Monroe Chat

I'm looking for all information that can help us see the picture, but show a direction.... I love the John Matarese 'Don't waste your money' slot on WCPO

I found a couple of articles that 'stirred me up' but there is a 'what you can do' addendum ~ always a good thing

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Good Credit, Turned Down for Loan!

We've been hearing a lot that if you don't have good credit, you may have a hard time getting a loan. Unfortunately, it's now worse than that.

Many homeowners with good credit are finding -- for the first time ever -- that even they don't qualify for a loan.

One Woman's Story

Ms. James is a preschool teacher who prides herself on her finances. She owns a nice suburban home , and is up to date on all her payments.

So when she applied for a home equity line to make some improvements to her house, she says "I kind of thought I'd be a shoe-in cause my credit was excellent. But they came and said it was denied due to the lending crunch."

Ms. James was stunned, because she says she has a credit score of over 800, considered excellent.

She tells me "I've had an equity line, 3 auto loans, and 2 previous mortgages from this same bank!"

But her case is becoming more and more common as banks tighten the strings....even on some of their best customers.

"I never had a late payment and I was surprised when they turned me down."

It turns out her "debt to income" ratio was too high: her bank did not consider her income high enough to warrant another loan. A year ago, Ms. James figures, it would have been no problem. For other people, the reason is that their home is not worth what it was one or two years ago.

Your Options

What can you do if this happens to you?

1. Apply for a loan through a Realtor, home builder, or car dealer: While they may not have better luck than you, they have a vested interest in getting you approved, so they may know some lenders willing to give you a break.

2. Consider a loan from your 401k account. But don't cash out of your 401k, or you can lose almost half to taxes and penalties.

3. Or check out "person to person" or "peer lending" websites: The biggest is Prosper.com (click link above).

Or do what Gina is going to do: Live without.

The recent $700 billion federal banking bailout is expected to loosen the credit strings. But it's not going to happen overnight. So start loan hunting early,

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AVOIDING THE REPO MAN

We're hearing so much about homes falling into foreclosure these days. But there's been very little coverage of another serious problem facing a lot of car owners: They can't make their car payment!

The credit agency Experian says nationwide 25 billion dollars in auto loans are now delinquent....owners behind at least 30 days.

Why you need to avoid a Repo

Your car can be repo'd if youre just two months behind. That repossession puts a black mark on your credit for seven years.
Credit counselors say if youre falling behind, here are some steps to take:


Ask your lender if you can refinance.
Ask if you can make a smaller payment this month
Borrow from your family
Borrow from your 401k.
As a last resort, sell the car.

Unloading a car you can't afford, or trading it in for a much cheaper used car, is much better for your credit than the tow truck.

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Should you Close Out your 401k Account?


Is your retirement savings sitting in mutual funds in a 401k account?

Many worried workers are converting to cash, pulling money out, or even closing their 401k account altogether! But most financial experts say despite very legitimate fears, don't cash out.

If you want, they say, move a portion of your 401k money into a safer fund, like a Money Market Deposit Account (FDIC insured).

The Dangers of Closing Out your 401k

Melody Hobson of ABC's Good Morning America says the problem is if you sell your stock funds now, you lock in a 30% loss that you'll never recover.

In addition, cashing out of a 401k hits you with huge penaltites.

She says despite the pain right now, keep contributing to the funds in your 401k: Buying funds now means you are buying low, the best time to buy stocks.

She says Bull Markets have historically always followed Bear Markets.... even after the Great Depression. And people who sold all their stocks and funds late in the downturn missed the eventual recovery.