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.
10 Fakta Menarik Mengenai Orang Yang Mempunyai Darah Jenis O
Real Estate Investment Strategies - Financing the Deal
What do you mean finance the deal - isn't this about acquiring property without using your own money? Of course it is - we will get into some techniques you can use without taking your wallet out of your pocket next, but I would find this discussion somewhat incomplete if I didn't touch a little bit upon financial methods that may require some skin (yours), and naturally, a pretty good credit score. Conventional: When I got started, I didn't have a couple hundred G's sitting in my bank account ready to plop down on my first rehab opportunity - perhaps you're in the same boat. But I did have good credit. If this is the case for you, consider doing what I did and visiting with your favorite mortgage broker (should also be on your professional team, right?). Get yourself a standing pre-approval - this will need to be updated from time to time but this is a nice tool to have in your arsenal. Why? Because it is necessary when you go MLS shopping - you know, scouring for great deals on your local multiple listing service with your agent - the same agent you chose to become part of your professional team. Let's not get confused here: remember, MLS shopping is only one of the ways you are employing to find sellers, certainly not your only way. Don't forget to continue your targeted mailing, signs, flyers, door knocking/leave behinds, classified ads, internet strategy... Are there deals on the MLS? Yes and no, I certainly couldn't speak for where you live, but I do go shopping in my area for REO's, short sales, and fixer-uppers on the MLS and I do indeed put offers on them. Not all of them are available for the price you need, but then again, some are. You will find out who is ready to play ball (the motivated seller) and who prefers to stay listed (the unmotivated seller) right away based on the seller's counter offer. Here's why you need to have that pre-approval we discussed above - it needs to be submitted now with your offer, without that pre-approval you're just wasting everyone's time. By the way, if you do have that $200k in your bank account, skip the pre-approval and whip out your proof of funds. Not to belabor the point, but if you are lucky enough to have an abundance of cash, give me a call (just kidding, kind of) use it - a cash offer that is free and clear of any mortgage contingencies will always rise to the top of the pile if you find yourself bidding against other investors. So I have a standing pre-approval for submitting offers, and I will use conventional financing if I find something that makes sense to buy and hold. If you have credit issues that will prevent a lender from sending over a pre-approval letter, don't sweat it, let's look at some other alternatives that may be available for you. Credit Lines: these can be secured or unsecured. I have a home equity line that I can tap into and I also have 2 unsecured lines I have access to (through another business). If you are a homeowner with a good amount of equity, you can speak with your lender (also a professional team member), about acquiring a HELOC. If you have another business that is credit worthy and in good standing you may want to also consider an unsecured line of credit. This type of financing is good for down payments, rehab costs, and (depending on your market prices and the amount of your lines) they can also be used to acquire a property outright with cash. Hard Money: this type of lender will have some pretty steep terms, but if you have purchased the property correctly, the sale of the repaired property will take care of the points and elevated interest rate necessary to squeeze into this type of loan. The good news here is that the lender will analyze the numbers associated with property you are trying to purchase rather than your FICO score. So if you are having an issue with getting into a conventional loan, this may be a nice alternative. The less than good news is that these lenders are looking for some of your personal participation (see credit lines above). In my area, I have found that the hard money lenders are scrutinizing the potential deal much more so than in the past. Prepare yourself to be grilled over your comparables, repair estimates, and ARV (After Repair Value). Like a lot of the conventional lenders we have been hearing about over the past 2 years, hard money lenders have eaten their share of deals gone bad and have had to foreclose on a large number of properties. As a result, the hard money lenders have also tightened their lending policies just like the conventional lenders. Speaking of ARV get to know it, and the necessary metrics involved in determining whether you have a deal or a dud. The standard formula form the not too distant past has been: ARV*70% - Repair Costs = MAO (maximum allowable offer). But in today's declining real estate market, you will need to be a bit more conservative, especially if you are going to deal with a hard money lender - Look for picking up property for 50-60% of ARV, the lower the better... Private Money: of course if you are fortunate enough to find a private lender or two - you know, one who will finance your deal for a fair return on their risk - then by all means, pass right to go! Finding a private lender(s) will certainly save you time navigating through today's rocky credit markets and allow you to spend your time finding deals! This is a point that should not be overlooked - let everyone know about what you do, the value you bring to your community - have you seen the returns on Wall Street lately? This is a great time to let the world know about alternative investment opportunities - network, network, network.... Securing financing will be a good first step for the beginning investor and it will also instill some confidence behind those offers you will be submitting. Yes indeed these different methods will require some personal finance/credit analysis by your choice of lender - if you need no money/no credit alternatives, stay tuned for our next discussion on creative financing: controlling property with options. Kevin Sullivan is an active real estate investor and owner of Maplegate Realty.
