A few days ago I opened a new checking account for a very nice lady that came in asking about our free checking accounts. As I was talking with her about her lending needs, she asked me about “the loans that let you make flexible payments”, AKA home equity lines of credit. I was telling her about how they work; the minimum payment is interest only, so if you only pay the minimum payment you won’t get anywhere, but if you pay the amount you pay now on your mortgage, everything above the minimum payment goes towards principal. She thought it was a great idea, she’d be paying less than she pays for her mortgage payment each month, and it would free up some money for her and she’d be not as strapped for cash each month. I put an application in for her. Declined. I was a little taken aback, until I looked at her credit report. Her credit score? 494. That is the lowest credit score I’ve ever seen! I took a look and realized why it was [...]

Smarty Pig is a new idea, started by two individuals, Mike Ferrari and Jon Gaskell. The basic gist of it is this: you want a new ipod, a Hawaiian vacation, a new bike, etc. First you start a profile on the site, then you establish your savings account and goal, and figure out your monthly contribution. Then you have the option to share with friends and family your savings goal so they can track your progress and make donations if they would like. Start saving, and before long you’ll meet your goal! There are no fees, you earn interest on your balances, and it’s FDIC insured, just like a high yield online savings account. What a great idea! The minimum savings goal is $250, and the maximum is $100,000. To get the account started, there has to be a deposit of $25 made to the account. Interest accrues daily but is posted quarterly. Once you reach your savings goal, you can request a Smarty Pig MasterCard® Debit Card which has the funds loaded on that you’ve saved up. You can [...]

It’s no secret that since the economy took the plunge banks have started tightening up on their lending standards. Many people are excited about lower rates, but just exactly how many of them can get approved for a loan in this economy? In February of this year, many banks were still lending at 100% loan to value (LTV). Basically what this means is that they would allow you to tap into more equity in your home, but it would cost you a higher rate than if you went with the standard 89.9% LTV. For example, if your house is worth $300,000, and you don’t owe anything on it, before you would have the possibility of a Home Equity Line of Credit or a Home Equity Loan of $300,000 if you wanted to go 100% LTV. Today, the most you could borrow out of your home’s equity would be $269,700, which is 89.9% of $300,000. The reason banks are doing this? To cover their assets. I know many banks went crazy lending money to anyone who wanted it about 1-2 years [...]