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.

Can I Close My Bank Account to Avoid Repaying a Payday Loan?

First, let’s be clear: Payday loans are illegal in the State of New Jersey. NJ state laws prohibit interest rates above 30% (which is exceptionally high already) and payday loan interest rates are much higher. Additionally, New Jersey banking laws prohibit the concept of advancing money based on a post-dated check.

What is a payday loan?

A payday loan is a very dangerous undertaking. It is process that is only entered into by those who find themselves in extremely dire financial straits.

The payday “lender” provides the borrower with a relatively small loan (usually less than $1,000). This cash loan is due to be paid back in full to the lender within a very short window of time – often when the borrower next receives a paycheck.

Those who are desperate for immediate money and don’t want to have their credit checked can often be fooled into thinking that a payday loan is the perfect solution to their problem. Borrowers who take out payday loans typically say that they don’t want to borrow money from friends or family, and their credit scores are usually already suffering, so taking out a proper bank loan isn’t on their radar.

Why do payday loans get such a bad rap?

In theory only, the concept of a payday loan is perfectly fine:

“You need rent money and your landlord is breathing down your neck about it. Due to unforeseen expenses this month, you’re short a few hundred dollars. If only you could simply borrow $400 to keep your landlord happy; you’ll have NO problem paying it back the next time you get paid.”

Sounds ok, right? The inherent problem with payday loans is this: if you are even a day late in repaying it, interest starts to accrue at an astronomical (up to 400%) rate. This, combined with the fact that by the time someone considers a payday loan, they are already having money trouble, leads the borrower down a path that can only end badly.

All payday loan borrowers talk themselves into believing that they’ll have the money to repay the loan on time. Most of them, however, arrive at their loan’s due date confounded and overwhelmed. Although they let themselves think their next paycheck would be enough to cover the cost of the loan plus their usual expenses, this is almost never the case.

Therefore, the average payday loan borrower ends up late in repaying their loan, either partially or in full. As soon as that interest starts building, their amount due climbs FAST. What started out as a $400 loan can end up as thousands of dollars in debt, leaving the borrower unable to even begin to make good on their promise to repay.

How can I get out from under a rapidly rising debt?

It can be an extremely scary feeling to know that your debt is rising higher and higher day by day at a rate that you can’t really even determine how much you owe. Drastic measures, like trying to close your bank account or moving away from the payday lender – will not solve your problem. Creditors can garnish your wages (up to a certain percent) until they get their money back, and unless you plan to leave the country and change your identity (not recommended) – they’ll go the distance needed to find you.

Although payday loans are illegal in New Jersey, that doesn’t mean that NJ borrowers aren’t taking out payday loans in neighboring states. If you’ve found yourself indebted to a payday lender, or if you are right now considering taking out a payday loan, you should consider filing for bankruptcy instead. Not only will this wipe out the money you owe to the payday lender, but many of your other debts can also discharged – giving you an opportunity to take stock of your money management with a clean(er) slate.

 

The Best Tips for Paying off Student Loans Quickly

At the time you applied for and were granted a federal student loan, there’s very little chance that you were thinking about how long it would take you to pay it back. We’re all a bit naive and wet behind the ears when just starting our college studies. Buoyed by the prospect of a “well paying job” after your time at university, you, like many others, most likely figured that paying back your student loan debt would be a piece of cake.

As we all know, student loans are a whole lot less fun after college ends. No one likes the harsh reality of knowing that a large portion of your (newly acquired) paychecks will go toward paying back your student loans. Real life take home pay is usually a lot less than you thought it would be, and subtracting even more money from your net income can feel almost physically painful.

On top of how depressing it can be to fully realize just how much you owe, it can feel like you’ll be paying for your student loans forever. However, there are things you can do to make sure that feeling doesn’t become your reality.

Stop deferment as soon as possible

As a general rule, most student loans, both federal and private, will continue to accrue interest while in deferment. This means the longer you put them off, the more you’re going to owe.

Avoid income-based repayment plans

Also known as ‘pay as you earn’ or ‘income contingent’ plans, these repayment methods are geared toward college graduates who can demonstrate at least a partial financial hardship. In theory, limiting how much borrowers have to repay each month based on how much money they’re earning might sound like a good idea. The problem with dramatically lowering your monthly loan payments again lies in the staggering amount of interest that will be tacked onto the total amount due.

Be aware of income taxes if considering loan forgiveness programs

There are currently a number of federal and New Jersey loan forgiveness programs available for borrowers who have made a set number of payments over a given time period (usually 10, 20 or 25 years). While just knowing that the remainder of your loan will eventually be forgiven can be a light at the end of a tunnel, you may have to pay income tax on the amount that is forgiven.

If you’ve deferred your loan several times and then paid the lowest payments possible via income-based repayment, the interest will have been compounding for a long time. That interest will be added to the remaining balance, which may be a significant sum by the time you qualify for forgiveness. While you will be able to celebrate the debt forgiveness, you’ll still need to foot the hefty NJ income tax bill.

Refinance and consolidate your student loans

One of the best steps to take when trying to get a handle on your student loan debt is to lower your interest rate. You should first consolidate (combine) any loans that are eligible for refinancing. If your original student loan interest rates were high, you’ll save a lot of money over the course of your repayment plan by refinancing to get a lower rate. This can also shorten the length of time required for you to pay back your loans and, in turn, lower the amount of income taxes you’ll owe on any remaining balance if you qualify for forgiveness.

Earmark your yearly tax refund for student loan repayment

Each time you receive extra money, whether from your tax refund, a lawsuit settlement, an inheritance, etc., resist the urge to spend it frivolously and instead apply as much of the total windfall to your student loan balance. You can do the same every time you receive a raise at work, too. Set aside the extra income and pay that much above and beyond your monthly minimum loan payment.

Look for employment opportunities that offer loan forgiveness

The Public Service Loan Forgiveness Program forgives student loan debt in teaching and certain public and nonprofit jobs. You’ll have to meet a whole host of requirements in order to have your loans forgiven through your job, but it is something extremely well worth looking into.

In addition to the above strategies to get out of student loan debt quickly, you should consistently re-work your budget so that you can trim as much excess spending as possible. This will allow you to put more of your income toward repaying your debts faster. Your budget will only be stilted temporarily – so remind yourself that the end justifies the means.

 

Image: “Calculator and Money” by Reyner Media – licensed under CC by 2.0

How to Start a NJ Business When You Have a Poor Credit Rating

8233288287_e3250f7842_z

If getting out of corporate America by becoming your own boss is your main goal as we roll into 2017, there are a lot of steps you’ll need to take to make it a reality. Starting your own business is without a doubt a challenging undertaking, but it has been done by many before you, so take heed that it can be done! However, if you’re starting the process with a low credit score, you’re already a bit behind the eight ball. Rest assured, though, that this does not mean entrepreneurship can’t happen for you.

Facing the fact that your credit score is less than ideal can be difficult, especially if you’ve managed to “get by” for years without giving it too much thought. By taking no action at all and simply burying your head in the proverbial sand, your score will never improve. Since starting a business is important to you, you’ll have to make smart borrowing choices that will enable you to launch while increasing your credit score simultaneously. In turn, you’ll have access to more financial resources later when your business expands, because your score will have gone up. It is more important to have a good credit score as your business grows, so you have that on your side. You’ve got nowhere to go but up!

In order to get your business off the ground, try these approaches to getting the start-up cash you’ll need:

  • Phone a friend. If you’ve ever watched an episode of Shark Tank, you’ve probably noticed that many of the entrepreneurs on the show report getting a large percentage of their start up costs by asking friends and family for loans (or investment in the company). While it may be difficult to ask loved ones for financial help before you have established your new company, this is one way you can avoid your low credit score prevent you from borrowing money.
  • Apply for grants. Although it can be very challenging to find a grant program that is willing to donate money to your new start-up, it is possible. This is especially true if your company is in the healthcare field or is a retail business in a struggling geographical location. Downtrodden areas with lower-income residents are frequently looking for new businesses to give a boost to their current economic status.
  • Look for a microloan. It is what it sounds like – a tiny loan, but if you have exhausted all other options, something is better than nothing. Lenders that are not affiliated with a bank do exist, and for many of them, their main purpose is helping entrepreneurs with low credit scores. Not only are they more likely to lend you money than a traditional bank or lender, but borrowing from them will also cause your score to rise! Naturally, that will only occur if you’re making your required payments on time, but with microloans the payments will be much more manageable.

The most important thing to remember if you dream of starting your own business is this: don’t give up just because of a low credit score. Today’s society revolves around the buying and selling of goods and services – now more than ever before!

Additionally, for those who are contemplating starting a business in New Jersey – our state welcomes you and wants to help you find the resources you need to succeed. More business in the Garden State means a better NJ economy! To learn more about special financing and incentives available to you, visit The Cornerstone of Financial Justice, where you’ll receive full service solutions to your credit score and business loan challenges.

 

Image credit: CCPixs

How to Buy a Home With a Low Credit Score

11415768915_de45e25243_o(1)

If you’ve made some mistakes in your financial past, you’ll see the effect of those mistakes displayed in your credit score. Many people with poor to fair credit scores wish to make a large purchase (like a vehicle or house) but are stymied when they realize that their credit history adds a degree of difficulty to the process.

There are many reasons that make buying “better” than renting. Some of them include:

  • No more landlords! You get to make all of the decisions about your property and your home, which naturally does add some responsibility into your life, but you’ll also feel a sense of freedom when you get out from under a landlord, especially if you’ve had a negative renting experience.
  • Homeowner tax deductions!
  • You can go “green.” Renters have no control over making home improvements that will lower utility costs, but as a homeowner you’ll be able to make changes like using solar panels and adding insulation.
  • You can make a home your own. Whether this means extensive renovations or simply changing the wall colors – it’s all up to you when you’re the owner.

If you are dealing with the roadblock of a low to fair credit score but are working with a NJ credit counseling professional to continually bring that number up – you are on the right track to becoming a homeowner.

Admittedly, a credit score that’s below about 580 is going to make it challenging for you to acquire a mortgage loan. Although it will be challenging, it isn’t impossible. Here are some tips that will make it more likely for you to be approved for a home loan in the near future:

  • Get a co-signer. If you’re determined to own a home NOW and your credit score falls into the “low” range (<580), ask a close family member or friend with good credit to sign the mortgage with you. Technically, the loan will then belong to both of you, but you will be the only one making the payments. When your credit score improves, you can have the co-signer removed from the loan.
  • Make a large down payment. The fact that you want to own rather than continue to rent, even with a low credit score, tells us that you have a reliable source of decent income or that you’ve had some kind of financial windfall recently. Either way, making a significant down payment often convinces lenders that sub-prime borrowers are on their way up and are not a lending risk.
  • Apply for an FHA loan. Because this type of loan is backed by the US government, you can (often) qualify for an FHA loan with a credit score in the 500s. You’ll be paying for your low score with required mortgage insurance, but if you can afford it, an FHA loan is a good option. After you pay down your loan a bit, you can petition your lender to remove the insurance.
  • Avoid making any more financial mistakes. For potential borrowers with bad credit, lenders look to see that your score is moving in the right direction. They also want to know whether you’ve missed any rent or utility payments in the last year or two. If your financial stability is super new, you may need to wait to apply for a mortgage until you are able to increase your credit score and/or generally improve your overall financial situation.

Image credit: Mark Moz