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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The Mood Of The Moment, Super Blues, Property News & Finances THE MOOD OF THE MOMENT
But how quickly the wheel turns. The new year opened with some enthusiasm and confidence and now, with the stock market tanking in free fall, the sentiment out there is very wary indeed. All this talk of a recession is self-fulfilling and it is interesting to watch people ducking for cover. I had a couple of property clients pull back from purchases and taking a wait and see attitude. I think property will be the winner from all this in the long run as it usually is. People look for a safe harbour in a storm. The combination of a nervous stock market and imminent threat of ongoing rate rises is understandably making people nervous. SUPER BLUES I feel sorry for all those who sold an investment property, at the government's urging, to sink their up-to-$1M into a super fund. I am sure that investment decision is making a few people feel a bit woozy as they scan the morning papers. They were hammered in August and now at the time of writing, over 1500 points or 22% has been wiped off the value of the All Ords since November with the worst one-day fall since 9/11. But for most people who do not panic and/or sell at the bottom, order will be restored in due course. But with all the talk of recession, it may take a while to recover. As they say, the market goes up by the stairs but comes down in the elevator! It could repeat the 80's bear market that kept dropping for two years after the crash of '87. The other interesting thing to remember is the absolute property boom that began after that slide. PROPERTY NEWS The Byron Bay hinterland is still a great place to buy, build and settle. The top end of the market is as strong as ever. It is also a great place to write about. Many of the financial journals and some of the tabloid rags have had their Byron Bay gossip sessions. The financials have been running stories about how big money has been coming to town with silly prices being paid for prestige property. It is a worry, as I believe that cashed up idiots come here and measure their penis size on how much dosh they can spend on a pad as an exercise in ego gratification. The sad thing is that it gets a spiral going and they can't help but make more money. I don't think it bodes well for the culture of a small town like ours. People like that don't really get "It". The Daily Telegraph was running a silly story on how Byron Bay doesn't really like tourists and that they should stay away - bollocks. Pop Star and Tantra devotee Sting was also in town - sorry, very gossipy today. Not staying at Rae's at Wategos as reported but staying in a few privately let homes in Belongil. Entourage of chef, driver and assorted PA's filled up at least 4 houses and rumoured to pay approximately $150,000 for the 10 days. Even though it rained constantly, he apparently had a good time and got to sample some of the spiritual and enlightening experiences the Bay has to offer. Last newsletter I mentioned how Suffolk Park was the winner of the property price rise stakes - storming the field with an average 20% PA rise in the last 5 years. I am amazed to hear that a lot of that increase must have happened in the last 6 months or so. It seems like only mid last year I was advising clients on getting it at around $600,000 and now entry level at beach side Suffolk is hitting $800K plus. It is easy to report on where the better than average price rises have been - but the big question is where will they be in the future. Well, as I have mentioned in previous newsletters, besides obvious top end locales like Wategos and Belongil, I am backing places like South Golden Beach (and other select pockets of Ocean Shores), Billindudgel, Broken Head (already gone!), Byron's Sunrise Estate and Pacific Vista, Upper Wilson's Creek, Old Byron Bay Road, Fernliegh/Newrybah area. Happy to take your call if you want any more info on that. FINANCE, MORTGAGE, LOANS, ETC. The major banks have pulled off a very clever trick. They managed to hold out against some of the recent rate rises and put out the impression that the non bank lender's rates (RAMS, Aussie, Mortgage Choice etc) were going to go through the roof. They say they have the advantage of using deposited funds and not buying at market rates they can hold out longer. Many brokers, myself included, have been refinancing people out of the non-banks into fairly good fixed rates. But as soon as they sucked the market as much as possible they quickly up their own rates without even taking the lead from the Reserve Bank. Sneaky Bastards! One silver lining of market meltdown is the reserve is more unlikely to introduce the rate rise in February as predicted. The other silver lining with rate rises is that they are often implemented to hose down a fast rising economy. What is the main ingredient of a hot economy - rising property values. Therefore I have never understood the logic of someone not buying an investment property because of fears of interest rate hikes. What you lose in rate rises, one will more likely pick up in spades with capital gain. For those thinking of fixing their rates in all this uncertainty, my belief is the present fixed rate may be too high to beat the banks over the long term. But by all means it is wise to fix a rate if it is "peace of mind" (a very good commodity at the moment) that you are seeking. There has been a lot of drum beating that rates are going to keep moving into double digits and stay there. I am not of that school of thought but also feel uncomfortable predicting mortgage rates as it is far from a science. Present rates on offer are about 8.1% for lo doc variable and between 8.15% - 8.25% for 3 or 5 year fixed. I know you can find better honeymoon rates - they are a rip-off - don't be tempted. Again, come in and discuss your finance situation anytime.
