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.
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Getting a Mortgage to Finance a Foreign Property Purchase
First lets recap on the steps generally involved in a successful mortgage application.
Basic steps involved in all mortgage applications
Calculate your budget and the amount you need to borrow. There will always be additional costs over and above the purchase price when buying property. These include legal fees and taxes, property registration fees, valuation fees and loan application fees. Allow at least 10% for costs over and above the purchase price - this means if your property is going to cost 200,000 your actual cost will be at least 220,000. You will also need to make an allowance for furnishing your new property or transporting existing furniture, either of which will be expensive. Remember too to allow for inspection visit costs and subsequent visits to complete documents.
Normally, you will need to be able to produce some cash to part-finance your purchase. While 100% mortgages are available, they are much harder to arrange and often have higher interest rates. Most lenders will only lend up to 80% of the purchase price.
All lenders consider the ability of the borrower to repay as their most important criterion. While the lender will always insist on using the property to be purchased as security against the loan, they try very hard to avoid having to foreclose and seize the property. So having a sustainable, provable income is nearly always essential to making a successful application, although there are exceptions to the rule. Apart from the percentage loan to value cap on the purchase, most lenders will also place a cap on your monthly repayments of a maximum of two thirds of your disposable income. Thus, if you earn 1000 per month after all state deductions and you have existing loan commitments of 400 per month, your disposable income is 600 per month. Lenders will restrict the amount you can borrow so that your repayments cannot exceed 400 per month.
Consider using a reputable mortgage broker to assist in obtaining a loan. Different lenders target different types of clients. Some lenders target higher-risk type clients, others use strict vetting and will only offer a mortgage to those who pass the vetting procedure.
If you approach a lender directly you probably will not know whether you fit into their ideal customer category. You may provide them with too little information or too much information, resulting in them declining your application. This refusal may then be posted with credit checking agencies which in turn makes it more difficult to get a loan offer from another institution.
Based on the information you provide, a broker will know from experience which lenders will look most favourably on your application. This can save you considerable time, money and most of all will not cause credit rating problems.
Virtually all lenders charge the borrower an arrangement fee. This fee is normally applied whether you arrange the mortgage directly or via a broker. The lender pays the broker a percentage of the arrangement fee, so normally nothing is added on to your overall costs. Some brokers will charge you an application fee. This is normally fairly small and reputable brokers will advise proceeding with the application only if they are as certain as they can be that the application will be successful.
Additional factors for foreign purchases
The most important additional factors in foreign purchases are:
Differences in local law.
Currency considerations.
In which country you raise the loan.
Local law
When purchasing in your home country, you will probably have some grasp of the legal and tax situation with regard to your purchase. Armed with this knowledge, you may need legal assistance only for the completion of the sale. However, when purchasing abroad, I recommend you seek sound legal advise from a local lawyer right at the start. You need to examine inheritance and tax laws among others. Your status in the target country (resident or non-resident) may also affect aspects of your purchase.
Currency
When purchasing abroad you may need to factor in currency exchange rates, and you will definitely need to factor in money transfer costs. You will need to discuss these with your home bank and your target country bank as both are likely to charge transfer fees.
Exchange rates always fluctuate, sometimes by a lot over a short time. You can arrange to buy your target currency in advance (this involves the exchange bureau or bank agreeing to a fixed forward exchange rate for a specified time - the longer the time specified the less favourable the rate).
If you fail to do this and your home currency declines against the target currency, your available budget will be lower. A significant fall in the value of your home currency during the period between contract signing and completion could cause you serious financial problems.
You could also opt to transfer all your money into the target currency before beginning your property search. In essence, it is absolutely vital to know exactly how much you have to spend in the local currency. Exchange bureaux often offer better exchange rates than the major banks.
In which country should you borrow?
This is a difficult one to answer precisely. The actual rates of interest charged are obviously a factor. But you also need to compare the economic performance of the two countries over the last ten years or so. Decide on which is the most stable - if one country's interest rates have fluctuated by large amounts while the other's has remained reasonably stable your decision will be easier.
No matter where you borrow, your loan interest rate will be subject to fluctuations. If you borrow in your home country you may have ongoing exchange rate fluctuations to bear in mind. If you intend to meet your monthly repayments from income derived in your home country, then it's probably best to borrow there. If, on the other hand, your repayments will be met from income generated in your target country (for example, you intend to rent out your property abroad), it makes sense to borrow there.
The key thing is to try and eliminate as far as possible any factors which may in the future cause you problems meeting your repayments.
