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Let’s First Look How It Affects Your Credit Score

When money gets tight and you are going to be forced to be late on your bills first consider what items report to your credit report each month. Your phone bill, electric bill, gas, cell phone, water and other similar bills do not report on your credit report.

A late payment for your mortgage will hurt your credit score more than a late payment for a car loan or credit card. Late mortgage payments are one of the most harmful delinquent accounts that can be found on a credit report.

Once a mortgage becomes 60, 90 and then 120 days past due, it is often very difficult to catch up the arrears. Extra interest, attorney fees and collection fees can be added to the amount. It becomes more and more difficult to obtain a refinance loan also.

On a first trust deed or mortgage, the borrower must pay a penalty if the payment is made more than fifteen days after the due date. So, not just the 60, 90 and 120 days, but also just fifteen days can harm your credit score and can eat up your budget quickly.

The Three Basic Choices

If you’re two months behind on paying your mortgage, you’re still safe. You should act soon, however. Make sure you continue to keep the lines of communication open with your current lender. They would rather work with you than have you give them back the keys to your home.

You have three choices:

• If you go one more month without paying your mortgage, your current lender will issue you a notice of default. Then, the foreclosure process will begin.

• Your lender will usually offer you the option to make up the back payments over a period of time. This is called forbearance.

• Call a professional mortgage broker. There may be a better loan product out there that will help you make timely payments in the future.

Let’s Find Some Good News

There are specific lenders called “sub-prime” lenders that have a multitude of options available that can help you straighten things out. Although the interest rates will be higher, depending on the lender and your specific situation. they will work with you.

Another great piece of information is that lenders only look at the last 12 months of mortgage history. If you can wait out the 12 months (after your negative mortgage payments) then your late payments will not affect your credit once you are back on track.

You can even refinance which may be very helpful to you at this time no matter how good or bad your credit is, no matter how far behind you are on your mortgage. The type of financing though that you may qualify for with a poor mortgage history will probably be less than favorable.

The key to all of this is the amount of equity you have in your home. The more you have the more opportunities you will be afforded. What your lender wants is the money from the home. Therefore, they are more than willing to work with you as long as they can see you are also trying to work things out.

It defiantly can if the lender you’re financing the rest from is honest. They want to make their money and will pull every trick they have to get it out of your pocket. You need to look out for them or all that big down payment is going to do is put more money in their pocket.

The only real reason that you want to put down a big down payment is to not get upside down in the loan. The moment you think about buying that car it starts to depreciate and within a year or two you will be upside down in that car without a down payment of at least 20%.

Those that have bad credit but want to put a larger down payment then normal hoping that this will help your credit, make sure that you go to one of the larger auto credit lenders. That way you can be sure you will get a fair reporting on your credit.

You see if you go for one of the smaller auto lenders they will not report timely payments on purpose so that they can raise your interest rate. That means more money for them.

If you are able to get a loan from a more reputable lender, then that is a wonderful way to build your credit. Even if you had financial trouble in the past they are a great way to fix your credit.

The reason behind that is a car payment is setup to get paid off, and they are fairly larger payments. That is the opposite of a credit card payment that is designed to have little monthly payments and keep you in debt for a very long time.

The best type of car to get a loan on is a car that is two to three years old. That way they are at a better price and they are still in good shape. A car that old shouldn’t have to many miles on it as well.

They also help you keep your value of the car and not get upside down in them. The worst type of an investment is buying a new car. As soon as you buy it you lose 40% of the value.

No investor worth anything would ever buy a stock or invest in a company knowing that the moment they invest they would lose 40% of there money with no way to get it back.

Instead of putting a large down payment on the car you could do direct financing. It makes a good bargaining chip for you because you can just focus on the price of the car and not the loan. Your direct financing lenders tend to be more reputable then other as well.

The easiest way of doing direct financing is online. There is plenty of online lenders to choose from so shop around for one you like. They often have no obligation quotes that you can get fairly quick. You can then get a check that you can take to the dealership.