Category Archives: Finance

The New Rule For Buying a Home

The American Dream; what does it mean to you? People have different jobs or hobbies or passions in life, but one constant remains the same among all of us, and this common thread that unites our dreams is that of Home Ownership! Unfortunately, in this current economy, achieving the dream of home ownership is becoming more difficult than any time in recent history. Too many Americans are following the unwritten rule of home ownership that tells us to ‘Find a Realtor and Get a Bank Loan’. In past economies, with thriving job markets, lower inflation, and less credit restraint, that ‘rule’ may have made sense to follow.

But our current economic system is making it difficult for the average person to achieve the American Dream of Home Ownership. In times of unstable job markets, with double digit unemployment forcing people to become self-employed to make a living, the banks are requiring a W-2 stable job history in order to issue loans. In times of a great credit crisis, the banks are requiring stricter credit scores than most people are able to achieve. Fewer and fewer honest, hard working Americans who are used to following the ‘traditional rules’ for owning a home are having the opportunity to own their own homes.

What if you could achieve the American Dream of Home Ownership without the assistance of a bank?

The purpose of this document is to allow motivated home seekers an opportunity to write a New Rule of Home Ownership that allows you to declare your freedom from the services of a Bank in order to partake in your piece of the American Dream of Home Ownership!

In order to understand the New Rule of Home Ownership, let’s take a closer look at the existing rules of purchasing a house with Traditional Bank Financing.

The first part of the Traditional Bank Financing focuses on Qualifying for a Loan. While many different loan packages exist, the most common loan written in today’s market is an FHA Loan, and therefore, we shall use their guidelines as an example. The following are guidelines for an FHA Loan:

o FHA Loans require a minimum credit score of 620 to be eligible for a loan
o FHA will require 3.5% down on the home. This down payment MUST come from your account. You are not allowed to borrow from friends, family or anyone else. You must document where the funds for the down payment came from. Specifically, the source of the down payment must be from your personal checking, savings or retirement account and CAN NOT be borrowed!

In order to work with most Realtors, you must first get pre-approved for a bank. Many Realtors won’t even show you a house unless you can prove that you are able to afford and receive financing for the property. This painful process of pre-approval from a bank can take 2-3 days and involve the following steps:

o Proof of Creditworthiness
o You must provide 2-4 years worth of tax returns!
o You must provide your last 4 pay check stubs if you are an employee or an updated Profit and Loss statement if you are self-employed, a business owner, an independent contractor or entrepreneur. However, if you cannot show a consistent pay stub as proof of income, then you may want to skip ahead to the part of this document where ‘Owner Financing’ is discussed, as you will find it increasingly difficult to qualify for a mortgage.
o Your bank may require you pay off other debit to help improve your credit score to qualify for the loan
o And the worst part… this proof of creditworthiness is done throughout the entire home buying process! Even once you qualify and pick out the home of your dreams; underwriters at the bank will have you go through the same process to make sure you still qualify.

Now that you are pre-qualified for the home of your dreams, you may finally begin the process of working with a Realtor to find your new home.

Once you’ve found your home, the Traditional Banks will want an inspection performed on the home and may require the seller to fix EVERYTHING for the bank to finance your loan. Some people just want a small discount on the house and they will do their own repairs however, many times a traditional bank will not allow you to do this! These small fixes may add to the total price of the house.

Also, expect to pay Realtor fees, bank fees, filling fees, “point buy down” fees, loan origination fees, closing costs, title fees, surveys, appraisal fees, and anything else imaginable for which to be charged. Though many of these fees can be rolled into your loan, over the long term, you may be paying an extra 10% in unnecessary Financing Fees that are loaded into your loan!

What if there was a quicker, easier, and less intrusive way to take your share of the American Dream? What if you could look at homes without having to pay a Realtor fee, pre-qualify for a loan, and go through a 3 month home buying process? After all, we ARE in a BUYER’S market in Real Estate, so why shouldn’t we be able to buy?

Consider the possibility of declaring a New Rule. Instead of working with (and paying for) a Realtor, why not work with the Seller directly? Especially if that seller is a Professional Real Estate Investor who is not only willing to sell the house in a quick and simple matter, but is also will to FINANCE the sale of the house on a short-term basis!

Earlier in this eBook, we went over the process of the Tradition Bank Financing. Now, we shall detail the 7 Easy Steps of Purchasing Your Home with Owner Financing:
* Contact the Seller of the Home without having to pre-qualify for a loan and look at the home to decide if you want to purchase.
* Settle on a price
* Agree to a down-payment and interest rate
* Once you’ve agreed to a price, down payment, and interest rate, complete a Deposit to Hold form and pay this 1% fee applicable to the sales price of the property. This fee will take the property off the market while you are closing on the home.
* Fill out credit application; provide 2 most recent paycheck stubs and bank statements as proof that you can afford the monthly payment.
* (Optional) If you chose, you can order your own home inspection to review the condition of the home
* Close in 2-5 business days

Buying a home from a Professional Real Estate Investor is quick and easy. Once you have settled on the price and monthly payments, you have minimal paperwork to complete and can close on the transaction within one week! The following is a summary of some of the benefits of Owner Financing compared with Traditional Bank Financing:
* In many cases, there is no minimum credit score required
* Instead of 10% Traditional Bank Finance Fees / Closing Costs, your Owner Finance Fee averages to 5% of the transaction.
* Unlike Traditional Bank Financing, your down payment for Owner Financing may come from almost anywhere (as long as it is a legal way to raise the funds). You can borrow the money from family, friends, others. There are also some tax incentives for you to use part of your retirement savings. Either way, with Owner Financing, you are allowed to raise your own down payment as you see fit!
* You and the Owner Finance Seller will agree on a time to “close” on the home and may close within 5 business days!
* Your Owner Finance loan is dependent on your down payment and ability to pay the monthly payment and NOT on your credit or having a W-2 Job. Therefore, Business Owners, Entrepreneurs, Independent Contractors, and the Self-Employed may qualify for Owner Financed Homes!
* You are not required to provide extensive documentation to obtain your loan

Due to the efficiency, simplicity, and cost effectiveness, you can see why buying directly from an investor with Owner Financing is the New Rule for Buying Homes. Owner Financing interest rates may be a little higher than market price when you initially purchase your home, however, this higher rate, along with a sizeable down payment, will actually help you obtain conventional financing at a lower rate down the road when you decide to refinance!

A good way to look at Owner Financing is that is a solution to buying a home with short-term financing. Once you have paid your Owner Financed note on time for say 12-24 months, it’s easier to refinance your existing note with a traditional bank loan at a lower interest. It’s much quicker, easier, and less intrusive to refinance a home into traditional financing then it is to purchase a home with traditional financing!

The following example will detail the process and the costs of owner financing:

o John chooses to purchase a beautiful home for $150,000 with a traditional bank loan. John’s credit score is 590 and the bank will not loan him any money until his credit score is at least 620. John understands the importance of owning a home and wants to buy something now.
o John finds a home that is being offered for $150,000 with Owner Financing. John has $15,000 to put down and wants to close in 5 business days. John’s new loan is at an 8.5% rate for 30 years and the sellers would like John to refinance his loan in 24-36 months. John’s monthly payment is $1,350 and it includes Principle, Interest, Insurance, and HOA fees. John is happy because he can afford $1,350 per month and is able to take his part of the American Dream!
o As John pays on time for, say, 24 months, John has an excellent payment history with his current lender. John will also need to be working on his credit in those 24 months to raise his score to the current minimum of 620.
o When John approaches a traditional bank John will be able to demonstrate the following:
o John’s $15,000 down payment shows that he has ‘skin in the game’ and is not just going to bail on his house payments
o John CAN afford and has been paying $1,350 a month at a 8.5% rate for his loan
o John’s credit score is now above the minimum required 620
o If John can afford $1,350 a month at 8.5% interest, John can easily afford a $1,100 a month payment at 6.5%!

It is much easier to refinance a loan rather than trying to get a loan for the original financing! Since you are already in the house, there is no inspection required, no lengthily closing procedures and there is no longer all that extra red tape that is associated with buying a home with traditional financing!

As you can see, purchasing with Owner Financing can be easily done and quickly closed for those who cannot use a traditional bank loan but deserve to own a home now.

Summary

In today’s market, due to tough economic times, there are many people selling their properties. Yet, despite the fact that this is a ‘buyer’s market’, it is tougher to buy a home with Traditional Bank Financing than ever before. Following the old, unwritten rules will lead you to a long and unhappy life in an apartment complex. Motivated home seekers looking for their piece of the American Dream are unable to achieve this great promise by traditional and conventional means due to stringent lending requirements initiated by the very same financial institutions that gladly took over 1 billion of our tax dollars to bail them out! Banks tightening up on their lending practices is causing a shortage of homebuyers in the market. This is one of the biggest reasons that real estate values continue to free fall because there are not enough people who can qualify for available homes while following the unwritten rules.

Mortgage Loans Have to Be Selected Thoroughly

Mortgages can be gotten in various shapes and forms and it is imperative that you completely understand the concepts of exactly how they operate before you get into one. What we wish to accomplish here is to present you with the best basis of knowledge in layman’s terms.

As you’re looking at this, you undoubtedly have similar aspirations as the majority of people and would like to buy your own property.

Almost all individuals, nevertheless, usually do not have enough money in their banking account to write a cheque for the house outright. Of course there are always a lucky few.

As a result there are quite a few banks, specialist mortgage lenders and also other finance institutions who are prepared to lend the funds for your needs. So a mortgage is actually just a loan supplied to a property purchaser and, if it were not available, most of us wouldn’t have our home.

However they are distinct from the normal loan you will have obtained for the car or holiday.

It will have various fees and costs that should be considered.

One should appreciate the way all of the points has an effect on you. On the really fundamental level a mortgage comprises 2 components, the capital and the interest.

The capital is the real amount you get to get your house while the interest is the cost the loan company makes to your account to borrow the money.

This is the method in which their organization makes their revenue. When you look in the financial media or even just right here by going online you’ll notice home loans offered with a lot of fancy names such as fixed interest and variable interest but, now, a vital thing to keep in mind is that there actually are only two forms of home finance loan.

These are a repayment mortgage and an interest only mortgage. The most basic form functions like a normal loan in that you’re reducing some capital every month as well as the interest.

Like this the lending company calculates the total amount that you need to pay them monthly to get all of your house loan cleared in a assigned length of time, maybe 25 years.

The interest only mortgage loan is just what it says, you are merely having to pay the interest each and every month to the mortgage company and need to find a method of settling the capital once you wish to do this. Well, that was the raw basics of home loans. You’ll be able to find lots extra details in the some other articles.

Buying a House With Owner Financing

Many people that have either been turned down for traditional financing are turning to Rent to own or Owner Financing to buy a house these days. While the offers advertising the fact that “Bad Credit is OK” may be appealing. The motivation behind these offers often is not in the best interest of the people the customers that use it.

Let me explain. There are some easy ways to find out whether the person/company selling the house is interested in you actually owning the home or just making money off of you.

    1. If your credit is low, are they offering a service to help you build your credit or are they reporting your payment to the credit bureaus.

    1. If they aren’t, chances are they have locked you in a VERY high interest rate loan that you may never be able to refinance out of.

    1. Did they require a large down payment (5-10k) and above market payment for the house.

    1. This is sometimes done knowing full well that if you default they can keep your down payment, take back the house and sell it again.

  1. Have they set up a bank to refinance your owner financed loan once the seasoning period is over. Banks will only refinance a borrower who has owned a home for at least 6 months.

These are all reasons to be suspicious of the offer. So before you pursue owner financing or rent to own for the purchase of a house. Make sure you are not being set up for failure and you have a plan of action to get your credit in place to refinance the owner financed loan.

Home Loans For the Self-Employed

Being self-employed can be a beautiful thing because it allows for you to work when you want, the way you want, without anyone looking over your shoulder asking you when something will be done. While there is a lot of freedom and benefits of being self-employed, it can make some other things more difficult, such as securing home loans. If you are self employed and you would like to buy a home you should be aware that it may take you some time to find the right offer, or in some cases, any offer at all.

Home Loans When You’re Self-Employed

When you’re self-employed, many lenders are hesitant to lend to you because you cannot promise that you will have the same income every month. When a lender lends to someone with a “regular” job, they have some safety in knowing that the borrower makes the same amount of money each year or each hour. This allows them to see that the payment can be made, but the lender has to question this a bit more when there is not a salary or base hourly pay.

If you have been self-employed for more than two years, you will find that it may be a bit easier to get the financing that you need. If you have been self-employed for less than two years, it may be difficult, if not impossible, to get a conventional lender to help you out. If you have been self-employed for longer and you can show some stability through tax forms, you may be able to appease the lender.

The thing to keep in mind is that even if you can provide the lender with tax forms that show that you have a stable income you will likely be paying an interest rate that is two to three percentage points higher than someone else with the same credit standing and yearly income. This increase in interest on home loans for the self-employed is simply due to the fact that the lender feels that they have more risk with the self-employed.

There are some ways to get around this sort of problem. A lot of people choose to go with stated income home loans or they decide that they will simply assume a mortgage from someone else. These are viable options, assuming that you can do this, as they will help you get into a home without all of the problems that many self-employed people face.

While it can be more difficult for the self-employed to secure home loans it is not impossible. You should look for lenders that specialize in hard to finance loans or even in self-employment loans. When you deal with someone who does a lot of these loans they may have certain things that they do or require of you that will help you get the financing that you need without seeing a huge increase in interest rates. Don’t give up before you get started; just be aware that you may have to work a bit harder at getting home loans than the average person. Home ownership can be a reality for the self-employed; you just might have to be more creative about getting the loan that you need!

Unsecured or Line of Credit Business

The only difference between a bank unsecured loan and a bank line of credit is a line of credit is an approved amount, which can be activated during a future time usually by just writing a check. The rate of interest, and the terms are exactly the same for either type of loan. The local banks and their loan personnel usually do not have the financial expertise, or knowledge to approve a loan of this type, thus business finance brokers place most of these loans. These brokers have contracts with large national banks to allow the placement of these loans using previously approved underwriting standards. The common loan amounts are usually $100,000 to $250,000.

The requirements to be approved are fairly simple. Most banks use a combination of personal credit, and a Dunn & Bradstreet PayDex scoring. With score of 660 +, and 65 + respectively. The business type, number of years in business, and the sales volume determines the maximum loan amounts approved. Start up or existing business purchase are not eligible for this type of unsecured or line of credit loans, as the failure rate is too high.

Applicants search for firms that handle these types of loans should be careful not to pay any advance fees based upon a promise to provide a loan, as most of those firms are not credible, and experienced in that type of loan. Just as when you applied for a home mortgage, the broker may request a small deposit to cover the costs of any credit application, to cover their costs in the event that your firm does not qualify.

Once you have been preliminary approved, you should be ready to furnish some of the following types of information:

State Drivers License copy

Verification of banking accounts

IRS personal and business tax returns for last year or longer.

Business license or state incorporation papers.

Additional information upon request.

Signed Application, and Broker’s Loan Agreement.

The signed application should contain all of the pertinent information about you and your business, and the Broker Loan Agreement the cost of the loan, or points. It is not unusual for these loans cost to be from 4% to 7% of the amount of the loan or line of credit maximum, and must be paid upon funding or approval. In the event that the loan is approved, but refused by the applicant, most firms will charge a fee to cover their administrative costs.

Approval time for these loans can be from several days to weeks once the paperwork is presented to the underwriter at the bank. Most banks, since the loan is directly with them, will contact the applicant directly, if there are any additional questions or missing information. The same when the loan is approved, and the rate and terms set.

Bridging Finance

What does this concept mean at all?

The best bridging finance, or bridging finance loans, occurs when an individual business owner needs money between the sale of one asset and the purchase of another. In a perfect world, we would rather live debt free and we also would like one property to sell exactly at the same time we are buying another. This does not always happen because it is not a perfect world and here where the idea of looking for bridging finance company has to appear.

Bridging finance lender is a company or a person who is welling to offer you an asset-based financing that is lent in a very short term at a higher interest rate. In this case, also known as secured loan, the lender will charge a much higher interest, regardless of credit, because they need to make the deal worthwhile for their business. Six months is the usual amount of time for the average lender.

What would be the ideal strategy to adopt in this case?

Some money saving ideas can still be applied to these situations. You could pay the debt off earlier than the time allotted. And even though the money is meant for the purchase of the next asset, you can use it if you need to pay something else off that is either overdue or set at a high interest rate.

What is the #1 benefit of this concept?

There is a clause that is traditionally attached to the contract that a borrower will pay the debt off when the asset is finally sold. You might believe that it is better to just wait until your asset sells and then you can begin to the search for your next acquisition.

However; you may find the home that you have always wanted and searching for companies with moderate bridging finance rates may be the only answer to your situation.

If it fails out, what would be the next solution?

One of the best tips for saving money is to be sure that you can repay your short term loan within the terms of the contract and shop around for the best offer. If you have any doubt that you might not be able to repay the debt, look to other avenues to resolve the problem.

At the high interest rate that you will be charged, if you do not repay the debt on time, you may lose the new asset or any future business loans that you just acquired.

What is my last tip for you that you should not overlook?

One of the financial tips for young people is to shop around. Many younger people are just so grateful that someone was willing to help them that they will go for the first company that offers them a hand. This can be a big mistake, if one company is willing to extend you the money, there will be others out there and maybe even at a lower interest rate for the same commercial loans.

Refinancing Home Loan

Many challenges are regularly associated with mortgage loan refinancing. To start with, you will get all stressed when you think you simply can’t obtain the credit. A low income, a pre-existing loan, debt with other lenders, poor credit history and too advanced age might be a few of the logic behind why you never make the favorite client of financial institutions. They will provide you with money, but on less advantageous conditions. In these instances you could expect a higher rate, a lower amount of money and various other terms imposed on you.

One thing you ought to do today to improve your chances to obtain good mortgage loan financing is to work with your credit. It typically takes 12 months or two prior to repairing damage, however in that time period interval you should never be late in the repayment of your rates. For those who have a favorable credit, you’ll be able to already begin doing your research to check the different options you could have with the numerous lenders. Regardless how pressed you feel to get things sorted out last but not least have got a place to call home, you shouldn’t rush right into a decision.

It’s also advisable to begin with the premises that home finance loan financing is definitely an aid, an option. The savings you might have and also the family help matter a lot to build a money deposit and pay as much beforehand as possible. Families that have around 50% of the sum can consider themselves fortunate. The stipulations with lenders are a great deal better in such instances because the sum you borrow is lower. Which means you will not pay exorbitant rates every month and you’ll finish repayment sooner.

Do your calculations really carefully to make sure that you could spend the money for rates. Normally, you will find there’s maximum limit that the house loan rates may take from your monthly income. You might want enough money to cover bills, health and dental insurance and all the other costs related to family and home maintenance. Likewise you must have enough money left to be able to pay the home loans rates. This is the reason house loan financing often appears like lottery.

Maybe your financial plans looked really promising at the time you contracted the loan, but nothing is certain the business world. No job is safe anymore. Things could often turn against you, and difficulties could appear with all the repayment with the debt. Always take precautions and then try to save as much as you can!

Ashley Furniture Financing

Getting new furniture in today’s economy can be tough, especially if you have a mediocre job that just pays your bills. However, this doesn’t mean you can’t get the pieces of furniture you want for the price you’re willing to pay. Some of the best pieces of furniture on the market today are created by the Ashley company, and many furniture stores offer easy to use financing that will get you on track for paying a furniture note you can afford, no matter your income. In fact, even if you have poor credit, many companies are willing to work with you for Ashley furniture financing for a new living room suite, a new dining table, or just about any other piece of furniture you need for your home.

When applying for a new furniture financing loan, there are a few things you should consider. The financing company will look at your credit history, so you need to make sure you have decent credit before applying for a regular financing loan. If you have bad credit, this doesn’t make it impossible to get a loan, but it will be harder, and you should expect to pay higher interest prices. The normal bad credit rate is around 20% and you’ll need to have proof of a job and a checking account. Then you’ll be put through the loan process which could take around a week.

If you’re approved, you’ll be given a loan and put on a financing plan that you can afford for your furniture. This financing plan could be anywhere from 12 months to 72 months, depending on your purchase and how much interest you’ll be charged. Overall, this is the best way to go if you’re looking to get a new suite of furniture in your home without having to pay upfront. In fact, financing is a great way to build your credit as well, as long as you are making your payments online, you’ll be building your credit while getting the things you need, thus improving your quality of life for future purchases on larger items like a car or even a house.

Information About Manufactured

If you’re currently looking for a manufactured home financing loan there are a few things that you need to take into consideration to ensure that you get a loan that fits your needs. You don’t want a mortgage that feels like a financial anchor because this will not allow you to enjoy your new home. Your home should feel like a home, not a drain that takes everything you have to pay for.

The big mistake most people make when considering financing for their factory built house is jumping at the first offer that comes their way. This may be due to the fact that home buying can be a stressful undertaking and many people give into their perceived need to own a home without fully looking at all their options.

Before making the final decision on your loan financing make sure that you understand what you are being offered and how it may affect your future financial obligations. Also consider all the loan options available to you and shop around with different lenders to get the best rates and terms for your situation.

The first thing a manufactured home financing lender will want to know is how much equity you are bringing to the table. Equity can be viewed in two ways; how much value to you have built up in your current home and/or how much cash or cashable assets do you have available for a down payment.

The more equity you have the better the terms of your loan because you can put a larger down payment on your new home and decrease the amount needed on the loan by that amount. This makes for a better interest rate and payments that don’t break the bank every month.

You’ll also need to explore all your different loan options. There are a multitude of lenders out there so it’s in your best interest to take advantage of multiple price quotes and terms. You have many choices when it comes to lenders including local and national banks, mortgage brokers, and online lenders.

Online lenders have the advantage of offering you multiple quotes that contain very flexible terms and low interest rates. They can do this because they have lower overhead costs then traditional banks. And you can fill out your loan application in the convenience of your own home. It doesn’t get any easier than that.

Owner Financing Assistance

The local real estate market may not look bad compared to many harder-hit locations in nation, but if you find yourself waiting a lot longer to find a buyer for your home, then it may be time to offer owner financing assistance. Owner financing can be offered to a potential buyer and help you move your property much faster in a sluggish market. It sounds pretty simple, but in reality it requires a thorough understanding of the risks.

Before you can put the offer on the table for owner financing assistance, it is important to protect yourself both legally and financially. This starts by doing a thorough review of the buyer’s personal background, including their financial assets and employment records, references, credit scores, and other relevant information. There is no reason why you shouldn’t perform as rigorous a review of the potential buyer’s qualifications as any other financial institution would.

Secondly, when offering owner financing assistance, the purchase contract must be very carefully prepared, including the details of the owner-financing loan. Be sure to include a “deed-in-lieu-of-foreclosure” clause in the contract, as well as the amount, interest rate and specific terms of the loan. This way, if the new owner were to default on his or her loan, you would be able to take the property back from the buyer. An agreement should also state that the sale is “contingent upon the approval of the buyer’s financial information”.

As tempting as it may be, do not enter into a situation where the buyer avoids a down payment. By investing a lump sum amount in the property, the buyer is more likely to feel ‘invested” in the property and this lessens the risk of default.

Also, remember you can ask for professional help in executing the contract and closing the sale. You may require the assistance of a title company and a loan servicing company, as well as a real estate attorney to help you with the closing paperwork and financial aspects of the sale.

A Realtor may be your best source of advice and support when you offer owner financing assistance.

Summary

Offering an owner financing assistance to a prospective buyer could be the fastest way to sell your home so that you do not have to wait too long. However, there are risks associated with this transaction, so you are expected to make the necessary review of the buyer’s personal background which includes financial background, credit score and others. You should also ensure that the purchase contract is very carefully prepared, including the details of the owner-financing loan. Lastly, the services of a real estate attorney will be very helpful in this case. It is worth the time, money and effort you will spend.