Your Financing Strategy
Ask questions from your bankers which of one these will benefits you most and which one could be costly to you. You can also get free checks when you open your account, you do not need to pay for checks. All checks are processed the same way that is up to you and how you manage your money.
-Savings Accounts: Custom Savings, Money Market Account Checking Accounts: Economy Checking, Express Checking, -Regular Checking, Senior Checking, Student checking
-Your Debit/Visa Card to use for shopping could be free when you open your account, make sure you ask for it, at times they will ask you if you want one or not. Where you use your Debit/Visa Card to withdraw money matters to your bank, it could cost you for using it at the wrong places, ask your banker for information where you could use your card without paying extra charges...
Some banks charges between $1.00 up to $3.00 if you use their card to withdraw money from another bank that they do not do business with. It is your money...
Each one of the above has advantages and dis-advantages, be careful when you are opening your accounts; you could loose money to the bank right away. You also need to know if your monthly statements are going to be free or not, when you make inquiries, the bank could be charging you for too many inquiries. Some things are free from the big banks and something's are cheaper from the community banks.
Basic Requirements for lending you money:
· Savings and Checking Account
· (2) Good Credit or No Credit it depends where you are getting the money.
· (3) Collateral such as your House, Car, Boat, Gold/diamond or any valuable assets they can hold on
· Driver's License,
· Social Security numbers
· Good Employment, at least for six months.
Lenders Information:
Big Bank requirements-
Can be very tough to meet because they have to abide by the 'Federal Reserve Bank or Federal Deposit Insurance Corporation (FDIC)' regulations. They got their money from the Federal Reserve Bank at a lower rate, however, they could turn around and loan it to the smaller banks at a higher rate, and the smaller banks loan it at higher quote rate to the public.
Community Bank requirements/Credit Union:
Well, the community bank is no different either, they turn to the big banks to borrow money at a lower rate so that they can loan it to their customers/clients at a higher rate to make some profit to stay in business.
Private Capital market requirement:
This is where the business gets tougher. The Capital Market enterprise is a big boy on the Wall Street, where they can finance just about anything they like, because they are not being regulated by the government, it is an individual rich businessmen that have money to loan out at a higher rate. They are not required to follow financing rule rigidly as the bank does, but they still have follow the consumer law that protect all of us from being taken advantage of.
Family friends requirement:
This one is your best source of financing, if you could find a rich friend or family friends that can loan you money without any attachment or collateral. They may ask you to pay them some small interest, or none it all depends what you are using the money for, at they would like to get a piece of the apple when they know you are going to make a lot profit.
Collateralization:
There some companies out there that would loan you money to meet your emergency needs, but becareful, they may ask you to give them your house, car, motor cycle or any of your valuables for collateral just in case you were unable to pay them back, but, they are very quick to take your valuables and you may not have any re-course to take them to court for doing so. I would stay away from such financing unless you have to...
There is going to be a time when we are going to need finance or re-finance our mortgages, car, motorcycle, big boat, air-planes etc., that we cannot come up with up-front lump sum money to pay for it This force us to turn to our bank, family friends, private capital market, small loan companies to loan us that money. This is where we are being taken advantage of by offering us some sort of un-affordable rates. At first you would think this a great opportunity that it will not be problem, you could afford that payment being offered to you by your lender, you better think again before you sign that dotted line. They could be collecting interest from you money for long time without any of it going to your principle.
Pay attention to dotted Line and Small print in the loan documents:
The loan documents can be very tricky to read when you are not an attorney, the small fine prints areas are very important areas to pay attention to, because this is where they hid rates, timeline, and warrante, but if you don't pay attention to the rates they quote or offer to you in the loan document that you are going to sign you could be losing a lot of money. You probably better off to take to your attorney before you sign the dotted line.
In the fine print of the loan documents is where they hid most important information that your lender did not want you to know about, especially mortgage and credit card documents. It sounds strange, but it is true, If you don't believe what I said here in this document, go to your loan documents and read the small prints in there you may find out something that you would not like to see or hear about, or if don't believe what I said here, ask yourself a question of why didn't they just print the whole loan documents in a readable format with nice fonts that an average third grader can read and understand it without having to scratch their head or look up words in the webster dictionary for interpretation of words, after all you are the consumer paying them for this services and they will be collecting interest from your financing for such a long time. 95% of mortgage homeowner never gets to the point of paying principle or their mortgage finance off before being taken away from them, but the bank or private investor already started to benefit. Yes, I understand they took the risk to finance us.
I think what is fair is fair, they should make the loan documents more readable for us, and there should be no small prints that is had to read on any loan documents. They should be in a readable format that average Joe can understand; my question all the years was why are they making it so complicated to read if they do not have anything to hide? I also think the loan documents should not have so many pages when we are talking about saving the threes... Not too many consumers read all these pages, it has no value to have so many pages when no one really reads it, of course the attorney will not be making money if they these document could be reduced to minimum.
My solution to this big fat loan documents should be to reduce them to minimum, all it should it be contain is, who own the house, the rate, how long is going to be paid, warranty, borrower's and co-borrower, and all other very valuable information it should not be more than 10 pages long.
9 Silap Mata Terkenal Dunia yang Telah Dibongkarkan! Anda Boleh Berlatih dan Tunjukkannya Pada Orang Lain Pula!
Real Estate Investment Financing
There is a simple misconception about how the process of lending works. This article will try and summarize some of the basics of the lending process. We'll start with the very basic question about getting loans in the name of a business entity, then discuss some of the fine points of lending.
Many investors consider asset protection a very important part of their beginning strategy. So, the first questions that many investors asks, is "How do I get a loan in the name of my company?" The answer to this question depends on things like credit and available assets...personal assets, namely cash or other liquid assets.
Many "rehab lenders" who specialize in lending money to real estate rehab investors will lend to a new business entity with a personal guarantee by the borrower who signs for the loan. Why do lenders require this? Certain business entities offer limited liability for business debts.
Have you ever purchased any stock in a company? Let's say you purchased 10 shares of Microsoft, how would you like it if you were personally held liable for the debts of Microsoft for the amount of your investment? You, as a shareholder of Microsoft, are not personally liable for the debt or the legal cases brought against it. So getting back to the original point, a lender is not about to fork over $150,000 and not have either a business with assets or an individual liable for the repayment of the debt.
Even though a mortgage is an asset for the bank, it is only an asset as long as that note is performing (being paid off by the borrower). Lenders want the ability to know that the money loaned will be repaid or that they will have the ability to seize assets of the borrower.
The next question many new investors ask is, "Can I transfer ownership from me personally to my business entity?" The smart answer is no. First of all, what purpose would this serve? The business does not receive credit for paying down the debt. Secondly, a quitclaim deed is considered a violation of a due on sale clause which is written into most (if not all) mortgage agreements and even though the not continues to be paid and in good standing, a lender will not take lightly to finding out a transaction like this has taken place, leaving them out of the loop. Lenders like to be in control of their assets. Many people will say that lenders just won't find out due to the nature and size of their business, but make no mistake, as a borrower, you've signed a contract with an entity that has loaned you a significant amount of money. They're not just going to ignore the fact that a borrower has violated the contract.
The consequences for conducting your investments in this manner do not mean you will go to jail. There is no jailhouse for violators of due-on-sale-clauses. The consequences though may very well be the loan being called due with no exceptions. This may cause the investment to be foreclosed on and great damage to your personal credit to result.
When other lenders realize this, they may start to sniff around and before you know it, all your loans are being called due, leaving you with little or no recourse. Personally guaranteeing a loan is definitely a way to accomplish obtaining a loan for your business entity to purchase things like real estate. By doing so however, you are putting your personal assets and credit on the line. This decision can only be made by the individual investor.
In order to obtain a loan for purchasing real estate, in most cases, the bank will be looking at the property itself and the borrower. For beginning investors especially, banks will require every detail of the property and borrower. To explain briefly the difference between a purchase and a refinance loan, it is important for investors to realize the big difference between these two types of financing.
A loan for a purchase of real estate is based in almost every circumstance on the agreed upon purchase price of the property. Bank certified appraisals will almost definitely match the purchase price. It does not matter if the investor is buying the property 50% below market. The bottom line to a bank is the price being paid.
Conversely, refinance loans are based on the true value of the property. Quite a few banks will provide a very high Loan To Value (LTV) on refinance loans. The difference is the owner already has rights to the property. A certain history is there that indicates the owner is paying the current loan (or paid it off).
Additionally, the equity in the property, if great enough, will be encouraging to the bank based on the value of the property. The difference is the risk the bank has to take. A buyer, technically, has no history of performance on a loan when it comes to buying a property. Thus, the risk must be evaluated and measured. An owner in most cases, even if it's only one year, has a history of actually paying his/her debts.
This works the same exact way for a business. "Credit history" means something to a bank. When they look at businesses to lend money to, they measure the assets, liabilities, and equity of the company, plus the type of responsibility the owners/managers take in paying back debts and bills. They just don't blindly loan money to anyone, without having a good idea of how their money will be paid back.
So as you consider buzz phrases like "asset protection" and "business entity", you must realize that there are certain paths you can take toward financing your business/investments. The possibilities and ideas you discover may not be as easy as you once thought. However, like anything else, once you start actually doing it, it becomes like a bicycle ride. Just don't ever forget to look both ways...twice, before crossing any path.
©2007 noobdogs.com
