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Credit Help Tips
In This Issue:
The Truth about Late Payment Fees
Robust Credit Leads Real Estate Investors to Greater
Fortunes
Invitation to Gift Teleseminar
Your Gift Ebook "Credit Tips: Turn Your Credit Burden
into Financial Power"
Watch Out: Late
Credit Card Payments Costs You -- Big Time
If you have been late with a payment lately, you've
already noticed that credit card companies have
discovered a new way to generate a great deal of extra
income. The average late fee today is $35.00, if you owe
more than $1000. Since the national average for American
families is $8,000 of credit card debt, that represents
a sizable pool of potential income for creditors, and
they're going after it aggressively.
In fact, latest income figures show that some 25 percent
of all income derived by credit card companies is
generated by late payment fees. When you factor in
penalties for exceeding credit limits, that percentage
jumps to 33. That means that 1/3 of all the income
generated by credit card companies comes strictly from
penalizing cardholders for spending too much or not
paying on time. In 1995, income from penalty fees
accounted for only 18 percent of the companies' profits.
The new figures represent almost a doubling of that
income - a startling revelation.
There is another figure that doesn't show up in those
numbers. If you're late with a payment, especially if
it's during a promotional period of low interest, your
interest rate could skyrocket. For example, I recently
received an offer from a credit card company that
offered a six-month rate of zero percent to new
customers.
That sounded great, until I looked at the fine print. If
I was late once during that promotional period, my
interest rate would have jumped from the usual 13
percent to 23 percent. (Of course, I also would have had
to pay a $39.00 late fee.) That was bad enough, but if I
had been late a second time, my interest rate would have
soared to a staggering 29 percent! (And another $39.00
late fee.)
Does that sound outrageous? It does, but it's not
unusual in today's credit card world. For example, back
in 1988, only about 47 percent of credit card companies
would have raised a customer's interest rate if they
paid late. Today, that number has risen to some 76
percent! That means it's more difficult now to find a
company that WON'T raise your rates. And that trend
isn't likely to change in the near future, because it's
a way for credit card companies to generate huge
profits.
So if you carry credit card debt, it will pay you, in
more ways than one, to make your credit card payments on
time. If you don't, you could find yourself seriously in
the red for a long time to come. Be wise and use your
credit to help YOU make more money, not to increase the
profits of your creditors.
Robust Credit Leads Real Estate
Investors to Greater Fortunes
Real estate investors
with credit scores over 700 get better interest rates
and lower mortgage costs, factors which lower the cost
of the investment. When you have great credit, why
bother investing in the stock market for a meager 7.6%
return? Investors make the most money in real estate because of
the significant return on their investment (ROI), up to
2000% or more. Your stellar credit gives you leverage to
use other people's money to make great profits for
yourself.
Nina has a credit score
of 740. She can buy non-owner occupied investment
property with stated income and get a 100% new mortgage.
This year, Nina purchased three houses using other
people's money. She sold one for an immediate $20,000
profit and used $3,000 of this profit to make up the
payment difference between the rental income and the
mortgage payments on the other two income properties.
The two income properties appreciated over $100,000
each. Wouldn't you like to make nearly $200,000 return
on an investment of only $3,000? Nina plans to buy six
houses in 2006.
If you have strong
credit, here are some money-making mortgage
possibilities for you:
Lehman Brothers, one of the big five Wall Street
Investment firms, offers investors with credit scores
over 700 and stated income a 90% mortgage loan for
non-owner occupied investment property. Investors with
the ability to provide full documentation only need a 640
credit score. You can get a 100% loan-to-value (LTV)
mortgage up to $200,000 if you have a 660 credit score
and provide full documentation.
If you want to purchase a more expensive rental
property, other mortgage lenders offer different
programs. According to Rob Kramarz, with NationWide
Mortgage in Southern California, other mortgage
possibilities for investment property include:
stated income, non-owner occupied, 90% LTV, credit score
over 700, full doc (employed as manager).
Strong credit saves real
estate investors money on mortgage finance costs. A good
credit score, along with the other credit and mortgage
qualifications, means that investors can pay lower fees
for financing, such as points and interest charges.
Also, good credit scores help you avoid garbage fees
associated with nonprime loans.
However, the real money
making difference for real estate investors comes into
play in the return on investment (ROI). When you build
up your credit score over 700, you open the way to
finance multiple investment properties using other
people's money. This means that your return on your cash
investment for the down payment can be significant.
For example, let's take a
home I found in Oroville, California. Appraised for
$150,000, built in 1950, this 2 bedroom, 1 bathroom,
1,000 square foot home looks like a great buy for only
$125,000. With strong credit, the 5% down cash
investment of $6,250 buys into the appreciation value of
$150,000. A lower credit score would mean that you'd
have to put 10%-25% down or more, which lowers your
return on investment. You would need $12,500-$37,500
down to buy into the same $150,000 appreciation
investment. In this case, your ROI for your cash outlay
would decrease significantly. Houses in this area of
Northern California enjoy a steady upward appreciation
with a strong employment rate. And, the rental income
would cover the mortgage payment.
Of course, other factors
like the condition of the house, affect your investment
capabilities. The point: get your credit score over 700
so that when you're ready to buy investment property,
you get the best return on your money. The more
investments you're able to make, the more money you'll
make.
Credit Help Teleseminar
Start the New Year off right!
Join our Teleseminar
Saturday, January 7, 10 AM Pacific
"Make
2006 Your Most Profitable Year Yet!" Teleseminar
Credit Help!
Get the
Credit You Need to be Worry Free and to Make Money
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Learn how to
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AND multiple investment properties.
YES! I Want to Get Credit Help! Save My Space
"Turn Your Credit Burdens into Wealth-Building
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Get the best-kept secrets of wealthy real
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Download instructions: Click on the
link below. Note:
You do not need to enter your credit
card info because this ebook is a gift to subscribers.
"Turn Your Credit Burdens into Wealth Building
Tools!"
ebook
Watch for our next
newsletter for bonus gifts to readers.
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Jeanette J. Fisher
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