Secured Loans – How to Get Quickly Accepted For a Secured Loan and Get a Better Rate

February 24th, 2019 by admin

When a lender receives a secured loan application form he only has two areas on which to base his decision – you and the property. If he can put a tick in both of these boxes then you will get your loan at a good rate.

However, it is possible to still get your loan if either you or the property are not A1.

This is one of the good things about secured loans, they allow you to obtain a loan when other sources of finance may not be available.

Secured loans – You

Unfortunately, most things in this day and age are broken down and put into boxes and that includes you when you apply for a secured loan.

Your boxes will be:

o Your employment/ self employment
o How many outstanding loans you have
o Your usable (free) monthly income
o Your credit rating
o How you have treated your current (and previous if less than 12/ 24 mths) mortgage company

Secured loans – how to improve “you” in the eyes of the secured loan lender

Most applications for secured loans are made through a broker as most lenders do not like to gather all the information needed to process a secured loan. There is also a lot of overhead in this process which they prefer the broker to pay for.

Secured loans – rule 1

Make sure you find yourself a good secured loan broker. The secured loan lenders are not going to like me saying this but all brokers are not equal in the eyes of the lender. The better ones earn more money per application and get more secured loans paid out, as a percentage, than others.

These both directly effect you as the more the lender pays the broker the less of a fee he will need to charge you and the other reason is that you are more likely to get you loan paid out (and at possibly a lower rate) by using a well established secured loan broker.

Secured loans – rule 2

Work with you broker – not against him. I know it is a pain to keep having to produce paperwork but the more you have, the less pain you will receive when your full loan application reaches the secured loan lender.

Secured loans – rule 3

Go through your available income with your broker and get him to explain how the lender, he is putting you with, is working out your available income calculation. You might find you get a better rate if you do a bit of debt consolidation.

If you are self employed but have regular contractual work that you can prove goes back a few years, then you may be able to argue for a better rate. Self employed applicants for secured loans are usually penalised with the rate as they are considered a high risk.

Secured loans – rule 4

Your credit rating is nowhere near as important for secured loans as it is for personal loans (unsecured). However, it is still important if you want a good rate. Lenders of Secured loans (like most lenders) don’t like to see arrears on a credit report. A credit report will show the lender how you have paid your credit cards and loans over the last 12 months. It will also show any defaults or county court judgements.

Most secured loan lenders will ignore one months arrears on most loans as this can be argued that it is just a late payment. When you start to get to two months or more then you need a good (preferably provable) explanation or your rate will start to go north.

One thing secured loan lenders hate is current arrears when you apply to them for a secured loan. So, if you can, make sure your current commitments are up to date when you apply and this will keep your rate down.

Secured loans – rule 5

How you have paid your mortgage is sometimes more important than your credit report as the secured loans lenders see themselves as an extension of your mortgage and the best way they can see if you are going to pay them is to see how you have paid your current mortgage.

So, if you can, make sure your mortgage is up to date when you apply and if you have had any arrears then you will need a good explanation to keep your rate down.

To speed up you application you could get proof of your last 12 months payments from you mortgage lender and proof of the outstanding balance.

Secured loans – your property

Your property is the security that the secured loan lender has. If all goes wrong and you stop paying and communicating with the secured loan lender then eventually he will reposes your property (although he will not want to as it is creates another set of problems for them).

So, putting the above cautionary note aside, you are putting up your property as security for the loan. You are only doing this because it benefits you and you probably fall into one of the following categories:

o A lower rate than other unsecured loans offer
o A larger loan than is available through other financial sources
o You want a loan but your employment is questionable or you are self employed
o You have missed a few payments on some credit and the loan rates you are being offered from other sources are unpalatable
o Your credit is poor and you need to put up security to get a loan

It only makes sense that if you are putting your property up as security for your secured loan then you may as well maximize its value and get a lower rate.

The secured loan LTV (loan to value) is one of the major calculations that will effect the rate you are offered. It is simple to work out: you take your current outstanding mortgage, add to that the secured loan you are applying for and divide it by the current value of your property. The lower the percentage the better rate you should get.

So, if you want a lower rate then maximizing the properties value is one of the best ways to go about it. It might take a little bit of time but you could be paying for the secured loan for anything from 5 years to 25 years so the extra bit of effort could save you a lot of money in the long term.

Secured loans – property rule 1

You will almost certainly have a valuer come round to have a look at your property towards the end of your secured loan application.

Valuing property is not a science but an opinion and in this case the the persons whose opinion counts is the valuers that you have coming round. You don’t know if he has spent most of the day sitting in a traffic jam, had an argument with his children or forgotten his anniversary and what is more you can’t do a thing about it.

What you can do is be friendly and offer him a cup of coffee and make sure you have allocated time for him. Go round the property and point out any improvements you have made and are going to make.

Valuers like to be told that the property is going to be improved as it lessens their risk of getting sued by the secured loan lender in case they value the property wrongly.

Secured loans – property rule 2

Before the valuer gets to your property make sure it is looking its best. A small bit of effort will add thousands to your valuation if the property looks well kept rather than run down.

First impressions count so make sure the front and entrance hall is spotless, try and put any junk away to make the rooms look bigger and also try to finish those jobs that were half started and never quite completed.

Secured loans – property rule 3

As previously stated, the property value is an opinion so you need to make sure that the valuers opinion is the correct one. All valuers will contact local estate agents to see what is selling in the market near your property.

It would be to your benefit if you contacted the estate agents and got comparable properties that are on the market and recent sales. You can then decide which of your collection you wish to give the valuer (or you can send them on to your broker but this is not quite as good as giving them to the valuer).

Human nature being what it is, your comparables will probably end up in the valuers file and he will take these into account when valuing your property.

Student Loan Consolidation Companies – How to Choose the Right Company For You

February 17th, 2019 by admin

Student loan consolidation is a way for graduates to have all their student loans combined into one loan. This loan is handled by one creditor. The creditor pays the multiple loans in full, leaving the student to pay for one new loan. Students no longer need to pay multiple student loans with separate billing cycles, dates or interest rates. They now have one loan and one interest rate, to be paid to one creditor.

When considering loan consolidation. You should do the research. First know the terms of agreement, monthly payments, and interest rates for each loan and creditor before looking for a loan consolidation company or program. When selecting a company or program, make it a point to compare them; know their terms of agreement, interest rates and obligations. Once you have carefully selected a company or program you feel is suitable for you provide them the information you had gathered.

There are Federal and Private Student Loan Consolidations. Federal Student Loan allows a student to have all their Federal loans combined into one new loan.

The government provides Federal programs such as:

o The Federal Family Education Loan Program (FFEL). FFEL will soon be replaced by the Direct Loan program and Pell Grant and the Federal Direct Student Loan Program (FDLP). These programs allow students to have their loans from Stafford Loans, Federal Perkins Loans and PLUS Loans combined into one Federal loan. These are fixed-rate loans backed up by the U.S. Government, offered to students and parents.

o The Federal Direct Student Loan Program (FDLP) was created by the U.S. Department of Education in effort to assist parents and students with their loans.

Private Loan Consolidation is combining private student loans into one new loan. Before considering private loan consolidation, apply for a federal loan, the reason for this is to better maximize federal loans that are available. Private companies such as Sallie Mae recommend it.

Here are several Federal Loans:
o Perkins Loans are funded by the government. They carry a very low interest rate but are need-based, a financial officer would determine if a student is eligible.

o PLUS Loans are for parents of undergraduate students. There are also PLUS Loans for students as well. Payments on this plan will begin once this loan is approved. PLUS loans allow you to take up to 10 years for repayment. Commercial banks and online lenders offer PLUS Loans for both parents and students.

o Stafford Loans offer a low interest rate. They do not raise their interest rates any higher. Stafford loans do not require a student to pay any interest while at school and are not required to pay the loan in the six months after graduation. It offers 10 years for repayment.

Here are a few private companies that offer Loan consolidation:

o Loan Approval Direct offers interest rates as low as 3 percent. Reducing a student’s monthly loan to as much as 60 percent.

o SLM Corporation or commonly named Sallie Mae. Sallie Mae offers a range of options depending on the type of school or what education program a student would have. Such programs include Federal Stafford Loan, Parent PLUS Loan, Graduate PLUS Loan, Sallie Mae Smart Option Student Loan, Continuing Education Loan and Career Training Loan.

o Citibank provides programs such as CitiAssist Undergraduate and Graduate Loans, CitiAssist Health Professions; CitiAssist Residency, Relocation and Review Loans; and the CitiAssist Law and CitiAssist Bar Exam Loans. Students receive a 0.25% interest rate reduction in their auto-debit payment program. These programs take up to 20 to 25 years to repay.

o EdFed is another private company. By selecting one of their plans a student can lower their monthly payment by as much as 60 percent. They also provide interest-only payments. The fixed interest on EdFed is the weighted average of the interest rates of the loans a student consolidated, rounded to the nearest 1/8th percent.

Alternative Loan Options for Residential Real Estate Investment

February 9th, 2019 by admin

Conventional loans are typically the hardest to obtain for real estate investors. Some lenders don’t allow income from investment properties to be counted toward total income, which can make global underwriting a problem for certain investors, especially those who already have several existing conventional, conforming real estate loans reporting on their credit. In these cases, the investor must look outside conventional funding for their investments. Two of the more popular choices for alternative financing are portfolio loans and hard money loans.

Portfolio Loans

These loans are loans made by banks which do not sell the mortgage to other investors or mortgage companies. Portfolio loans are made with the intention of keeping them on the books until the loan is paid off or comes to term. Banks which make these kinds of loans are called portfolio lenders, and are usually smaller, more community focused operations.

Advantages of Portfolio Loans

Because these banks do not deal in volume or answer to huge boards like commercial banks, portfolio lenders can do loans that commercial banks wouldn’t touch, like the following:

  • smaller multifamily properties
  • properties in dis-repair
  • properties with an unrealized after-completed value
  • pre-stabilized commercial buildings
  • single tenant operations
  • special use buildings like churches, self-storage, or manufacturing spaces
  • construction and rehab projects

Another advantage of portfolio lenders is that they get involved with their community. Portfolio lenders like to lend on property they can go out and visit. They rarely lend outside of their region. This too gives the portfolio lender the ability to push guidelines when the numbers of a deal may not be stellar, but the lender can make a visit to the property and clearly see the value in the transaction. Rarely, if ever, will a banker at a commercial bank ever visit your property, or see more of it than what she can gather from the appraisal report.

Disadvantages of Portfolio Loans

There are only three downsides to portfolio loans, and in my opinion, they are worth the trade off to receive the services mentioned above:

  • shorter loan terms
  • higher interest rates
  • conventional underwriting

A portfolio loan typically has a shorter loan term than conventional, conforming loans. The loan will feature a standard 30 year amortization, but will have a balloon payment in 10 years or less, at which time you’ll need to payoff the loan in cash or refinance it.

Portfolio loans usually carry a slightly higher than market interest rate as well, usually around one half to one full percentage point higher than what you’d see from your large mortgage banker or retail commercial chain.

While portfolio lenders will sometimes go outside of guidelines for a great property, chances are you’ll have to qualify using conventional guidelines. That means acceptable income ratios, global underwriting, high debt service coverage ratios, better than average credit, and a good personal financial statement. Failing to meet any one of those criteria will knock your loan out of consideration with most conventional lenders. Two or more will likely knock you out of running for a portfolio loan.

If you find yourself in a situation where your qualifying criteria are suffering and can’t be approved for a conventional loan or a portfolio loan you’ll likely need to visit a local hard money lender.

Hard Money and Private Money Loans

Hard money loans are asset based loans, which means they are underwritten by considering primarily the value of the asset being pledged as collateral for the loan.

Advantages of Hard Money Loans

Rarely do hard money lenders consider credit score a factor in underwriting. If these lenders do run your credit report it’s most likely to make sure the borrower is not currently in bankruptcy, and doesn’t have open judgments or foreclosures. Most times, those things may not even knock a hard money loan out of underwriting, but they may force the lender to take a closer look at the documents.

If you are purchasing property at a steep discount you may be able to finance 100% of your cost using hard money. For example, if you are purchasing a $100,000 property owned by the bank for only $45,000 you could potentially obtain that entire amount from a hard money lender making a loan at a 50% loan-to-value ratio (LTV). That is something both conventional and portfolio lenders cannot do.

While private lenders do check the income producing ability of the property, they are more concerned with the as-is value of the property, defined as the value of the subject property as the property exists at the time of loan origination. Vacant properties with no rental income are rarely approved by conventional lenders but are favorite targets for private lenders.

The speed at which a hard money loan transaction can be completed is perhaps its most attractive quality. Speed of the loan is a huge advantage for many real estate investors, especially those buying property at auction, or as short sales or bank foreclosures which have short contract fuses.Hard money loans can close in as few as 24 hours. Most take between two weeks and 30 days, and even the longer hard money time lines are still less than most conventional underwriting periods.

Disadvantages of Hard Money and Private Money Loans

Typically, a private lender will make a loan of between 50 to 70 percent of the as-is value. Some private lenders use a more conservative as-is value called the “quick sale” value or the “30 day” value, both of which could be considerably less than a standard appraised value. Using a quick sale value is a way for the private lender to make a more conservative loan, or to protect their investment with a lower effective LTV ratio. For instance, you might be in contract on a property comparable to other single family homes that sold recently for $150,000 with an average marketing time of three to four months. Some hard money lenders m lend you 50% of that purchase price, citing it as value, and giving you $75,000 toward the purchase. Other private lenders may do a BPO and ask for a quick sale value with a marketing exposure time of only 30 days. That value might be as low as $80,000 to facilitate a quick sale to an all-cash buyer. Those lenders would therefore make a loan of only $40,000 (50% of $80,000 quick sale value) for an effective LTV of only 26%. This is most often a point of contention on deals that fall out in underwriting with hard money lenders. Since a hard money loan is being made at a much lower percentage of value, there is little room for error in estimating your property’s real worth.

The other obvious disadvantage to a hard money loans is the cost. Hard money loans will almost always carry a much higher than market interest rate, origination fees, equity fees, exit fees, and sometimes even higher attorney, insurance, and title fees. While some hard money lenders allow you to finance these fees and include them in the overall loan cost, it still means you net less when the loan closes.

Weighing the Good and the Bad

As with any loan you have to weigh the good and the bad, including loan terms, interest rate, points, fees, and access to customer support. There is always a trade-off present in alternative lending. If you exhibit poor credit and have no money for down payment you can be sure the lender will charge higher interest rates and reduce terms to make up for the added risk.

When dealing with private lenders make sure to inquire about their valuation method.

Also, with hard money lenders, you should be careful in your research and background checking. While hard money loans are one of the more popular alternative financing options, they are often targets for unscrupulous third parties. Before signing any loan paperwork make sure to run all documentation by a qualified real estate attorney and/or tax professional. If you suspect fraud or predatory lending contact the state attorney general office.

There is an excessive amount of traffic coming from your Region.

February 3rd, 2019 by admin