Most people would choose to purchase properties by mortgaging primarily because of two reasons – first, it is a very good way to establish good credit history and second, it is the fastest way to acquire properties.
But, no matter the reason or the dynamics of how the financing was obtained, it is very important that a borrower knows that settling his debt on time should be top priority. A borrower should be very careful with debts gone out of control, especially those made from subprime mortgage lenders. To be prepared, a borrower should make him or her aware of the inherent risks that debts have so that they can impose precautionary measures from the get go.
1. Tax Caveats
Like all goods, loans are also taxed. Any loan more than $600 is taxed and tax increases in proportional ratio to the loan made. In most cases, the tax is automatically deducted from the loan made. Therefore, a borrower should be well aware that the net amount he or she receives will be less than the actual loan he applied for and the amount he will be paying will be way more than the loan itself because of interests. Depending on the loan program the borrower applied to, the shape of his or her loan can vary indefinitely.
2. Lawsuit Possibilities
When it come to debt settlements, a borrower should expect from the get go that when he or she becomes delinquent in paying, lawsuits will become very common. Unlike cases when bankruptcy is declared, creditors are bound to stop collecting to these “bankrupt” companies, but debt settlements in an individual’s level is different. Regardless of incapacity to pay, they are still bound to pay the debt in full else they will be sued and sent to jail.
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3. Bad Credit History
Another big hold of creditors to their borrowers is the threat of giving very negative feedback to credit score listing agencies. Not meeting payment deadlines can damage you credit standing and cause you to not pass any application for loans from prime lenders or high street banks. As a result, a borrower is pushed into making loans to subprime mortgage lenders which ask for higher interests. However, there are times when the creditors would ask the borrowers to make a lump-sum payment plus the interest instead of making the regular after payments. In this way, a borrower is given enough opportunity to re-establish his or her credit standing.
4. Fraudulence
Many people have become victims of debt settlement companies which work on scams. These so-called companies collect big upfront fees as a preliminary payment for the service, but disappear right after they receive the money, leaving their clients with more problems and more debt than they first had before they approached them. Other companies may not run away from their clients, but would become incompetent in negotiating for favorable deals for their clients.
If you are interested to know more about subprime mortgage lenders and manythe different types of lenders you can choose from, just click on the links provided.