10% down payment.

What You Need to Know (Before You Apply)

fha loan

1. You need a consistent income.

While FHA loans don’t have a set minimum or maximum income requirement, you must prove that you earn a steady income. Pay stubs or yearly tax returns can help you prove that you are a reliable earner. Bonus points if you’ve worked in the same field or for the same employer for a couple of years.

2. Heavy debt can hurt your approval chances.

The FHA is unlikely to approve your application if you already have a lot of existing debt—like auto loan(s), credit card debt, and student or personal loans. An FHA loan officer will analyze your income to determine what percent of your monthly income goes to paying down your debts. As a general rule of thumb, your mortgage shouldn’t be more than 31% of your income before taxes. Additionally, your combined debts should not be more than 41% of your income.


An FHA loan officer won’t approve you for a mortgage if you’ll be paying half your salary toward debts.

3. Lenders favor borrowers with credit scores above the 580 minimum.

While 580 is the minimum credit score the FHA requires to insure your loan with a 3.5% down payment, some of the lenders the FHA works with do have higher credit score requirements. For most lenders, you will have a better chance with a credit score of at least 640.  If your credit score isn’t quite there yet, it can be worth it to take the time to improve your score before applying for an FHA loan.

4. Be realistic about your buying power.

There are limits on how much money you can borrow with an FHA loan. These limits are based on real estate prices in the area(s) where you want to buy a home. If you can afford to buy a huge house with a swimming pool, you likely don’t need an FHA loan to begin with. Keep in mind that FHA loans aren’t just for single-family homes. A smart investment move is to purchase a multi-family housing property with up to four units. Rental income can pay for your monthly mortgage payment (and sometimes more). FHA requirement for purchasing multi-family homes is that you must live in the property for at least a year.

5. You will need mortgage insurance.


Mortgage insurance is an insurance policy for lenders in case the borrower defaults on the loan.

If you have an FHA loan, you must have mortgage insurance. The up front premium for mortgage insurance will be part of your closing costs and is approximately 1.75% of the total loan amount. In addition to the 1.75% upfront cost, you will also have a monthly mortgage insurance premium. This will typically read as mortgage insurance premium (MIP) on your FHA loan statements. Mortgage insurance costs between 0.5% and 1% of your loan value each year. This calculates to ~ $120 a month for a home loan of $195,000.

If you are trying to decide if an FHA loan is right for you, sit down and look at the numbers to make sure you can afford a mortgage payment, mortgage insurance, the down payment, and closing costs. If you think your budget is ready for homeownership, an FHA loan can be a great way to make your dreams a reality!

What if I Can’t Pay Back my Personal Loan?

personal loan

Personal loans, unlike student loans, mortgages, or auto loans, can be used for almost anything. If approved, you receive a lump sum that must then be paid back in monthly installments. From big purchases to home renovations to consolidating debt, a personal loan can be a useful financial tool. But sometimes, as with anything else, “life happens.” Unexpected financial difficulties like a pay cut or medical expenses can disrupt even the most carefully planned budget. When a financial set-back occurs, it can be difficult if not impossible to keep up with bills and payments. Often, it is loans and credit cards that are the first payments to be put off. What do you do if your situation has changed since being approved for a loan and you can no longer make payments on your personal loan? Today we’ll give you a few examples of steps you can take to remedy the situation.

While most people are reluctant to talk to their lender in the event of a financial set-back, this is often the best thing you can do. In fact, most lenders will respect a proactive approach to handling the situation and appreciate your dedication to paying back the loan. The sooner you make your lender aware of the problem, the more likely they are to work with you. On the other hand, simply ignoring missed payments can result in an accumulation of late fees, collection efforts, a drop in your credit score, and even default. If there is a valid reason you cannot make the payments, your lender should understand and work with you to find a mutually agreeable solution.

Once you have taken steps to make your lender aware of your situation, they may be willing to revise the terms of your loan to make monthly payments more manageable for your new financial circumstances. Lenders who are willing to negotiate will look at your expenses, other debts, and income to determine a more realistic monthly payment. So while the total principal of the loan will remain the same, payments can be made more affordable. The solution might even be as simple as changing the monthly due date of the payments to a time when it does not conflict with other bills. You may even be able to negotiate a deferment on your payment—it doesn’t hurt to ask!

If your lender does not work with you to revise the terms of your loan and is still demanding on-time payments, you will have to find different ways to make the payments. Consider areas in your budget you could cut back on, even if it is only until you’ve paid back the loan. Determine which expenses are necessities (like food, utilities, transportation to work, etc.) and which are extra. If it is possible, try selling high dollar items, like a second car. You may even consider doing side work or getting a part-time job to help offset the cost of the loan payments. Explore all of your budget-revising options to avoid missing payments.

In the event you still cannot afford to make the payments on your loan, don’t assume all hope is lost. When you’ve done all you can do to remedy your finances and you’re still struggling, it is time to reach out for professional help. At Veitengruber Law, our team of experts has years of experience dealing with difficult lenders and assisting borrowers in getting back on the right financial track. We will negotiate with lenders on your behalf to find effective solutions for real financial relief.

We understand that not every debt problem is the same and we will work diligently to come up with a customized solution for your specific situation. Bankruptcy is not the only solution to unmanageable debt, although it may be the best solution for your circumstances. Our team will perform a holistic financial analysis to help you make informed choices about your financial future.

Can I be Approved for a NJ Mortgage with a Bad Credit Score?

NJ mortgage

A lot of people with a bad credit score assume it is impossible to become a homeowner. A low credit score can definitely make it harder to get a new credit card or any type of loan, including (and especially) a mortgage loan. If the one thing standing between you and home ownership is your credit score, don’t give up hope. It is possible to get approval for a NJ mortgage with a low credit score.

What is considered a “bad” credit score to mortgage lenders?

Different lenders have different criteria for loan applicants. The lower your score, the more likely it is that potential lenders will see you as a risk. If your score is somewhere in the middle—between 620 and 740 (approximately)—there is a little more wiggle room. While you will likely face higher interest rates and be restricted in how much you can borrow, you should still be able to secure a mortgage loan without much issue. Generally, if your score is under 620, you will not be able to get a loan from a traditional lender. But that doesn’t mean you have no options for getting a loan; it just means you will have to go through less traditional lenders.

Private Lenders

One option for borrowers with low credit scores is to go with a private lender. Mortgages through private lenders often come with higher interest rates and more substantial minimum down payments for borrowers with bad credit. You also may have to do a little more work with a private lender, like providing additional paperwork that is typically not required with a traditional lender. It’s important to do your due diligence when going through a private lender. Shorter payback periods and higher interest rates can make it difficult to make your monthly mortgage payments. Make sure you will be able to make timely payments in full for the duration of the loan.

FHA Loans

Another possibility is a Federal Housing Administration (FHA) loan. If your credit score is at least 580, you can qualify for an FHA mortgage with 3.5% down. With a score between 500 and 580, you will need to put at least 10% down. The cutoff for credit scores with an FHA loan is 500. Downsides to an FHA loan include: high interest rates and a mortgage insurance premium of 1.75% as well as monthly insurance premiums. If you pay less than 10% of the loan for your down payment, you will have to pay these monthly insurance premiums throughout the life of the loan.

Mortgage Tips for Low Credit Score Borrowers

Sometimes it’s possible to make up for a bad credit score in other ways. You can offset the risk of the loan by offering to pay a bigger down payment. While first-time home buyers typically put down 6% or less, making a 20% or more down payment could encourage lenders to approve your application despite a poor credit score. Plus, the more money you put down, the lower your monthly payments will be.

Another option is to enlist the support of a co-signer. If you have a close friend or family member with a great credit score, they could help you secure a mortgage loan. This is not a commitment to take lightly, though. While the mortgage is in your name, the co-signer will be equally responsible for any payments. This means if you miss a payment, their credit will be negatively impacted. Working with a co-signer requires a lot of communication and trust.

#1 Way to Own a Home with Bad Credit

If your goal is to buy a property but your credit score is poor, the best thing you can do is take the time to rehab your credit score. The higher your credit score, the better chance you’ll have of working with a traditional lender. Working with a traditional lender means your down payment, interest rate and monthly payments will be lower. Regardless of your situation, Veitengruber Law can help you determine which path to home ownership is best for you.

Have You been the Victim of Predatory Lending?

nj real estate attorney

Predatory lending is precisely what it sounds like. While there are many lenders in the US who have all of their scruples, it’s important to know that unscrupulous lenders do exist. If you think you were granted a loan you didn’t truly qualify for, or a loan you can’t possibly make the payments on, you may be a victim of predatory lending.

In general, predatory lenders target groups of people based on their lack of understanding about loans and/or their inability to actually repay the loan. Some groups that are targeted include: the poor, the less educated, the elderly, and those who are in need of immediate cash.

Loans given to those who fall into the above groups benefit the lender and can seriously damage the borrower’s credit score and overall finances. Because of this, it is important that you have a clear understanding of any loan you are signing for. If you don’t understand some or all of the loan language, DO NOT SIGN.

As a potential borrower, you have the power to tell a lender that you’d like to wait to make an informed decision before signing. You should then walk out and go directly to an experienced NJ attorney who regularly works with lenders. This may be a debt negotiation attorney, or one that specializes in real estate transactions.

Your New Jersey real estate attorney will have the experience needed to advise you on the loan you are considering. He will also be able to tell you if you are being taken advantage of by a dishonest lender.

Specifically, mortgage lenders have been found to practice predatory lending in recent years. Unscrupulous lenders may target potential borrowers who currently have substantial equity in their home. This is because mortgage lenders will benefit from a loan backed by a borrower’s real property and even a foreclosure. Naturally, not all mortgage lenders are bad! In fact, most lenders are on the up and up.

However, if you get a bad feeling while you are discussing your loan options with a lender, it’s in your best interest to leave their office before signing anything, and take copies with you. When you meet with your NJ real estate attorney, he will be able to read through the proposed loan contract in order to inform you of your best next move.

Don’t risk getting yourself in over your head on a loan that you ultimately will default on. Know all of the facts about the loan by working with a professional who can guide you toward honest and helpful lenders in New Jersey.