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Category Archives: Finance

8 Financial Mistakes To Avoid When Applying For A Mortgage

Deciding on buying a house is easy. However, financing your home purchase is the tricky part. If you need help with your home purchase, then applying for a mortgage is next on your to-do list.

To increase your chances of sealing a good mortgage deal, make sure to avoid the following financial mistakes.

Taking Additional Debt

Your Debt-To-Income Ratio is one factor that lenders will check when applying for a home loan. If you rack up your debt before your mortgage application, your DTI ratio will go up. Most lenders consider borrowers with a DTI ratio of more than 43% a risky borrower.

Failure To Pay Your Dues On Time

Failure to make debt payments on a timely manner can have a huge effect on your FICO score and credit history. Your credit history and credit score reflect the type of debt payer you are. Both can affect your chances of scoring a mortgage. If you’re applying for FHA loans, you can qualify even with a FICO score of 580. However, for those applying for larger mortgages such as Jumbo Loans in Texas, you need a higher credit score – typically between 680-720.

Not Having Enough Funds To Cover For Down Payment Fees

While some mortgage programs allow borrowers not to pay an upfront fee, some will still require you to put at least the minimum down payment due to get a mortgage. It only means you need to start saving up cash if you plan on buying a house soon.

Saying Yes Because Of Low-Interest Rates

Some mortgage lenders will entice you with low interest rates. Most first-time homebuyers will naturally consider such an offer and thinking they can seal a good deal. However, there are other costs to consider. One is the APR, also known as the Annual Percentage Rates. Make sure to read, understand and ask questions to know what how much the mortgage really costs. This is why shopping around for mortgages and lenders is essential.

Having A High Credit Utilization Ratio

The way you use your credit card can also have a direct effect on your credit score. Many lenders consider using more than 30% of your credit card limits as a high Credit Utilization Ratio.

Recommended Read: What Is a Good Credit Utilization Ratio?

Making Career Changes Before and During Mortgage Application

Switching jobs can affect your chances of qualifying for a home loan since you’ll need to show how much your monthly income is and if it can cover enough for your expenses, debt payments, and the mortgage. You need to show financial proofs to your lender that you’re financially stable.

Not Getting Pre-Approved For Mortgage

Many people confuse prequalification with pre-approval. However, the latter is the gold standard in getting mortgage approval. By getting pre-approved for a home loan, you’ll get to know how much of a house you can really afford and will tell home sellers you’re capable of buying their home for sale.

Neglecting The True Cost Of Home Ownership

Buying a house is no easy expenses. Aside from the down payment, monthly mortgage, interest fees, and closing rates, there are other costs to consider. You need to consider your expenses like groceries, insurance, even home repair, and maintenance.

Good Read: 20 Hidden Costs of Home Ownership

Make sure to do your research and to ask your lender all the costs that come with the mortgage deal.

Quick and Simple Go With Private Money

Prepared land speculators prescribe utilizing private cash when financing ventures. Furthermore, they have a considerable measure of explanations behind doing as such. Here are a few truths you have to think about private cash, which is known in the land contributing world as hard cash.

Private money financing is popular among real estate investors because it is fast. Lenders know the urgency involved in real estate investing. They know the competition is tough and that if you need funding, you need it fast. They understand this and this is how they operate. Despite higher risks, hard money lenders approve or reject loans in just days. They even extend credit to those who have poor credit scores. Their way of assessing applications enables them to release loans in just days.

Lenders in this kind of financing will hardly care how much you earn from your office job, in case you have one. Unlike banks, they do not evaluate borrowers based on credit scores or credit reports. What lenders care about is the deal you plan to close using their money. In short, you must convince a lender that your project is worth funding and that you will be able to repay them through this.

Let us take rehabbing houses as an example. In case you need private money financing for a rehabbing project, lenders will evaluate the property you want to rehab. They will determine whether it will result in positive returns. If you are able to prove that your plan to rehab that property will bring you profits, the expect the loan to be approved. Now that’s easy money.

Hard money, unlike traditional loans, can also finance 100% of a rehabbing project. That means you get yo buy a cheap property to rehab and repair it using one loan. This is possible because of an unconventional way of computing how much money you will get from a lender.

Hard money lenders usually give between 60% and 70% of the after repair value of the property, better known as ARV. This is usually enough to shoulder both purchase and repair costs. It some cases, it can even answer closing costs. If you went to traditional lenders, for example a bank, you are likely to get an amount just enough to buy the property you want to rehab. As for the repairs, you will have to apply for a personal loan for that or use your personal money.

Utilizing Difficult Money Loans for a Down Investment

Is a “no cash down” land venture conceivable in today’s monetary conditions? Banks are clearly taking care of however there are different loan specialists why should willing fund land speculations. They will give speculators enough cash to buy an once-over house and even repair that property to it can be sold for a much higher sum. These moneylenders give hard cash advances.

Hard money lenders are unlike traditional lenders. These creditors lend money based on the real estate deal the borrower wants to close. In short, if the lenders think that the investor will earn enough profit to repay the loan, they will give him the funding he needs. In most cases, that funding includes money for the repairs – something you can’t expect banks to give borrowers.

Traditional lenders like banks, if ever, will provide a borrower money to purchase a property. But if that borrower is a rehab investor, or one who repairs and flips properties, he would need more than that. He will need money for improving the condition of the house. If an investor sought funding from traditional lenders, he would have to foot the repair funds. The case is different is he uses hard money loans.

Hard money financing can cover all those expenses. That simply means the investor can buy a property, repair it, and sell it without having to come up with out of pocket money. If so, it can be considered a “no money down” investment. But how exactly does this happen?

As mentioned, these hard money lenders base their decision on the deal that investor wants to close. They will usually provide around 65% of the property’s ARV, or after repair value. Therefore, if all of the investor’s expenses are within that 65%, a single loan will be able to finance the whole project. He wouldn’t need any personal money to complete the deal. That’s how hard money loans work.

For example, the ARV is one dollar. If the investor purchases the property for 50 cents on the dollar and will need another 15 cents for repairs, closing, and other expenses, then it’s a “no money down” investment. He’ll be able to buy a home and fix it without shouldering any of the expenses. One loan – the hard money loan – will be able to cover all of those expenses.

Dealing with Your Personal Finances Suitably

Cash can be difficult to oversee, particularly with such a variety of requirements and needs. The vast majority are perpetually worried monetarily. It appears to numerous individuals that necessities are more than their salary, making it difficult to make a decent living. Some will even think that its hard to spare any cash. It is however extremely conceivable to deal with your own accounts properly and be in a position to do everything that you wish to. Appropriate administration will dispense with monetary anxiety from your life.

Start by setting goals

There should be goals that you have with your money. Finances directly affect various parts of your life. Your main goals should matter. They could be anything from retiring early, starting a business or travelling to a favorite destination for a holiday. Owning a home or changing a career will also be affected by finances. By writing the goals, you will manage to prioritize them. You will therefore end up paying attention to the most important goals. You can also attach achievement periods.

Create a workable plan

It should be a plan that is geared towards achieving the set goals. A spending plan, for instance, will help you buy what you need, pay a debt and save some money in the process. The main aim of the plan is to help you work your way towards the goals you have set as most important to you. Everything you do should focus on progressive achievement of goals.

Create a budget and stick to it

It is an important tool in financial management. The budget should remain in place even after you have cleared your debts. Spending money is easy that making it making it very important to have controlled spending. By tracking your spending, you will minimize chances of getting into debt again. The budget will also help in reaching financial milestones that you have in place.

Ask for financial advice

A financial planner can offer insights on things such as investing your money. When you seek professional help, you will get to find out about any risks that are involved in what you wish to do. When you know the details beforehand, you will manage to make a decision that is right for you. The professionals can also help you in coming up with a budget that makes reaching your goals easier. Money matters can be tricky. When you get helpful advice, it should be easy to wade through the challenges of managing your money properly.

Financial management books can be helpful for individuals and even companies. There are books online that can offer all the insights, tips and advice on proper financial management. The internet has free books accessible to anyone who is interested in finding help with his or her finances. Some of the books handle the management process in a straight forward manner to make sense to all. You can download books touching on financial subjects you find most important for you. The books can lead you to success even without involving the services of professionals directly.

Several Ways of Borrowing From Hard Money Lenders

House rehabbers frequently look for subsidizing from hard cash loan specialists to back their arrangements. Otherwise called private loan specialists, these agents ensure that you can continue with your land contributing arrangement regardless of the fact that you are short in individual cash. Here are a few things you should know whether you plan to tap this sort of financing.

Always go for the good deals. If you doubt that you will make a lot of money from a particular rehabbing project, let go of it. There are scores of cheap homes you can buy and rehab out there. If lenders see the potential of the property you want to flip, then your loan application is likely to be approved. But if they feel that you will not profit from it, they will reject your application.

The amount you will get will depend on the ARV, or after repair value of the property. This is the value of the property after you rehab it. Hard money lenders usually lend between 60% and 70% of the ARV so the higher your after repair value, the bigger the money you will get. You can seek the help of a professional appraiser if you do not have the experience in estimating ARV.

You must learn to find hard money lenders the right way. The most convenient way to search for private lenders is through the Internet. You can try typing rehab hard money, which means that you are looking for hard money financing for a rehabbing project. You can also find private lenders through referrals, the classified ads, and local real estate clubs.

Be prepared to pay a higher interest rate. Private lenders use interest rates that are twice that of traditional lenders impose. Despite this, rehabbers and other real estate investors still prefer using hard money financing because it is more convenient. These kinds of loans are released in just days. Banks and other traditional lenders, meanwhile, usually take a month to process applications, especially those concerning large amounts of money. Applying for hard money financing is easier since borrowers do not have to secure so much financial documents.

Step by step You Can Obtain Secured Finance

The most widely recognized type of secured account is a home advance. Here are the essentials that are generally the same. The primary thing you should realize that, despite the fact that it is secured account which has generally less dangers for the moneylender than an unsecured advance, it is still a noteworthy buy and an advance of a considerable measure of cash for a private individual to get.

Be prepared, for that reason, to fill out an extensive loan application, and a lot of information on the property that is being used to secure the financing. Be prepared to explain your budget – your income and your expenses, your assets and your liabilities.

Be aware as well, that your secured finance options can change at any time, as rates do change. Once you have that secured financing in place keep an eye on interest rates.

It may be that somewhere down the road you will see interest rates drop and can save some money through a refinance process on the same secured property. Refinancing a mortgage has become quite commonplace.

When you see a better rate that will save you some money, and more attractive terms, try to take advantage of that secured refinance opportunity to save yourself a considerable amount of money over the life of the mortgage.

No matter which finance option you choose – and for a home loan its almost undoubtedly going to be secured – you must make your payments on time. This is the most important thing you can do to your credit and your ability to retain your home. Nothing can hurt your credit rating than making your mortgage payments late.

And since it is a finance options secured with your own home, youre risking the roof over your head when you are late with a payment. If your mortgage company offers automatic debit payments through your bank account take them up on that. Dont risk your home and your credit.

The options for buying a new car with a loan are generally going to be secured finance deals, although you can make them with the auto dealer or with the bank. You generally have a greater percentage of your own money in the way of cash or a trade in of your present car than you do for a home loan, but you almost always need a secured finance lender as well.

The other choice you would have is to lease the car. The problem with leasing is that the car is never really yours and to make it so you will end up with a huge balloon payment at the end of the lease.

The auto dealer finance option, still secured with your new vehicle, means higher interest rates than most financial institutions. It does have its benefits, however. For one thing you can buy the car, finance the car on the spot and drive it home. For busy people this can be a considerable savings of itself.

Utilize These Right Ways To Manage Person Finances

For a few, the thought of individual back never rings a bell. For those that do think of it as, some will do not have the learning to know where to begin. This article will diagram probably the most strong tips and exhortation accessible in regards to individual money alternatives. Using them could mean the security of your money related future.Many companies offer a matching program if you put money into a 401k. This is an excellent way to save money, and also gain some extra for the future. It is best to take free money whenever you can get it, and this is one of the best ways of doing that.

To save your money you may want to consider working from home. In reality, going to the office can cost you a lot. Between gas, parking, and buying meals, you are going to end up spending half of your check before you even receive it.

If you are out of school, go ahead and get your various student loans consolidated into one account. You will be able to combine multiple loans into one fixed interest rate and you will avoid having to remember to pay multiple lenders and accounts each month. Shop around for the best interest rate before choosing a lender.

Increasing your savings is a very good way to improve your personal finance. However, in order to do this successfully you must have a positive attitude toward saving. You should not think of saving as miserly or being cheap. It is about doing what is best for you and improving your current situation. Without the right attitude, it can be very difficult to stop yourself from spending.

Fishing, believe it or not, can be a way for you to supplement your personal finance. You can eat the fish that you catch and save yourself from having to buy food. You can also sell the extra fish from your catch or even trade it for other things.

Order your checks through the mail instead of from your bank! Banks subcontract the printing out and hike the price up so they make a profit. Mail order companies, in comparison, specialize in printing and will usually print directly for the customer at much cheaper prices than you would have to pay through the bank.

Cooking at home can give you a lot of extra money and help your personal finances. While it may take you some extra time to cook the meals, you will save a lot of money by not having to pay another company to make your food. The company has to pay employees, buy materials and fuel and still have to profit. By taking them out of the equation, you can see just how much you can save.

Personal financing is an important aspect of the responsible persons spectrum of considerations. Giving the sort of consideration and mindful decision making toward personal finance as you would give to any crucial aspect of your life plans and goals is advisable. With the right choices you can have profitability long-term.

Reasons You Should Get Hard Money Despite

Numerous financial specialists have been demoralized by the high premium forced by hard cash banks. Really, they were presumably “killed” by absence of data.

Contrasted with customary loan specialists, hard cash moneylenders force a multiplied financing cost. That is definitely not what borrowers’ ears were longing to hear, in spite of the fact that the individuals who keep on investing in land utilizing this sort of financing will say something else. They don’t utilize a high loan fee just to make life more troublesome for land financial specialists. To comprehend why they do this, it is imperative to realize that such banks hazard getting misfortunes at whatever point they support recoveries or different properties.

Bank and other traditional lenders carefully assess a person and his capability to repay the money whenever a borrower applies for a loan. They check his credit score or report and require the borrower to present numerous documents including a proof of income. This process is tedious and time-consuming, leaving the borrower to wait for around 30 days before he knows if his application is approved or rejected. This is to ensure that the loan will be repaid.

Hard money lenders, though, are at a bigger risk of making losses. They lend money even to those who do not have a good credit standing. That’s because they look at what a borrower is presenting rather than whether he has the ability to pay the loan with his current income. They assess whether the fixer upper a borrower will flip will actually result in something positive. They will decide to fund your rehab project if they see that you will be able to pay them once the property is sold.

They also compute how much money you will receive through the ARV, or after repair value of the fixer upper. Usually, the borrower gets around 70% of the ARV – an amount enough to purchase the fixer upper and in many cases, even fund the repairs. That’s buying, repairing, and selling a property without spending a penny.

Experts say that that is the essence of getting hard money financing: you get to flip a house and earn from it fast without spending your own money. They call this OPM, or investing using other people’s money. While interest rates in hard money financing may rise to around 18%, would you still care about it if you will get a 75% rate of return from the project you will get? That 18% will be dwarfed by the profit you will get from a project you might miss if you rely on tradition funding.

Let’s say you opt for banks and other traditional lenders that offer a 9% interest on the loan. With the competition among rehabbers heating up amid the recession, another rehabber could snatch the fixer upper you want to flip while you are waiting for the processing of your loan. Take note, that is processing and not approval. There is no guarantee that you will get the money after you wait for 30 days or so. But in hard money financing, loans are approved or rejected in just days, allowing you to seek money through other channels in case you are denied, without compromising the deal you want to close.

Several Ways On What To Do With My Money

Dealing with your own funds is imperative for any grown-up, particularly those that are not used to burning through cash on necessities, similar to, rent or power bills. Figure out how to make a financial plan! Perused the tips in this article so you can take advantage of your pay, regardless of your age or level of pay.

If you write checks monthly, balance your checkbook. The easiest way to lose sight of the money you have available, is to not know how much of it you are spending.
Writing checks is an easy way to lose sight. Sit down with a calculator and pencil, and keep your checkbook organized, and balanced. Do it at least once a month.

A great personal finance tip is to start improvising with your workout routine. You don’t have to spend a fortune on a gym membership or on expensive equipment. There are a lot of great body weight exercises that you can do at home, and you can get plenty of cardio done outdoors.

Try to avoid your local bank if you want to open a checking account. It is better to open an account at a credit union. Most credit unions have fees that are much less than those at the bank. Another good point is the fact that every dollar you deposit buys you a share in the company.

Try to use credit cards for things that you need instead of things you want and that will help prevent you from going into debt. If there is something you would like and you cannot afford it now, save up the money so that you can get it another time.

Set goals to save money. Whether it’s a small purchase or a large purchase, start saving for it. Figure out how much money you will need to save, and how long it will take you to save it. Work to make it to your goal as quickly as possible.

Visit a dental school if you need to have work done on your teeth. These places offer solid, supervised care for a fraction of the cost of visiting a regular dentist’s office. You can search on the Internet to see where the closest dental school is at in your area.

Set aside a small amount of money from each paycheck to use however you would like. For example, you might decide to go bowling with friends or treat your child to a frozen yogurt. Do not spend more than the predetermined amount; this method allows you to have a little freedom while still keeping your spending under control.

If you are having trouble paying rent, contact your landlord about reducing the amount you pay. Chances are that they won’t want to go through the hassle of listing the property and finding new tenants, if a small deduction in rent would keep you around. This is especially useful if you are a good tenant, who pays on time and keeps the property in good condition.

Specialists Lend A Hand With Several Ways On Lending Money

The littlest bills can bring about the greatest anxiety, particularly toward the end of the month when due dates appear to come quicker than paydays. At the point when the money related standpoint is dubious, numerous connect with loved ones for transient help. Lending money to friends is a common practice and although people often have the best of intentions, it can sometimes result in sticky situations. According to a recent study by IPSOS and PayPal, 71 percent of Americans have loaned money to family members and friends.

It may seem harmless to help a friend make a car payment or assist a co-worker going through a divorce who just needs “a little help.” But a temporary crisis isn’t always so temporary-and can quickly become an uncomfortable situation if the lender has to ask for the money to be repaid. As easy as it is to lend to someone you know well, it can be just as hard to pester them to pay you back.

According to etiquette experts Kim Izzo and Ceri Marsh, co-authors of “The Fabulous Girl’s Guide to Decorum”and “The Fabulous Girl’s Guide to Grace under Pressure,” money issues between friends and family members are difficult because money is inherently an emotional situation for both parties.

In fact, according to the survey, 57 percent of Americans have seen a relationship end because one person owed the other money. Everyone wants to be a good friend, but no one enjoys feeling like someone is taking advantage of their generosity, say Izzo and Marsh.

“But money lending can be done right,” continues Izzo. “We recommend setting some simple ground rules when considering the possibility of lending money. These ground rules can take some of the stress out of lending to friends and family, and even make it into a positive experience.”

Marsh and Izzo offer several tips for conducting successful financial transactions with friends and family:

• If you’re loaning money to someone close to you and if you’re financially able, consider making it a gift rather than a loan. If not, make it clear you expect to be paid back.

• To make collecting a debt easier and more comfortable, consider using a service called PayPal. This makes it possible to send and receive payments online. With PayPal, you can send e-mail reminders to the borrower. The lender can then get the money back instantly via email.

• Never co-sign a loan or credit card application for someone else without clear, written parameters, and always maintain a business-like environment.

• Don’t lend beyond your means. Only lend money that you don’t need back immediately so as not to ruin your credit or your relationship with the borrower.