international student life

international student

Stricker rules for getting loan. Credit score very important.

Credit score for Mortgages, Credit cards, PLUS loans, Home equity loans and Car loans.

Since the financial crash of 2006, getting loans for mortgages or to buy other things like cars has become more difficult. However it's still possible to get a loan although the requirements have become more stringent.

Your Credit Record and current Credit Score are very important to a bank or credit union when deciding whether to provide you with the loan or not. Different banks and Credit Unions have varying criteria, so if one bank refuses to give you the loan with the terms you want, you can usually find another one that has better terms.

Before you go to the bank to ask for a loan, its better to check your credit score, available for free at www.annualcreditreport.com. This will help you determine what your score is and what issues may be lowering your score.

Student Loans.

The Stafford Student loans are backed by the federal government and are still available to students. Stafford loans are available to all students who apply and are given regardless of the applicants credit history or financial status. They currently have a fixed interest rate of 6.8%.

New Federal law also increased the amounts a student can borrow per year. This is S5,5OO for freshmen, $6,500 for sophomores, and S7.5OO a year for juniors.

PLUS Loan is another type of student loan that is given to parents to pay for their children's' college. They however need to have good credit and if they don't, they may be unable to get this loan. The interest rates for PLUS loans is 8.5%.

Mortgages.

There are now stricter rules for Mortgages. Before you get a mortgage, you need to make a down payment to the house value, and show that you have enough income to cover your mortgage, house insurance, taxes and other life expenses.

Some of the things you need to prove your financial status include bank account statements, two year tax returns and employment verification. They will also check other debt that you have and decide if your Debt to Income levels are acceptable.

For people with low credit scores or those with low down payments, you may be eligible for Federal Housing Administration (FHA) loan that is backed by the Federal government in an effort to support most people to own a home.

Home Equity loans.

Many people take out a home equity loan to do all sorts of things with the money. in the past when housing market was always rising, this was very easy to do. But since the crash in housing market, it is now harder to get a home equity loan.

New rules say that you are now able to borrow only 80% of your equity. So if your house is worth an appraised value of $200,000 and your mortgage balance is $100,000, your equity is $100,000 and you can only borrow a maximum of $80,000 against your equity.

The mortgage companies also make a full and comprehensive appraisal of your home to determine what it is worth.

You will also need a high credit score and also prove of income before your home equity loan is approved.

Car Loans.

For consumers with good credit, it is still easy to get a car loan. This is true for people with a credit score of over 700. They should not have a problem getting a car loan.

However most car dealers are now demanding down payments for the car and then finance the remaining cost.

Many car manufacturers and their financing companies are offering 0% rates for short term loans (less than 3 years) and for people with good credit score. For people with lower credit or those who want longer term loans, the interest rates rise to between 2% to 8%.

Credit Cards.

Credit cards are still available but needs to have higher credit score and the banks are lowering the credit limits they give to credit card holders.


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