Monthly Archives: November 2017

Being A Cosigner All Risk And No Reward

We all might have experienced a situation where a friend or a family member asks you to become a cosigner. Before saying yes, it is best to know what you are getting into. Typically, when you consider cosigning for an auto loan, you are agreeing to repay the loan amount if the primary borrower stops making payments. While you agree to it, the risks outweigh the benefits. You may consider it as a way of improving your credit score, but do not delve into it before fully understanding the risks associated with it.

Risks associated with Cosigning an Auto Loan

1. Damaged Credit Score

Earning a good credit score requires decent effort. When you become a cosigner, any form of delay or non-payment of the auto loan will reflect on your credit report. Inability of the primary borrower to make the payments can decrease your credit score. Also, your debt-to-income ratio increases when you become a cosigner. Ideally, a debt-to-income ratio should not be higher than 36 percent. Being a cosigner increases your debt against your income. And, your credit score decreases due to increased debt amount. Therefore, if the borrower has a poor credit history, rethink your decision.

2. Enforceable Legal Judgments

When the primary borrower is unable to repay the loan, the lender may take legal action against the cosigner. Also, there is a high probability that you are sued before the primary borrower. It is because you are likely to repay the loan amount fast in order to protect your credit score. In case, the primary borrower is unable to repay the loan, a cosigner’s assets and salary can be in jeopardy as the lender can claim his assets.

3. Reduced Credit Ability

When you are a cosigner, other lenders see you as someone who has already agreed to guarantee a loan. The lenders assume that you are already making monthly payments on the loan you have cosigned for, thereby leaving little money to make payments for a new loan. Thus, a new auto loan approval might become difficult for you.

Does it make sense to become a Cosigner?

While it may not be a financially sound decision to become a cosigner, you can agree to it when you are in a position to afford the risk. If you have a good amount of surplus cash or possess substantial assets to repay the loan amount of the primary borrower, you can think about it. Also, if you will be using the car, it makes sense to say yes.

Cosigning an auto loan may look like a lucrative method to improve your credit score. However, it can mean all risk and no reward when you have to deal with a damaged credit score, enforceable legal judgments and reduced credit ability.

Cosigning an auto loan may look like an easy way to improve your credit score. But, it is not true. Before you jump at the first chance of becoming a cosigner, arm yourself on the know-hows of the risks associated with it. Learn more about how it can mean all risk and no reward if you have to deal with damaged credit score, enforceable legal judgments and reduced credit ability.

The Advantages Of Hard Money Loans

When it comes to the real estate industry in the Washington, DC metro area, time and money is the name of the game and in most cases, a home flipper will need financing – fast. With more and more developers and house flippers searching for financing options other than a bank, hard money loans have emerged as a viable option. Often referred to as private money, these loans are a specialized financing tool, in which the loan is secured by a valuable asset, such as real estate. Considering the fact that some borrowers are finding it harder to get money from banks, either due to poor credit rating or lack of balance sheet history, many fix and flippers are opting for hard money loans. In the DC area, access to hard money loans in Virginia and Maryland are equally important.

In addition to offering flexible structure and no prepayment penalties, hard money loans in Maryland, Virginia, and DC relieve the borrower from the hassles of extensive documentation and financial background review.

Here are the top five advantages of hard money loans:

1.Speed – While traditional lending entities like banks may take months to approve loans, hard money lenders, can approve and fund in as quick as 2 to 3 days. Hard money loans, in short, are easier to acquire than a bank loan and cut through the red tape.

2.Money matters – With hard money loans, real estate investors can typically borrow a larger amount of money as compared to a bank loan. The reason behind this benefit comes from the fact that the loan amount is based on the collateral’s ARV, short for After Repair Value.

3.Fewer requirements – When compared to bank loans, hard money lenders have fewer qualification requirements – such as credit rating and balance sheet history. For many, fewer requirements and paperwork means a higher likelihood of loan approval.

4.Extended opportunities – Hard money loans provide new opportunities to real estate investors who want to invest in certain properties that conventional lenders won’t financing. It goes without saying, that banks are extremely risk-averse and will not grant a loan on properties falling outside of their strict lending criteria. In situations like this, borrowers can turn to hard money lenders to quickly obtain a loan to purchase a property in need of serious rehab.

5.Flexibility � In general, financial institutions take a one-size-fits-all approach when it comes to loan terms and conditions, giving little to no room for flexibility. Hard money lenders, on the other hand, can efficiently structure the repayment and terms in ways that are favorable to both the lender and the borrower.

At the end of the day, hard money loans edge out traditional ways of funding properties due to the fact that these types of lenders are not tied down by the stringent rules and regulations that govern conventional lending institutions. In addition to the flexibility, funding is fast, which in many cases, is the most crucial component of laying the groundwork for a profitable fix and flip.

Interest Rates On Home Loans

Home Loan:-
Loan acquired from a financial institution to purchase a home. Home loans consist of and justable or fixed interest rate and payment terms. Home loans may also be referred to as mortgage loans.
Home loans, also known as mortgages, use the borrower’s home for collateral. This home can be a single-family house up to a four-unit property, as well as a condominium or cooperative unit. Lenders fund home loans, but both the lenders themselves and brokers who act on behalf of the lenders originate, or process, them.

Construction Loan:-
A short-term loan used to finance the building of some real estate project. The builders take out a construction loan in order to begin the project while they obtain long-term funding. Because there is no guarantee that the builders will be able to obtain long-term funding and a construction loan is not intended to fund an entire project, construction loans are fairly risky, and, as a result, have high interest rates.
Mortgage Loan:-
A mortgage is an agreement that allows a borrower to use property as collateral to secure a loan. In most cases, the term refers to a home loan: when you borrow to buy a house, you sign an agreement saying (among other things) that your lender has the right to take action if you don’t make your required payments on the loan.
Takeover Loan:-
A takeover occurs when an acquiring company makes a bid in an effort to assume control of a target company, often by purchasing a majority stake. If the takeover goes through, the acquiring company becomes responsible for all of the target company’s operations, holdings and debt.
Loan Against Property (LAP);-
A loan against property (LAP) is exactly what the name implies — a loan given or disbursed against the mortgage of property. The loan is given as a certain percentage of the property’s market value, usually around 40 per cent to 60 per cent.
DTCP Approve :
Directorate of Town & Country Planning. except in chennai metropolitan area where CMDA is approving the layouts of housing, institutional & industrial layouts beyond 1 hectare extents all other places in tamilnadu DTCP is the authority to approve such developments.
Site Purchase Loan :
Indian investors are traditionally inclined towards buying land either purely as an investment or for building a house. So, if you are looking to buy a plot, you may not be eligible for a home loan, but for a land loan. Home loans are available only for the property already constructed, under construction or likely to undergo construction soon. For funding the purchase of a vacant plot, you will have to go for a land loan instead. Although the terms, rates and processes related to land loans are similar to that of a home loan

Top Reasons To Contact A North Carolina Credit Union

Surely, if you have never needed a loan before, you do not really know why you should consider getting in touch with a North Carolina credit union rather than any other available financial institution. Well, before making any decisions in this case, you need to be aware of a few important details that your local bank does not mention when you want to get a loan or benefit from a particular service that they have to offer. It all starts with the fact that a Winston Salem credit union consultant does not depend on commission.
On the other hand, bank consultants are motivated by different levels of commission to convince you that a particular financial product is better than another, even if the second option would match your needs. This is just one of the many reasons why you should consider looking into becoming the member of a North Carolina credit union. At the same time, you should know that even if you have a bad credit score, the right Winston Salem credit union might be able to find a proper solution.
For example, if you visit a North Carolina credit union first and you ask them to look into your current financial situation, they will tell you everything you need to know about it. So, if your credit score is not great, they will not turn you down right away. First, they will make sure that they look up every possible solution. After that, if somehow your credit score is still preventing them from approving your loan, they will offer you suitable advice on how to improve it in the shortest time possible.
Another reason why you should want to get in touch with a Winston Salem credit union is the fact that you will be treated like a valuable member of the community when you walk in such an establishment. Due to the fact that credit unions are owned by their members, you are actually part owner of the institution, which means that the consultants working there have our best interest at heart.
Also, you will be greeted with a smile and will have enough time to talk about your current situation, your needs and expectations. The credit union consultant will answer any questions that you might have and will make sure that when you opt for one of their financial services, you do not end up paying for something that you do not really need. You might also want to keep in mind the fact that credit unions ask for lower interest rates, which means that even if you get a loan, paying it back will not bankrupt you in the long run.
Surely, if you have never needed a loan before, you do not really know why you should consider getting in touch with a North Carolina credit union rather than any other available financial institution. Well, before making any decisions in this case, you need to be aware of a few important details that your local bank does not mention when you want to get a loan or benefit from a particular service that they have to offer. It all starts with the fact that a Winston Salem credit union consultant does not depend on commission.
On the other hand, bank consultants are motivated by different levels of commission to convince you that a particular financial product is better than another, even if the second option would match your needs. This is just one of the many reasons why you should consider looking into becoming the member of a North Carolina credit union. At the same time, you should know that even if you have a bad credit score, the right Winston Salem credit union might be able to find a proper solution.
For example, if you visit a North Carolina credit union first and you ask them to look into your current financial situation, they will tell you everything you need to know about it. So, if your credit score is not great, they will not turn you down right away. First, they will make sure that they look up every possible solution. After that, if somehow your credit score is still preventing them from approving your loan, they will offer you suitable advice on how to improve it in the shortest time possible.
Another reason why you should want to get in touch with a Winston Salem credit union is the fact that you will be treated like a valuable member of the community when you walk in such an establishment. Due to the fact that credit unions are owned by their members, you are actually part owner of the institution, which means that the consultants working there have our best interest at heart.
Also, you will be greeted with a smile and will have enough time to talk about your current situation, your needs and expectations. The credit union consultant will answer any questions that you might have and will make sure that when you opt for one of their financial services, you do not end up paying for something that you do not really need. You might also want to keep in mind the fact that credit unions ask for lower interest rates, which means that even if you get a loan, paying it back will not bankrupt you in the long run.

Car Guarantees More Bang For Your Bucks

With the rising population, the most stressed sector in today’s world is transportation. Due to reasons such as uncertain weather conditions and unexpected delays, you cannot rely on public transport. Therefore, it is best to buy a car for commuting from one place to another.

Amidst the different available options, what kind of car shall you prefer in order to get the maximum benefit out of your budget? Without a doubt, one should go for a certified pre-owned car. The necessity of owning a car and limited budget has helped the certified pre-owned car business flourish in America. You need not to worry about the quality of the car as the dealer certifies it. Plus, it attracts special benefits and offers that you do not enjoy when you buy a normal used car.

Here are some of the reasons why preferring a certified pre-owned car over a normal used car guarantees more bang for your bucks:

You get the Best Quality Car

A car with the best quality is eligible to become a certified pre-owned car. The simple reason is that the dealer does not want to spend extra bucks on maintenance and reconditioning of the vehicle. So, he chooses a car that is in a decent condition. A certified pre-owned car, practically, does not require any maintenance in the near future. So, you should not worry about anything.

Thorough Inspection of the Car

Before certifying a car, the dealer inspects every bolt of the car in order to find the tiniest fault. Once the dealer notes all the faults, he reconditions the car. Once satisfied, he certifies it as a certified pre-owned car. The main advantage of buying such a car is that you need not worry about it as the dealer addresses every major or minor problem.

Extended Warranty

Since the dealers recondition the car, they remain tension-free regarding the quality of the vehicle. Due to the same reason, they provide extended warranty to the car buyer. Having additional warranty will make you tension-free regarding the maintenance of the vehicle.

Some dealers also provide road-side assistance free of cost along with extended warranty.

Low Interest Rates

Despite the higher cost of a certified pre-owned car, lenders provide low interest rates to car buyers. It will lower your monthly payment burden. It is because a certified pre-owned car is as good as a new car. And, lenders don’t differentiate between a new car and a certified pre-owned car. So, they charge the same interest rate on both the vehicles.

More Offers

Since a certified pre-owned car is equivalent to a new car, dealers as well as lenders never hesitate to provide you with additional benefits. Dealers also provide free insurance, reduction in price, additional discounts etc. on special occasions.

You can enjoy the same discounts on a certified pre-owned car that the auto manufacturer offers you for a brand new car. Therefore, saying that you get the maximum benefits by spending the minimum amount of money cannot be wrong. So, buy a certified pre-owned car because it guarantees more bang for your bucks.

Buying A Rent-to-own Car A Feasible Option

A poor credit score can become a lingering nightmare and affect numerous aspects of your life. If you are credit-challenged and wish to purchase a car, getting an auto loan approval may seem like a tedious task. However, rent-to-own cars have gained significant popularity amongst those with a bad credit score. Typically, a rent-to-own car means renting and using the car from a dealership whilst paying a down payment and making weekly payments. Once you have completed the weekly payments of the car, the ownership of the rent-to-own car shifts to you, the buyer. As the dealer requires no significant credit check for the purchase of the car, many credit-challenged individuals turn to rent-to-own cars. Although they may seem like a lucrative option, the disadvantages outweigh the benefits.

What are the Downsides of a Rent-to-Own Car?

1) Expensive Purchase

When the dealer lines up used cars under rent-to-own category, he marks them higher than other cars. As no interest rates are charged on rent-to-own cars, he tries to make a profit through sale of the car. Therefore, purchasing a rent-to-own car means paying more to own a used car with a lower resale value.

2) Frequent Payment Schedule

The payment schedule associated with a rent-to-own car is more frequent as compared to a used car. The dealer requires you to make weekly payments as against the regular monthly payments on a used car. Due to frequent payments, it can become difficult to keep tracks of payments, thereby, attracting the possibility of a late payment fee.

3) No Effect on Credit Score

Regardless of your timely payments, your credit score will not improve due to a rent-to-own car. With the purchase of a regular used car, the ability to increase your credit score is a possibility. However, with the purchase of a rent-to-own car, the payments do not reflect on your credit report and will not help in improving your credit score.

4) Absence of Warranties

There are no warranties on rent-to-own cars. As you use the cars, the probability of a breakdown is higher than a regular used car. Therefore, any repairs, damages and breakdowns are your responsibility as a buyer of a rent-to-own car.

Is there an Alternative Option?

If you do not wish to buy a rent-to-own car, you can still avail a bad credit auto loan to purchase a regular used car. The advantage with purchasing a regular used car is that monthly payments can help you structure your finances and warranties can shield your car from any potential future damages. Thus, purchasing a used car can provide greater benefits in the long run.

A damaged credit score does not necessarily mean that you should opt for a rent-to-own car. The downsides of purchasing the car include expensive purchases, frequent payment schedules, little or no effect on your credit score and absence of warranties. The good news is that purchasing a regular used car with a bad credit auto loan is a suitable alternative.

Choose The Best Suitable Mortgage Option

Borrowing money to buy a new home can be an intimidating process. There are several options and each of them comes with different benefits. But to choose the right option you don’t need to become an expert. You can plan all of it and take one step at a time.
Basics of Mortgages
The first thing you should ask yourself when buying a mortgage is whether you want a Fixed rate mortgage or Adjustable rate mortgage. These two plans are not much different from each other.
Both of these plans allow you to borrow a handsome amount of money which you can pay back in the form of monthly payments.
Under both these plans your first year payments are shifted towards the payment of interest amount and then by the time the equity on your home grows faster.
Both these types require you to disclose your credit history in the form of debt payment, income, monthly expenditures etc.
Fixed Rate Mortgage
Fixed rate mortgage plans are more suitable for most of the clients. They consist on long term i.e. 30 years plan but you can also get 10 or 15 years plan. In this plan the interest rate remains the same over the term of the mortgage. So if you were paying 4% interest rate at the beginning of the mortgage you’ll keep paying 4 till the end. The benefit of this plan is that the interest rate will not rise even if they are going up.
Adjustable Rate Mortgage
In Adjustable rate mortgage plan, the interest rate change over the term of the mortgage. It starts from an interest rate which is lower than the market rate of that time and then sets back to regular rate after some time. So the amount of monthly payment also changes with that.
ARM plan also consist of 30-years plan or so, however, the rules for this plan are incorporated in your contract. So read it carefully before you sign the mortgage papers.
Adjustable rate mortgage plans can be complex because the amount of monthly payment keeps changing over the term of the mortgage. There may be chances that you monthly payment shrinks after few years because the mortgage rates will fall. But in times of high interest rate you have to pay huge monthly payments.
Therefore it is important to consider all points before choosing any one plan. Many homeowners lost their homes in the housing crash because they were stuck with a wrong mortgage plan. Therefore consult your mortgage broker before choosing a plan. It is their job to find the best suitable mortgage deals for their clients. They have experience and knowledge so they can guide you in the best possible way.
If you have any further queries or you want to discuss your mortgage options with our professionals, you can contact us and schedule your meeting today. Our dedicated team of professionals aims to help you through the mortgage process. So the process of home buying becomes a memorable journey for you.