Wednesday, February 28, 2007

Loans – a human need

Strange as it may seem, it wouldn’t be an exaggeration to state that loans have become an essential part of everybody’s lives. From eager-to-learn students to teachers; from single people to long-wedded couples; from tenants to homeowners, we all seem to need loans at one time or the other.

There are certain aspects a person looking to avail loans must take into account, like the risks he is willing to take; the commitment he is prepared to undertake; his cash flow requirements; the lender to avail the loan from etc.

Broadly speaking, there are two types of loans in the market: secured loans and unsecured loans. With secured loans, the borrower can avail lower Annual Percentage Rates. However, there is a risk one has to take to get these loans.

With secured loans, borrowers need to put up collateral as security to avail the amount. The collateral in question here generally determines the amount that is loaned out. Greater the collateral, bigger will be the loan amount. Typically, the home acts as collateral. This has engendered the term “homeowner loan”, which a secured loan is loosely referred to as these days. In reality, the security can be any asset of value. With secured loans, one can borrow a relatively greater amount (usually £75,000 as the maximum).

With unsecured loans, there is no need for the borrower to provide any assurance. The lender faces a greater risk with this type of loan, as there is no real way to get the money back should the borrower default on the repayments. This is, however, no leeway for the borrower to default. The lender can always take legal recourse to get back the due amount. The one benefit with unsecured loans is that it can be availed comparatively quickly, as the evaluation of property is absent in this case. There are several sources to avail loans from. Conventional banks and financial institutions are two of the most established avenues. Then there are private lenders and the now-popular online option.

Summary: Loans have become a necessity in today’s world. There are broadly two types of loans: secured loans and unsecured loans.

Secured homeowner loan: really cost-effective and easy to deal with

You had to work day in and day out to be a homeowner. Now it is the turn of your home to work for you round the clock. And truly it is doing so by giving you shelter and protection. But surprisingly this is not all that your home can do for you. It can provide you with fund in the moment of dire need. For that you have to take secured homeowner loan, one of the cost-effective modes of fund raising.

Secured homeowner loan is offered against the home of the borrower. As a rule you should have sufficient amount of equity available in your home to take this loan. However, there are some lenders who get ready to offer this loan to homeowners who have no equity available in their home.

In sharp contrast with other type of loans, secured homeowner loan comes with a bundle of benefits that make it really cost-effective. It carries low interest rate which curbs the cost of the loan to a greater degree. Again this low interest rate while combined with long loan period makes the repayment instalment small. All these features make it easy to deal with the loan.

Borrowers of secured homeowner loan can enjoy flexibility in all the terms and conditions of the loan. Any missed payment will not be treated with severity; rather you can clear it along with the next instalment. You can avail the loan despite your poor credit too. Above all, this loan gives you the chance to unleash the equity tied-up in your home.

Summary: Your home can be a good source of cash if you take secured homeowner loan against it. This loan comes with a bundle of benefits that make it really cost-effective. Its flexible terms make it easy to deal with.

Secured loans for homeowners: Your home is your heaven

"Give shelter to your dreams with the help of your home." Homeowners are definitely very fortunate in terms of availing financial aid to fulfil their dreams and desires. Home is an asset for the homeowners. They can utilise the equity in their homes to get financial advantages through secured loans for homeowners. Lenders feel more than happy to offer secured loans to homeowners because the loan amount is secured against the home. Lenders know that they can seize or sell the home in case the homeowner fails to repay the loan on time. So, the lender is sure he will be able to recover the loan money from the borrower. This confidence of the lenders and lower risk perceived enable the borrowers receive the following privileges:

* low interest rate
* flexible monthly instalments
* easy availability
* approval for a large sum of money

The loan amount that you can receive depends upon the equity value of your home. Greater the equity, greater the sum of money you can receive. One can get up to 125% of the property value as secured loan. So, the lender will first get your home value assessed and then decide the loan amount to be approved. However, a homeowner should not get too tempted by his dreams and desires to endanger the home. Take care to apply for the amount that is extremely necessary. Be sure that you are able to bear the monthly instalments comfortably. Always keep in mind that your home is under constant threat of being repossessed by the lender in case you fail to repay on time.

A homeowner is free to use the secured loans for homeowners for any purpose, such as making home improvements, meeting expenses of higher education, arranging for a wedding, purchasing a stylish car, managing your debts or anything under the sun.

Summary: Homeowners can take advantage of the secured loans to fulfil their needs and desires. The equity in the home can be utilised to avail loans with easy and flexible repayment terms.

Homeowner Loans- Raise funds from your home

Owning a home in the UK opens you to varied loan prospects at competitive rates. Home being a fixed asset is the best collateral the lender can ask for. So, UK lenders prefer giving loans to homeowners. A homeowner loan is probably the best way to procure hefty amounts of loan. You can get a fruitful deal at attractive interest rates and have flexible repayment options as well. To define it, homeowner loans are loans that allow you to borrow money based on the equity of your home. Cited below are the essential features of homeowner loans.

• The home needs to be valuated
• Long procedure as legal validation is involved
• Loans available up to £100,000
• Enables to borrow from 90% to 125% of your home equity
• Flexible repayment period from 3 to 30 years
• Multipurpose loans
• Competitive interest rates
• Homeowner with bad credit can avail these loans
• Home will be seized in case of failure in repayment

Secured and Unsecured Homeowner Loans
Though the secured homeowner loans are a popular option wherein the home of the borrower is put on stake as collateral, lenders in the UK loan market offer unsecured homeowner loans as well. In the case of unsecured homeowner loans, since nothing is put as collateral, the loan amount is smaller and the loan carries a higher rate of interest, as compared to the secured counterparts. However, before going in for homeowner loans, shop around in the market, make a comparative study of the various and look for details like arrangement fees, early repayment charges, and the credit policies of the lenders.

Homeowner loans trend in the UK market
The number of properties occupied by just one person was around 20 million in 1990. The same is projected to hit 25 million in 2020. (Source: Discussion on Communities and Local Government, DCLG). The trend is reinforced by a research conducted by the Economic and Social Research Council that found that since 1971, the population of UK has increased by 5%, but the number of single households has increased by 31%. More homes mean more people who can go in for availing homeowner loans. This is an indicator of boom to be expected in the market for homeowner loans.

Summary: Homeowner loans give homeowners in UK the freedom to procure hefty loan amounts at competitive rates of interest. The loan amount is based on the equity of the home, exclusive of the running mortgages and debts on the home.

Homeowner Loan – model loan for the homeowner

Secured loans are generally termed homeowner loans. This is because the collateral used for homeowner loans are typically homes. However, in truth, collaterals can be anything of value. With a homeowner loan, interest rates can be variable, unlike unsecured loans where rates tend to be fixed.

With homeowner loans, one can get a longer repayment term as well. However, the borrower may also have to pay extra charges, like a property valuation fee.

The interest rates are comparatively lower with a homeowner loan. This has mainly to do with the presence of collateral in the case of this loan type. The collateral assures one thing to the lender – the loan will be recovered one way or another. If the borrower defaults, the collateral can be sold off to recoup the loan amount.

The greatest benefits with a homeowner loan are that the money offered can be repaid over a distinctly greater time period, in comparison to unsecured personal loans. The repayment period can stretch up to thirty years. The amount borrowed is dependant on the equity in the house. There are cases where the borrower can get more, but that usually warrants elevated interest rates.

Of course, the elongated time-frame engenders a lot of other benefits for the borrower. As the loan can be paid back over a greater duration, it becomes easier to manage the monthly outflow. This assists in supervising the finances better. However, there is a downside to this. Should the loan not be repaid in time, there is a clear chance that the borrower could lose his home.

There are several avenues to procure a homeowner loan. While the traditional banking institution is still a major player in this regard, other options are coming up too. Private lenders are one. The other is the online option, which is arguable the best in terms of choice and customer convenience.

Summary: A homeowner loan necessitates the borrower to put up collateral – his home - as security. These loans have a longer repayment term, and come with slight lower monthly instalment rates than unsecured loans.

Homeowner Loan – the homeowner’s most viable choice

Secured loans require the borrower to put up an asset as collateral against which the loan amount is issued. The popularity of this loan type is increasing in the UK. However, there is a flipside to this. There have been an astonishing number of repossessions in the country, due to non-repayment of the loans.

This loan is also loosely called a homeowner loan, as most of the assets that are put up as collateral happen to be homes. The advantages with taking a homeowner loan are several. The amount one can borrow with this loan is big – the typical figure is £75,000. Even this is a flexible amount though. With a collateral of greater value, one can always seek (and get) a bigger amount. Also, there is the added advantage of a long repayment term, which, at times, is as long as thirty years. Secured loans are ideal for circumstances that necessitate a big amount of money. The longer repayment term helps the borrower to manage finances better.

There are disadvantages with a homeowner loan too. The most glaring one is the threat of repossession of property, in the event of a repayment default from the borrower’s side. Secondly, availing a secured loan means one has to possibly go through endless paperwork. The expediency factor is not there with this loan.

There are several avenues through which one can get a homeowner loan. Some of the standard sources are banks; building institutions; private lenders, and the Internet. Of these, the first two have been long established in the market and have managed to gain the trust of the customers. Private lenders are a more recent addition that has come about owing to specialised customer needs. However, for sheer customer comfort and convenience, there is nothing as feasible as the Internet.

Borrowers taking secured loans should do so with discretion and after an honest evaluation of their financial base. With these loans, the worst-case scenario is indeed the nastiest – the loss of a home.

Summary: homeowner loans are gaining popularity in the UK market today. However, one should take these loans with discretion, as the price for non-repayment is a massive one – repossession.

Secured homeowner loans – loans for the homeowner

A secured loan is freely termed a homeowner loan. A secured homeowner loan necessitates a home to be put up as collateral by the borrower in order to procure the amount. Procured against collateral, generally a home, Secured homeowner loans have lower interest rates compared to unsecured loans. This leniency from the lenders is owing to the presence of collateral in the case of a secured homeowner loan. If the borrower defaults on the repayments, he can lawfully lose the collateral to the lender.

With these loans, one can borrow a distinctly greater amount than what one does with an unsecured loan. The amount dispensed can vary between £5000 to £75000. The latter is flexible. If the value of the security is greater than that amount, there is likelihood of the borrower being given an even bigger amount. As far as the value of the collateral is concerned, it can be of equal or greater worth than the loan amount.

The usage of an unsecured personal loan is not limited. The money can be deployed for wedding expenses, home renovation, launching a new business venture, children’s’ education etc. Typically, the repayment term is around three years for little amounts. For a distinctly larger loan, it can stretch up to 30 years.

Banks, building societies, private lenders and online lenders provide secured homeowner loans. For quickness and choice, the online lender is the most feasible. One can access different lenders in a matter of a few hours, by logging into their respective websites. These websites offer different quotes and studies. There are also facilities like loan and repayment calculators, which may help the borrower avail a better deal.

A borrower applying for a secured homeowner loan may have to provide a few details, including his name; address; contact information; telephone number; email address; amount he is applying for; value of the security; the loan’s purpose etc.

Summary: Secured homeowner loans can be availed by putting a home as collateral against the loan. These loans have lower interest rates and a longer repayment term.

Tuesday, February 27, 2007

Home Equity loan, Cashing in On Your Equity

This is a type of loan under which a property owner uses his residence as collateral security and can get prearranged amount against the property. The loan allows you to use into your home's built-up equity.

Home equity is the actual difference between the amount your home could be sold for and the amount that you already owe on the mortgage. Assume that the market value of your home is $200,000 and you owe $70,000 on your mortgage, then you have $130,000 equity available on your home. Remember that if you have more than one mortgage taken on your property, then all of them have to be considered for calculating the outstanding dues.

A home-equity loan is a good way to borrow money for two main reasons:
1. The interest rate is one of the lowest loan rates a borrower can get.
2. The interest you pay on the loan is tax-deductible. Thus it is sometimes recommended by many to replace other consumer loans whose interest is not tax-deductible, such as auto loans, credit card debt, and medical debt with the Home Equity Loan.

Caution: If you don't repay the debt, you can risk losing the home and be forced to move out. Do act with care and make sure you are able to fulfil the repayment terms.

There Are Two Types of Home Equity Loans
1. The standard home equity loan,
2. The home equity line of credit (HELOC's)

In a standard home equity loan, a pre specified amount of money is loaned in a lump sum for a specified period of time and the same amount of interest is paid every month. It is also called a term loan, a closed-end loan or a second mortgage installment loan.

HELOC works similar to a credit card because it has a revolving balance. A HELOC allows you to borrow up to a certain fixed amount for a specified period of the loan which is set by the lender. During that time period, you can withdraw as much money as you need. As you clear the principal, you can use the credit again, like a credit card.

These loans are repaid in a shorter period of time than the first mortgages. They often have a repayment period of 5 to15 years.

The loan could be either a fixed interest rate or a variable interest rate.

Homeowners often use a home-equity loan for home improvements or debt consolidation or to pay for a new car or to finance their child's college education.

Article Source:

Homeloans - Five Things to Watch Out For

Homeowner loans can be a quick and easy way to finance major investments and purchases. With these loans, you can tap into the value of your biggest asset in order to pay for things that are important to you. Those 'things' are virtually unlimited - you don't have to account for how you spend the money you borrow against your home to anyone but yourself. It can as easily be spent to finance a year trotting across the Continent as it can to pay for your education, make improvements to your home or pay for a new car.

With all the loan products available, nearly anyone who owns a home can find a company in the UK to offer them a home loan. The wide range of UK lenders who will be happy to advance you money on the security of your home also means that there's a lot of competition for your business. And that means that if you shop around, you can find some outstanding deals on home loans when you need one. Unfortunately, it also means that there are many companies offering products with lots of hooks and traps in them. To help you avoid those traps, here are five things to watch out for when you're shopping for home loans.

1. Look beyond the APR.
While the APR is generally considered the single best way to compare one option with another, the way that APRs are calculated is not quite standardised. Unscrupulous lenders have found ways to 'hide' charges from the APR calculation, making their loans a bit more expensive than the APR would lead you to believe. A better calculation for comparing loans is 'total cost' which takes into account the repayment of the loan, all interest charges and other fees that will be paid before you're done with it.

2. Be careful of repayment insurance.
Repayment insurance is meant to assure you and the loan company that your loan will be paid off in full if something should happen to your ability to make the payments. Some lenders will offer you repayment insurance through the company that they choose - often at rates so high that you'll pay nearly as much as you borrowed in the first place. Shop for repayment insurance just as you do for the loan itself. You are not ever obligated to accept the repayment insurance offered you by the lending company or bank.

3. Know all of the fees you'll have to pay up front.
Arrangement fees - sometimes called origination fees - are paid when you apply for a loan. In some cases, those fees will be due whether you are approved or not, and whether or not you accept the loan. Some of those arrangement fees can add up to (GBP)700 to the total cost.

4. Check into how interest is calculated and compounded.
The way that interest is calculated can save or cost you a surprisingly large amount of money. If interest is calculated annually, you'll pay far more in interest fees than if it is calculated daily. If possible, check your expected monthly loan repayments on the loan company's own loan calculator for comparison purposes.

5. Exit fees can make it difficult to get into a lower-cost loan arrangement later.
Checking the exit or early repayment fees can be especially important if you're shopping for higher cost home loans because of temporary credit difficulties. If you hope to transfer to a lower interest loan when you can qualify for one, then you'll want to be certain that the exit fee doesn't make it impractical to do so.

You can compare all facets of home loans at comparison web sites, from arrangement fees to APRs. Remember, no matter what your situation, you'll get the best options possible by shopping around and comparing loan rates and terms.

Article Source:

Redesign your Home with Home improvement loan

There are different types of loans that you can obtain for redesigning your home. But there is one particular loan available which is designed to assist in redesigning your home and is known as home improvement loan.

Home improvement loan is available in both forms secured home improvement loan and unsecured home improvement loan. Secured home improvement loan is available after placing your assets as collateral. Owing to collateral, you have to pay lower interest rate and larger repayment terms. And you can negotiate with the lender regarding lower interest rate.

Unsecured home improvement loan is available without placing your assets as collateral. Due to absence of collateral; you have to pay higher interest rate and loan is available for shorter period. Before taking home improvement loan, you have to make proper plan regarding repayment, if you fail to make repayment on time, then borrower has full authority to repossess your provided asset.

If you are suffering from bad credit it does not matter; take heart, then go for home improvement loan. This loan is available for good credit borrower and bad credit borrower too. Bad credit borrower has to pay higher interest rate compared to good credit borrower; the reason is obviously risk of the lender.

You can use home improvement loan for multiple purposes such as, for home expansion, renovation, refurnishing, remodeling, and many more. You can avail loan amount ranging from £5000 to £75000 and repayment term 5 years to 25 years. But it depends on value of the property which is provided as collateral and repayment capacity of the borrower.

Through online method you can avail various quotes of the various reliable lenders. You can use this method from home with the help of internet. Through this method, you can apply faster and get faster approval without any hassles. Now a days, this method is very popular among the residents of the UK for its lots of advantages.

Article Source:

Credit cards, mortgage and loan calculators

At these days more and more people need help in dealing with home finances and for that reason free information can be useful.
There is new website on the internet credit cards mortgages loans calculators Site is divided into following sections:
Use home finance mortgage loan calculators in calculating loans payment, loans amortization schedule, calculating interest rate, present and future value of monthly payments
In Mortgages section you can calculate - Home equity line of credit calculator - Maximum mortgage calculator - Mortgage amortization - Escrow account cancellation - Mortgage payment calculator - Mortgage points comparator - Mortgage refinance calculator - Mortgage tax saving calculator
- Home equity line of credit calculator - revolving credit loan, also referred to as a home equity line of credit (HELOC), where the borrower can choose when and how often to borrow against the equity in the property, with the lender setting an initial limit to the credit line based on criteria similar to those used for closed-end loans. Like the closed-end loan, it may be possible to borrow up to 100% of the value of a home, less any liens. These lines of credit are available up to 30 years, usually at a variable interest rate. The minimum monthly payment can be as low as only the interest that is due.
In credit cards section use financial calculators in
Real Cost calculator where you can find out how much is the price of product
The Cash Advance Cost Calculator is used to determine the total cost of taking a cash advance from your credit card and paying it back over time
The Payoff calculator helps you calculate how much interest you will save by paying off a credit card balance now instead of paying it off over time,
- College cost calculator
- College saving calculator the purpose of student loans Savings Calculator is to determine how much you will have to put away on a monthly basis to meet your college savings goals
- Retirement planner
- Rent versus buy house calculator will help people who are trying to decide whether to keep renting their home
- Lease or buy car will help people who are trying to decide whether to keep leasing their car
You can use free online credit cards, mortgage and loan calculators

Article Source:

Monday, February 26, 2007

Reverse Mortgages: Cashing In On Home Ownership

Many consumers age 62 or older are "house-rich and cash-poor" - their mortgages are paid off, but they are living on fixed or limited incomes. A "reverse mortgage" may allow some consumers to take advantage of their home as a valuable asset and convert it to a source of income without losing home ownership.

How Reverse Mortgages Work

A reverse mortgage is a loan: where the lender pays you - in a lump sum, a monthly advance, a line of credit, or a combination of all three - while you continue to live in your home. To qualify for a reverse mortgage, you must own your home. The amount you are eligible to borrow generally is based on your age, the equity in your home, and the interest rate the lender is charging. Funds you receive from a reverse mortgage may be used for any purpose.

With a reverse mortgage, you retain title to your home. You are responsible for maintaining your home and paying all real estate taxes. Depending on the plan you select, your reverse mortgage becomes due with interest when you move, sell your home, reach the end of a pre-selected loan period, or die. When you die, the lender does not take title to your home, but your heirs must pay off the loan. Usually, the debt is repaid by selling the home or refinancing the property.

Facts to Consider about Reverse Mortgages

Reverse mortgages are rising-debt loans. The interest is added to the principal loan balance each month, because it is not paid on a current basis. The amount you owe increases over time as the interest compounds. Some reverse mortgages have fixed-rate interest; others have adjustable rates that can change over the lifetime of the loan.

Reverse mortgages use up some or all the equity in your home, leaving fewer assets for you and your heirs.

The three types of reverse mortgages - FHA-insured, lender-insured, and uninsured - vary according to their costs and terms. Check the features of each to select the type that is best-suited for your needs. Before considering any reverse mortgage, consult with family members, your attorney, or financial advisor.

Reverse mortgages typically charge loan-origination fees and closing costs. Insured plans charge insurance premiums; some plans have mortgage servicing fees. You may be able to finance these costs if you want to avoid paying them in cash. But, if you finance the costs, they will be added to your loan amount and you will pay interest on them.

Your legal obligation to repay the loan is limited by the value of your home at the time the loan is repaid. This could include any appreciation in the value of your home after your loan begins.

There are various reverse mortgage plans offered today. Consult your attorney or financial advisor about the tax consequences of the particular plan you are considering.

Reverse Mortgage Safeguards

The federal Truth in Lending Act (TILA) is one of the best protections you have with a reverse mortgage. TILA requires lenders to disclose the costs and terms of reverse mortgages. This includes the Annual Percentage Rate (APR) and payment terms. If you choose a credit line as your loan advance, lenders also must tell you of charges related to opening and using your credit account.

About the Author
The Federal Trade Commission (or FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anticompetitive business practices.

Home Equity Credit Lines: Is It Right For You : Part 2

If you are considering a variable rate, check and compare the terms. Check the periodic cap, which is the limit on interest rate changes at one time. Also, check the lifetime cap, which is the limit on interest rate changes throughout the loan term. Ask the lender which index is used and how much and how often it can change. An index (such as the prime rate) is used by lenders to determine how much to raise or lower interest rates. Also, check the margin, which is an amount added to the index that determines the interest you are charged. In addition, inquire whether you can convert your variable rate loan to a fixed rate at some future time.

Sometimes, lenders offer a temporarily discounted interest rate - a rate that is unusually low and lasts only for an introductory period, such as six months. During this time, your monthly payments are lower too. After the introductory period ends, however, your rate (and payments) increase to the true market level (the index plus the margin). So, ask if the rate you are offered is "discounted," and if so, find out how the rate will be determined at the end of the discount period and how much larger your payments could be at that time.

What are the upfront closing costs?

When you take out a home equity line of credit, you pay for many of the same expenses as when you financed your original mortgage. These include items such as an application fee, title search, appraisal, attorneys' fees, and points (a percentage of the amount you borrow). These expenses can add substantially to the cost of your loan, especially if you ultimately borrow little from your credit line. You may want to negotiate with lenders to see if they will pay for some of these expenses.

What are the continuing costs?

In addition to upfront closing costs, some lenders require you to pay continuing fees throughout the life of the loan. These may include an annual membership or participation fee, which is due whether or not you use the account, and/or a transaction fee, which is charged each time you borrow money. These fees add to the overall cost of the loan.

What are the repayment terms during the loan?

As you pay back the loan, your payments may change if your credit line has a variable interest rate, even if you do not borrow more money from your account. Find out how often and how much your payments can change. You also will want to know whether you are paying back both principal and interest, or interest only. Even if you are paying back some principal, ask whether your monthly payments will cover the full amount borrowed or whether you will owe an additional payment of principal at the end of the loan. In addition, you may want to ask about penalties for late payments and under what conditions the lender can consider you in default and demand immediate full payment.

What are the repayment terms at the end of the loan?

Ask whether you might owe a large payment at the end of your loan term. If so, and you are not sure you will be able to afford the balloon payment, you may want to renegotiate your repayment terms. When you take out the loan, ask about the conditions for renewal of the plan or for refinancing the unpaid balance. Consider asking the lender to agree ahead of time and in writing to refinance any end-of-loan balance or extend your repayment time, if necessary.

What safeguards are built into the loan?

One of the best protections you have is the Federal Truth in Lending Act, which requires lenders to inform you about the terms and costs of the plan at the time you are given an application. Lenders must disclose the APR and payment terms and must inform you of charges to open or use the account, such as an appraisal, a credit report, or attorneys' fees. Lenders also must tell you about any variable-rate feature and give you a brochure describing the general features of home equity plans.

The Truth in Lending Act also protects you from changes in the terms of the account (other than a variable-rate feature) before the plan is opened. If you decide not to enter into the plan because of a change in terms, all fees you paid earlier must be returned to you.

Because your home is at risk when you open a home equity credit account, you have three days to cancel the transaction, for any reason. To cancel, you must inform the lender in writing. Following that, your credit line must be cancelled and all fees you have paid must be returned.

Once your home equity plan is opened, if you pay as agreed, the lender, in most cases, may not terminate your plan, accelerate payment of your outstanding balance, or change the terms of your account. The lender may halt credit advances on your account during any period in which interest rates exceed the maximum rate cap in your agreement, if your contract permits this practice.

About the Author
The Federal Trade Commission (or FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anticompetitive business practices.

Home Equity Credit Lines: Is It Right For You

Using a credit line to borrow against the equity in your home has become a popular source of consumer credit. And lenders are offering these home equity credit lines in a variety of ways.

You will find most loans come with variable interest rates, some come with attractive low introductory rates, and a few come with fixed rates. You also may find most loans have large one-time upfront fees, others have closing costs, and some have continuing costs, such as annual fees. You can find loans with large balloon payments at the end of the loan, and others with no balloons but with higher monthly payments.

No one loan is right for every homeowner. The challenge, then, is to contact different lenders, compare options, and select the home equity credit line best tailored to your needs.

Be sure to review the home equity contract carefully before you sign it. Do not hesitate to ask questions about the terms and conditions of your financing. To help you do this, you may want to consider the following questions and to use the checklist at the end of this brochure. (We apologize that the checklist is not available on-line. To obtain a copy of the checklist, please request a free copy of the brochure by contacting: Public Reference, Federal Trade Commission, Washington, D.C. 20580; (202) 326-2222. TDD call (202) 326-2502.)

Is a home equity credit line for you?

If you need to borrow money, home equity lines may be one useful source of credit. Initially at least, they may provide you with large amounts of cash at relatively low interest rates. And they may provide you with certain tax advantages unavailable with other kinds of loans. (Check with your tax adviser for details.)

At the same time, home equity lines of credit require you to use your home as collateral for the loan. This may put your home at risk if you are late or cannot make your monthly payments. Those loans with a large final (balloon) payment may lead you to borrow more money to pay off this debt, or they may put your home in jeopardy if you cannot qualify for refinancing. And, if you sell your home, most plans require you to pay off your credit line at that time. In addition, because home equity loans give you relatively easy access to cash, you might find you borrow money more freely.

Remember too, there are other ways to borrow money from a lending institution. For example, you may want to explore second mortgage installment loans. Although these plans also place an additional mortgage on your home, second mortgage money usually is loaned in a lump sum, rather than in a series of advances made available by writing checks on an account. Also, second mortgages usually have fixed interest rates and fixed payment amounts.

You also may want to explore borrowing from credit lines that do not use your home as collateral. These are available with your credit cards or with unsecured credit lines that let you write checks as you need the money. In addition, you may want to ask about loans for specific items, such as cars or tuition.

How much money can you borrow on a home equity credit line?

Depending on your creditworthiness (your income, credit rating, etc.) and the amount of your outstanding debt, home equity lenders may let you borrow up to 85% of the appraised value of your home minus the amount you still owe on your first mortgage. Ask the lender about the length of the home equity loan, whether there is a minimum withdrawal requirement when you open your account, and whether there are minimum or maximum withdrawal requirements after your account is opened. Inquire how you gain access to your credit line - with checks, credit cards, or both.

Also, find out if your home equity plan sets a fixed time - a draw period - when you can make withdrawals from your account. Once the draw period expires, you may be able to renew your credit line. If you cannot, you will not be permitted to borrow additional funds. Also, in some plans, you may have to pay your full outstanding balance. In others, you may be able to repay the balance over a fixed time.

What is the interest rate on the home equity loan?

Interest rates for loans differ, so it pays to check with several lenders for the lowest rate. Compare the annual percentage rate (APR), which indicates the cost of credit on a yearly basis. Be aware that the advertised APR for home equity credit lines is based on interest alone. For a true comparison of credit costs, compare other charges, such as points and closing costs, which will add to the cost of your home equity loan. This is especially important if you are comparing a home equity credit line with a traditional installment (or second) mortgage, where the APR includes the total credit costs for the loan.

In addition, ask about the type of interest rates available for the home equity plan. Most home equity credit lines have variable interest rates. These variable rates may offer lower monthly payments at first, but during the rest of the repayment period the payments may change and may be higher. Fixed interest rates, if available, may be slightly higher initially than variable rates, but fixed rates offer stable monthly payments over the life of the credit line.

About the Author
The Federal Trade Commission (or FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anticompetitive business practices.

Avoiding Home Equity Scams

You could lose your home and your money if you borrow from unscrupulous lenders who offer you a high-cost loan based on the equity you have in your home. Certain lenders target homeowners who are elderly or who have low incomes or credit problems - and then try to take advantage of them by using deceptive practices. The Federal Trade Commission cautions all homeowners to be on the lookout for:

Equity Stripping: The lender gives you a loan, based on the equity in your home, not on your ability to repay based on your income. If you can't make the payments, you could end up losing your home.

Loan Flipping: The lender encourages you to repeatedly refinance the loan and often, to borrow more money. Each time you refinance, you pay additional fees and interest points. That only serves to increase your debt.

Credit Insurance Packing: The lender adds credit insurance to your loan, which you may not need.

Bait and Switch: The lender offers one set of loan terms when you apply, then pressures you to accept higher charges when you sign to complete the transaction.

Deceptive Loan Servicing: The lender doesn't provide you with accurate or complete account statements and payoff figures. That makes it almost impossible for you to determine how much you have paid or how much you owe. You may pay more than you owe.

Some of these practices violate federal credit laws dealing with disclosures about loan terms, discrimination based on age, gender, marital status, race, or national origin; and debt collection.

You also may have additional rights under state law that would allow you to bring a law suit.

The FTC suggests if you're thinking about using your home as collateral for a loan, be careful. Unless you can make the loan payments out of current income, you could lose your home as well as the equity you've already built up. Some additional tips to remember:

The lure of extra money or the chance to reduce monthly credit payments can be very costly in the long run. High interest rates and other credit costs could get you in over your head.

Credit insurance may not be a good deal from a lender. If you want the added security of credit insurance, shop around.

Don't sign a loan agreement if the terms are not what you were given when you applied.

Ask for an explanation of any dollar amount, term, or condition that you don't understand. Federal law is very clear about what credit and loan term information must be provided in writing when you apply for a loan and before you sign any agreement.

In addition, shop around for the best loan terms and interest rates. Contact lending institutions, such as banks and credit unions, and consult a legal or financial advisor, or someone you can trust before you make any loan decisions. Or contact your local Fair Housing Office, legal aid, or senior services organization for information and help.

About the Author
The Federal Trade Commission (or FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anticompetitive business practices.

Mortgages: High-Rate, High-Fee Loans

If you're refinancing your mortgage or applying for a home equity installment loan, you should know about the Home Ownership and Equity Protection Act of 1994 (HOEPA). The law addresses certain deceptive and unfair practices in home equity lending. It amends the Truth in Lending Act (TILA) and establishes requirements for certain loans with high rates and/or high fees. The rules for these loans are contained in Section 32 of Regulation Z, which implements the TILA, so the loans also are called "Section 32 Mortgages." Here's what loans are covered, the law's disclosure requirements, prohibited features, and actions you can take against a lender who is violating the law.

What Loans Are Covered?

A loan is covered by the law if it meets the following tests:

For a first-lien loan, that is, the original mortgage on the property, the annual percentage rate (APR) exceeds by more than eight percentage points the rates on Treasury securities of comparable maturity;

For a second-lien loan, that is, a second mortgage, the APR exceeds by more than 10 percentage points the rates in Treasury securities of comparable maturity; or

The total fees and points payable by the consumer at or before closing exceed the larger of $528 or eight percent of the total loan amount. (The $528 figure is for 2006. This amount is adjusted annually by the Federal Reserve Board, based on changes in the Consumer Price Index.) Credit insurance premiums for insurance written in connection with the credit transaction are counted as fees.

The rules primarily affect refinancing and home equity installment loans that also meet the definition of a high-rate or high-fee loan. The rules do not cover loans to buy or build your home, reverse mortgages or home equity lines of credit (similar to revolving credit accounts).

What Disclosures Are Required?

If your loan meets the above tests, you must receive several disclosures at least three business days before the loan is finalized:

The lender must give you a written notice stating that the loan need not be completed, even though you've signed the loan application and received the required disclosures. You have three business days to decide whether to sign the loan agreement after you receive the special Section 32 disclosures.

The notice must warn you that, because the lender will have a mortgage on your home, you could lose the residence and any money put into it, if you fail to make payments.

The lender must disclose the APR, the regular payment amount (including any balloon payment where the law permits balloon payments, discussed below), and the loan amount (plus where the amount borrowed includes credit insurance premiums, that fact must be stated). For variable rate loans, the lender must disclose that the rate and monthly payment may increase and state the amount of the maximum monthly payment.

These disclosures are in addition to the other TILA disclosures that you must receive no later than the closing of the loan.

What Practices Are Prohibited?

The following features are banned from high-rate, high-fee loans:

All balloon payments - where the regular payments do not fully pay off the principal balance and a lump sum payment of more than twice the amount of the regular payments is required - for loans with less than five-year terms. There is an exception for bridge loans of less than one year used by consumers to buy or build a home: In that situation, balloon payments are not prohibited.

Negative amortization, which involves smaller monthly payments that do not fully pay off the loan and that cause an increase in your total principal debt.

Default interest rates higher than pre-default rates.

Rebates of interest upon default calculated by any method less favorable than the actuarial method.

A repayment schedule that consolidates more than two periodic payments that are to be paid in advance from the proceeds of the loan. Most prepayment penalties, including refunds of unearned interest calculated by any method less favorable than the actuarial method. The exception is if:

  • the lender verifies that your total monthly debt (including the mortgage) is 50 percent or less of your monthly gross income;
  • you get the money to prepay the loan from a source other than the lender or an affiliate lender; and
  • the lender exercises the penalty clause during the first five years following execution of the mortgage.

A due-on-demand clause. The exceptions are if:

  • there is fraud or material misrepresentation by the consumer in connection with the loan;
  • the consumer fails to meet the repayment terms of the agreement; or
  • there is any action by the consumer that adversely affects the creditor's security.

Creditors also may not:

Make loans based on the collateral value of your property without regard to your ability to repay the loan. In addition, proceeds for home improvement loans must be disbursed either directly to you, jointly to you and the home improvement contractor or, in some instances, to the escrow agent.

Refinance a HOEPA loan into another HOEPA loan within the first 12 months of origination, unless the new loan is in the borrower's best interest. The prohibition also applies to assignees holding or servicing the loan.

Wrongfully document a closed-end, high-cost loan as an open-end loan. For example, a high-cost mortgage may not be structured as a home equity line of credit if there is no reasonable expectation that repeat transactions will occur.

How Are Compliance Violations Handled?

You may have the right to sue a lender for violations of these new requirements. In a successful suit, you may be able to recover statutory and actual damages, court costs and attorney's fees. In addition, a violation of the high-rate, high-fee requirements of the TILA may enable you to rescind (or cancel) the loan for up to three years.

About the Author
The Federal Trade Commission (or FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anticompetitive business practices.

Home Equity Loans: The Three-Day Cancellation Rule

If you're considering applying for a personal loan and using your home to guarantee repayment, you should know that a federal credit law gives you three days to reconsider a signed credit agreement and cancel the deal without penalty. Your "right to rescind" or "right to cancel" is guaranteed by the Truth In Lending Act. You can rescind for any reason but only if you are using your principal residence - whether it is a condominium, mobile home, or house boat - as collateral, not a vacation or second home.

Under the right to rescind, you have until midnight of the third business day to cancel the credit transaction. Day one begins after all three of the following occur:

  • you sign the credit contract;
  • you receive a Truth in Lending disclosure form containing certain key information about the credit contract, including the annual percentage rate; finance charge; amount financed; and payment schedule; and
  • you receive two copies of a Truth in Lending notice explaining your right to rescind.

For rescission purposes, business days include Saturdays but not Sundays or legal public holidays. For example, if the events listed above take place on a Friday, you have until midnight on the next Tuesday to rescind.

During this waiting period, activity related to the contract cannot take place. The creditor may not deliver the money for the loan. If you're dealing with a home improvement loan, the contractor may not deliver any materials or start work.

If you decide to rescind, you must notify the creditor in writing. You may not rescind by telephone or in a face-to-face conversation with the creditor. Your written notice must be mailed, filed for telegraphic transmission, or delivered if by other written means, before midnight of the third business day.

If you cancel the contract, the security interest in your home is also cancelled, and you are not liable for any amount, including the finance charge. The creditor has 20 days to return all money or property you paid as part of the transaction and release any security interest in your home. If you received money or property from the creditor, you may retain it until the creditor shows that your home is no longer being used as collateral and returns any money you have paid. Then, you must offer to return the creditor's money or property. If the creditor does not claim the money or property within 20 days, you may keep it.

If you have a bona fide personal financial emergency - such as damage to your home from a storm or other natural disaster - the law allows you to waive your right to rescind and eliminate the three-day period. To waive your right, you must give the creditor your own written statement describing the emergency and stating that you are waiving your right to rescind. The statement must be dated and signed by you and anyone else who shares in ownership of the home. But remember: if you waive your right to rescind, you must go ahead with the transaction.

The right to rescind does not apply in all situations when you are using your home for collateral. Among the exceptions are:

  • when you apply for a loan to buy or build your principal residence;
  • when you refinance your loan with the same creditor who holds your loan and you don't borrow any additional funds; or
  • when a state agency is the creditor for a loan.

In these situations, you may have other cancellation rights under state or local law.

About the Author
The Federal Trade Commission (or FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anticompetitive business practices

Understanding Debt Consolidation and Bankruptcy

Debt Consolidation

You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. Remember that these loans require you to put up your home as collateral. If you can't make the payments - or if your payments are late - you could lose your home.

What's more, the costs of consolidation loans can add up. In addition to interest on the loans, you may have to pay "points," with one point equal to one percent of the amount you borrow. Still, these loans may provide certain tax advantages that are not available with other kinds of credit.


Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, and can make it difficult to obtain credit, buy a home, get life insurance, or sometimes get a job. Still, it is a legal procedure that offers a fresh start for people who can't satisfy their debts. People who follow the bankruptcy rules receive a discharge - a court order that says they don't have to repay certain debts.

The consequences of bankruptcy are significant and require careful consideration. Other factors to think about: Effective October 2005, Congress made sweeping changes to the bankruptcy laws. The net effect of these changes is to give consumers more incentive to seek bankruptcy relief under Chapter 13 rather than Chapter 7. Chapter 13 allows you, if you have a steady income, to keep property, such as a mortgaged house or car, that you might otherwise lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off your debts during a three-to-five-year period, rather than surrender any property. After you have made all the payments under the plan, you receive a discharge of your debts.;

Chapter 7, known as straight bankruptcy, involves the sale of all assets that are not exempt. Exempt property may include cars, work-related tools, and basic household furnishings. Some of your property may be sold by a court-appointed official - a trustee - or turned over to your creditors. The new bankruptcy laws have changed the time period during which you can receive a discharge through Chapter 7. You now must wait eight years after receiving a discharge in Chapter 7 before you can file again under that chapter. The Chapter 13 waiting period is much shorter and can be as little as two years between filings.

Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments and utility shut-offs, and debt collection activities. Both also provide exemptions that allow you to keep certain assets, although exemption amounts vary by state. Personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. Also, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or security lien on it.

Another major change to the bankruptcy laws involves certain hurdles that you must clear before even filing for bankruptcy, no matter what the chapter. You must get credit counseling from a government-approved organization within six months before you file for any bankruptcy relief. You can find a state-by-state list of government-approved organizations at That is the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Also, before you file a Chapter 7 bankruptcy case, you must satisfy a "means test." This test requires you to confirm that your income does not exceed a certain amount. The amount varies by state and is publicized by the U.S. Trustee Program at

For more information, see Before You File for Personal Bankruptcy: Information About Credit Counseling and Debtor Education, Knee Deep in Debt, and Fiscal Fitness: Choosing a Credit Counselor at

Avoiding Scams

Turning to a business that offers help in solving debt problems may seem like a reasonable solution when your bills become unmanageable. Be cautious. Before you do business with any company, check it out with your local consumer protection agency or the Better Business Bureau in the company's location.

Advance-Fee Loan Scams

These scams often target consumers with bad credit problems or those with no credit. In exchange for an up-front fee, these companies "guarantee" that applicants will get the credit they want - usually a credit card or a personal loan.

The up-front fee may be as high as several hundred dollars. Resist the temptation to follow up on advance-fee loan guarantees. They may be illegal. Many legitimate creditors offer extensions of credit, such as credit cards, loans, and mortgages through telemarketing, and require an application fee or appraisal fee in advance. But legitimate creditors never guarantee in advance that you'll get the loan. Under the federal Telemarketing Sales Rule, a seller or telemarketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or receive payment until you've received the loan.

Recognizing an Advance-Fee Loan Scam

Ads for advance-fee loans often appear in the classified ad section of local and national newspapers and magazines. They also may appear in mailings, radio spots, and on local cable stations. Often, these ads feature "900" numbers, which result in charges on your phone bill. In addition, these companies often use delivery systems other than the U.S. Postal Service, such as overnight or courier services, to avoid detection and prosecution by postal authorities.

It's not hard to confuse a legitimate credit offer with an advance-fee loan scam. An offer for credit from a bank, savings and loan, or mortgage broker generally requires your verbal or written acceptance of the loan or credit offer. The offer usually is subject to a check of your credit report after you apply to make sure you meet their credit standards. Usually, you are not required to pay a fee to get the credit.

Hang up on anyone who calls you on the phone and says they can guarantee you will get a loan if you pay in advance. It's against the law.

Protecting Yourself

Here are some tips to keep in mind before you respond to ads that promise easy credit, regardless of your credit history:

Most legitimate lenders will not "guarantee" that you will get a loan or a credit card before you apply, especially if you have bad credit, or a bankruptcy.

It is an accepted and common practice for reputable lenders to require payment for a credit report or appraisal. You also may have to pay a processing or application fee.

Never give your credit card account number, bank account information, or Social Security number out over the telephone unless you are familiar with the company and know why the information is necessary.

About the Author
The Federal Trade Commission (or FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anticompetitive business practices.

Steps to Save Money on a Mortgage or Home Loan

Shopping around for a home loan or mortgage will help you to get the best financing deal. A mortgage - whether it's a home purchase, a refinancing, or a home equity loan - is a product, just like a car, so the price and terms may be negotiable. You'll want to compare all the costs involved in obtaining a mortgage. Shopping, comparing, and negotiating may save you thousands of dollars.

Obtain Information from Several Lenders

Home loans are available from several types of lenders - thrift institutions, commercial banks, mortgage companies, and credit unions. Different lenders may quote you different prices, so you should contact several lenders to make sure you're getting the best price. You can also get a home loan through a mortgage broker. Brokers arrange transactions rather than lending money directly; in other words, they find a lender for you. A broker's access to several lenders can mean a wider selection of loan products and terms from which you can choose. Brokers will generally contact several lenders regarding your application, but they are not obligated to find the best deal for you unless they have contracted with you to act as your agent. Consequently, you should consider contacting more than one broker, just as you should with banks or thrift institutions.

Whether you are dealing with a lender or a broker may not always be clear. Some financial institutions operate as both lenders and brokers. And most brokers' advertisements do not use the word "broker." Therefore, be sure to ask whether a broker is involved. This information is important because brokers are usually paid a fee for their services that may be separate from and in addition to the lender's origination or other fees. A broker's compensation may be in the form of "points" paid at closing or as an add-on to your interest rate, or both. You should ask each broker you work with how he or she will be compensated so that you can compare the different fees. Be prepared to negotiate with the brokers as well as the lenders.

Obtain All Important Cost Information

Be sure to get information about mortgages from several lenders or brokers. Know how much of a down payment you can afford, and find out all the costs involved in the loan. Knowing just the amount of the monthly payment or the interest rate is not enough. Ask for information about the same loan amount, loan term, and type of loan so that you can compare the information. The following information is important to get from each lender and broker:


Ask each lender and broker for a list of its current mortgage interest rates and whether the rates being quoted are the lowest for that day or week.

Ask whether the rate is fixed or adjustable. Keep in mind that when interest rates for adjustable-rate loans go up, generally so does the monthly payment.

If the rate quoted is for an adjustable-rate loan, ask how your rate and loan payment will vary, including whether your loan payment will be reduced when rates go down.

Ask about the loan's annual percentage rate (APR). The APR takes into account not only the interest rate but also points, broker fees, and certain other credit charges that you may be required to pay, expressed as a yearly rate.


Points are fees paid to the lender or broker for the loan and are often linked to the interest rate; usually the more points you pay, the lower the rate.

Check your local newspaper for information about rates and points currently being offered.

Ask for points to be quoted to you as a dollar amount - rather than just as the number of points - so that you will actually know how much you will have to pay.


A home loan often involves many fees, such as loan origination or underwriting fees, broker fees, and transaction, settlement, and closing costs. Every lender or broker should be able to give you an estimate of its fees. Many of these fees are negotiable. Some fees are paid when you apply for a loan (such as application and appraisal fees), and others are paid at closing. In some cases, you can borrow the money needed to pay these fees, but doing so will increase your loan amount and total costs. "No cost" loans are sometimes available, but they usually involve higher rates.

Ask what each fee includes. Several items may be lumped into one fee.

Ask for an explanation of any fee you do not understand. Some common fees associated with a home loan closing are listed on the Mortgage Shopping Worksheet in this brochure.

About the Author
The Federal Trade Commission (or FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anticompetitive business practices.

Sunday, February 25, 2007

How A Loan Can Help You Fix Up Your House

A house is nice to have… but a nicer house is even nicer to have! Don’t you want to live in the very best house you can afford? Sure, you don’t want to break the bank, but you do want to be able to maximize your living conditions and you expect an increase in cost for it. But how can you make it happen?

Some people may feel that it is simply out of their reach, but you know differently! You know that there is a financial tool out there that will allow you to afford to improve your home and won’t cost you an arm and a leg right away. It’s called a UK secured loan and it is designed to help you with fiscal management as you spread the cost of your home improvement over several months or years. Here’s how it can help you.

First, UK secured loans offer flexibility. A UK secured loan is available for many people in a variety of amounts and interest rates. That way, you can choose the amount that is appropriate to your needs. As well, the interest rates are often dictated by a number of factors, which include current interest rates, the risk level of the recipient, the amount of money, and the period of time in which the money is expected to be paid back. So by wisely deciding the amount of money you need and shopping around for the best interest rate for your situation, you can find a secured loan appropriate for you. Also, a UK secured loan comes with several repayment terms, including the frequency of payment and the length of time you are expected to repay. That way, you can manage the loan over a period of time and suit it to your income.

If you shop around, you should be able to find a UK secured loan that provides you with the amount you’d like to borrow, at a competitive interest rate, for the period of time you’d like it for, and with a repayment frequency you can handle. At first glance, a loan may seem like an odd choice to add to your portfolio, but consider the advantages you can leverage from it.

A UK secured loan is a great way to help you take advantage of the assets you have built up in your home. You can borrow against the value of your home and improve it, thus improving your home. This will mean a greater resale value in the future but it also means a greater lifestyle value today!

Article Source:

Tim Renolds is the owner of Homeowner Loans providing Uk homeowners with a free loan quote service. Visit us today for a free no obligation quote.

How to Choose a Bank for your Home Business

You should thoroughly consider your business needs when selecting a financial institution or bank for your small/home business. You may want to consider the following points:

- The types of products and services that are offered.
- The bank's criteria for qualifying for a loan.
- The minimum balances for accounts, interest rates and charges for account services.
- Location and Access to ATMs
- Online Banking Services

One bank may specialize in home loans or auto loans while another may focus on commercial loans for businesses. Some banks may only offer basic deposit accounts while others have lock box services, sweep accounts, and even online banking! It's very important to evaluate your business needs before you select your banker.

Here are some of the things that your banker may be able to help you with:

- Help you with the cash management needs of your business.
- Offer investment products of varying maturities or risks.
- Provide advice regarding what it will take to qualify for the loan that best meets your needs.
- Provide special loan programs for small businesses, including SBA loan programs and other government-guaranteed or agency loans.
- Assist you with finding financial information on your industry.

So compare different banks in order to find the one that will serve your business's needs and will also provide support and assistance during the infancy stage of your business. Selecting a bank that you can work with will be especially important as your business grows.

Start shopping around by gathering information to help you make this important selection. Compare interest rates on deposit accounts and basic consumer loans (most business loans are negotiated, so the rates won't be posted at the banking center). Also, look carefully at the charges for services. Tell them about your business and the form of organization so that they can tell you what special products and services or restrictions might apply.

Before selecting a bank, be sure to have a good understanding of your own business needs, and what you need from your bank. If you know what you will need from a bank, it will be much easier to evaluate and compare between various services. Remember, it is a good idea to establish a relationship with a banker, before you need money. The right banker will be someone that understands the needs of emerging and growing businesses. They will be interested in your business dreams and will help you achieve them.

Content Provider:

More About Chileshe Mwape: Copyright © 2005. Chileshe Mwape writes for the US Banks Website: Find informative articles and news stories about banking and finance. This article may be reprinted as long as the above link is active and clickable.

(R)Evolution In Home & Personal Accounting

'Accounting for a Better Life’ is a book in which John Passmore proposes a new, simplified and fun approach, to home and personal bookkeeping and accounting.

The new methods, based on what he calls, domestic well-being accounting, enable people to gain control of their personal and domestic, financial affairs. The system provides the necessary visibility so that users will know exactly what their money is being spent on, and how well balanced their spending is, in relation to its distribution.

The balance is across basic domestic needs and responsibilities, discretionary spending on holidays, leisure and entertainment, and provision for future well-being. Knowing about the current and past spending patterns, users can determine where and by how much, changes might be needed. Budgeting and associated feedback, facilitate the monitoring of such financial planning.

The author believes the new methods have the potential to be adopted as a formal, sub-discipline of business accounting, eventually perhaps, with suitable certificates and diplomas for those who learn how to use it successfully.

With such recognition, the motivation for appropriate investment from industry and the state becomes real, so that domestic accounting, its further calibration and an associated training infrastructure, can all be further developed and refined.

He proposes that in time, such methods should become an established part of the school curriculum. Through this, youngsters will be able to achieve the best possible foundation to accept and take on the financial responsibilities that are associated with success, in modern life.

In the prevailing UK situation, of a very severe debt crisis, the new approach, almost in passing, provides the required visibility on the state of a family's financial affairs, to provide warnings of potential difficulties so that the necessary defensive actions can be taken, to prevent falling into the debt trap. For those already experiencing some debt, the new methods provide the necessary visibility on their finances to facilitate the required planning and control, required to best manage debt recovery.

If people realized the extent and value of the average, domestic, cash turnover, in the course of a lifetime, it seems amazing that serious, financial management is not already, demanded. If an equivalent, small business, with similar turnover was not effectively managed, the owners would probably have shareholders, accountants and Company House, knocking on their doors.

Accounting has traditionally been thought of as a rather boring, difficult and tedious activity by most people. It is also recognized as somewhat of a challenge, in considering the length of training required to achieve professional status, as a Chartered Accountant, or similar.

Having started to manage his own accounts at home, soon after the arrival of the PC, in the late eighties, John Passmore tried to adapt the traditional, business-oriented way of using accounts, with all the usual, end-of-period reports. He uses commonly available, general purpose software, an accounting package (Microsoft Money) and a spreadsheet package. He has adapted the maturity of double entry accounting and has also had to ensure his methods could cope with multiple currencies in use, whilst working overseas for thirty years.

Although it was basically satisfactory, in so far as it produced the overall figures on net worth, John realized two things; first, the traditional business focus and motivation on profits and shareholders’ value, understandably, had little relevance to the domestic situation, and second; there was no visibility on the nature of the bulk of the day-to-day, domestic income and expenditure. In addition, the terminology and the overall style of business accounting, he found, not at all conducive to successfully and easily running accounts, for a home environment.

Over a decade, John Passmore has gradually evolved a new approach to personal and domestic accounting. At a fundamental level, he has made everything much easier to understand and use. This was achieved by a range of simple techniques, such as rigorous naming conventions and a simplified version of the so-called, accounting equations. More importantly, he introduced a new focus for home and personal accounting, which he calls, domestic well-being. Essentially, domestic well-being, or DWB, provides a hierarchical structure for defining and recording, the increases and decreases, making up day-to-day, domestic financial activity.

At the top level, there is a 3-way split into Basics, Discretionary and a catch-all, of Others.

The Basics are sub-divided into Essentials (utilities, food and drink, clothing, health, etc.), Responsibilities (taxes, mortgage, licenses, maintenance, insurance, etc.) and Family (presents, and personal commitments, etc.). Similarly, Discretionary includes asset purchases and sales, Nice to Have (holidays, leisure, entertainment, etc.), Investment for the Future (Home improvements, pension contributions and other investments, etc.). Others are for uncontrolled changes, such as prizes, inheritance, gains and appreciation, fines, losses and depreciation, etc.

This DWB structure is used as the basis for the domestic reports and for categorizing all the transactions, as they entered into the accounts, as part of bookkeeping.

A sub-title of his book 'Accounting for a Better Life', is 'Gain Control of Personal Finances'. Following an overview of control and a comparison of a number of typical control environments, the book describes how control can be applied to financial situations. The visibility now afforded by DWB means that a new set of financial reports can be defined. These replace the business style, Trading Account, Profit & Loss Account, Balance Sheet and Cash Flow Statement. The new set of statements, tailored directly for the domestic situation, include the Domestic Well-Being Statement, the Domestic Balance Sheet and the Domestic Cash Flow Statement.

Readers will be generally aware of the typical, business ratios such as Gross and Net profit margins, Return on Capital Employed, and over twenty other ratios. Although vital for management and control in business, these ratios have absolutely no bearing on domestic finances. However, with the visibility provided by DWB, a whole new group of Domestic Financial Factors suddenly become evident. John has defined five, major new factors and a host of secondary factors. For example, the Basic Cost of Living Factor (BCLF) is the ratio of Basic Domestic Decrease to Total Household Increases, whilst the Well-Being Contribution Factor (WBCF) is the proportion of Discretionary Domestic Decreases, compared to the Total Household Increases. These factors provide the yardsticks, by which various characteristics of domestic life can be both qualified and quantified.

These factors open up new areas for comparison, measurement and control of domestic, financial situations, based on family size. Their real benefit however, has to await calibration and an accumulation of data, so that a parallel can be achieved with the business concepts of comparison to industry averages, or norms. The domestic averages will have to be built-up, over time. In the future, a BCLF 3 of 0.43, for a family of three for example, could be compared with the value of the factor, found for other families of three, across regions, or internationally, across continents.

Even without this capability until later, other forms of financial control suddenly become immediately feasible, in a practical way. For a start, with the new visibility provided, balancing or redistribution of expenditure across the Basic and Discretionary categories for example, now becomes possible, with due attention always being given to Investment for the Future (IFF).

John Passmore provides the necessary background and information for anyone to get started with setting up and running their own, domestic accounting system. Because of the simplification and visibility provided, which gives relevance to the financial activities of each and every domestic environment, with its own character and content, the author believes he has developed a system which can be fun to use. Once familiar with the set-up, a couple of hours a month is all that is required to keep the bookkeeping under way; and a couple of half-days at the end of any financial year, to produce the annual reports, should be all that is required at that time.

With basic computer literacy, access to a computer with preferably, an on-line connection, and maths competence, no higher than GCSE level, John believes that benefits are potentially available for a domestic situation with a shared annual income, of around £20,000 and upwards. It will also be appropriate for accountants in their work on behalf of domestic clients.

A sense of personal responsibility towards the members of the domestic situation is paramount.

The benefits are that with the accumulation of a few months' worth of figures, a realization of the actual spread and balance of the family outgoings will become apparent. With this, decisions can be made on any changes required to the pattern of financial activity, in order to obtain a better balance. The whole purpose is to achieve an overall and improved sense of domestic well-being.

With the new-found information, family members will know in detail about what has to be done in order to achieve a better life-style. Accounting, in itself, will not achieve this. Discipline will be required to change spending patterns to obtain the desired changes. The new accounting system can help keep track of progress, using budgets and targets. In this way, users will obtain early warnings of where and when they are not keeping to target, so that concerted efforts can be directed at coming back, on track.

This authoritative book, written with rigor and thoroughness is being published by Matador, Troubador Publishing Ltd ( and further information can be found on the author's web site at

copyright © 2006 John Passmore

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More About John PASSMORE: John Passmore, is now retired near Christchurch, in Dorset, UK. The motivation for his new accounting methods came from the realisation that the focus, reports and terminology of business accounting were wholly unsuited to the home scenario. Discover more on DWB accounting at

Financial Planning for Your Life

The purpose of financial planning is to enhance your life. Money is not the end goal. Money is the merely tool of measurement and method of payment for many of life's best achievements. Owning your own home, paying for your child's college tuition, taking your spouse on a romantic getaway - these are some of the objectives that you're really after when you set out to plan your financial future.

By focusing on your real life goals instead of always looking at the dollars and cents of your planning, you can make your financial plan a joy. This positive attitude focused on the end results you want to achieve will also help refine your financial planning efforts. Your plan will end up being much more appropriate and effective for you and your family by thinking about what you really want instead of some arbitrary amount of money that you think should meet your needs.

Focus on your life and all the enjoyable things you want to accomplish through your wise financial planning. Don't obsess over how much money you have now and how much you think you'll need by a certain date. This will help you avoid the common pitfall of believing in scarcity and lack. There's more than enough to go around for everyone. Economics is not a zero-sum game; if you end up with a million dollars in your bank account that does not mean some else has to do without. Money is fluid and loves to grow wherever it is well managed; but it is the things you do with your money that ultimately matters, not the money itself.

Home Loans – A Basic Introduction

During the recent span of years, it has been observed that the demand of home loans has increased. The main reason being, the availability of loans in market has increased too. Home loans are now a days available in the market at pretty low and attractive rates.

Home loans are recent craze in the loan market now days. The reason being the fact that, home constitute out as the largest asset that usually people have. While purchasing a home, the person has to invest a very huge amount of money. Some people face trouble, paying out the whole money together for the house, while some can’t even afford to invest money for the home of their choice. Home loans, this way have turned out to be a boon for people, who want to have a home of their choice, but cannot afford it at the moment concerned.

Buyers now days don’t have to think about the source of money for their homes. Home loans have made the life of a lot of buyers very easy. But, the buyers should be careful while opting or going for a home loan. They should first, make a thorough research of the prevailing interest rates in the market, and then opt or go for any home loan. Borrowers can even go for home loans, by undertaking mortgages. In this, the borrowers take a loan after pledging or securing any asset or securities of theirs, against the sum borrowed by them.

While going for a home loan, the individuals should take care of the other various aspects relating to the home loan. An individual before going for a home loan should take care, before deciding the principal amount that he is going to borrow as a home loan. Otherwise the person may end up taking a loan with a higher principal amount and then end up paying more interest for the amount that he had borrowed unnecessarily. The second aspect that the borrower should consider is the interest factor associated with every home loan. Interest is an unwanted burden that comes attached with the home loan. Interest is the extra amount that the borrowers have to pay, for taking the loan from the lender. The borrowers motto should be take a loan which carries the lowest interest rates. For this, the borrower should make a complete research of the prevailing interest rates in the markets so that he does not get cheated by the home loan lenders. Borrowers should also consider the aspect of the term associated with the loan that he has undertaken, otherwise they may end up paying or repaying the loan for 30 to 35 years, just because of the fact that the loans conditions had stated that the principal amount has to be repaid on fixed amount over 30 years installment basis.

Home loans are a boon for people, but they should be careful before opting for a home loan.

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Is a Home Equity Loan a Good Idea

First, what is a home equity loan? Well a home-equity loan is a second lien against your home's equity.

I always consider my home equity as a safety net for those difficult times, such as, a job loss or family illness. My rule of thumb for debt management has always been centered on how much equity I had in my house. I would never have my debt exceed my equity.

Now let's get back to the question. Is a home equity loan a good idea? If you manage your money wisely home equity loans are a good idea but only if you spend the proceeds on items that are a necessity and carry a higher interest rate that the home equity loan. A good example would be home improvements or educational needs. These items usually are quite expensive and require long pay-off periods. By using your equity you will be able to write-off your purchase interest on your federal and state taxes. Another example would be to pay-off high interest credit card and personal loans debt but you must make sure that once the debt is paid you can not accumulate any more credit card debt or you will become financially strapped.

Below are some guidelines if you're thinking about borrowing against your home's value:

Don't waste the cash. Please be aware you're attaching a new lien on the home, moving closer to the risk of foreclosure. If you do not make your payments on time, the lender has the right to foreclose on your home.

Don't accumulate more debt than you can handle. As I mentioned earlier your total debt should not exceed your homes total equity.

Evaluate the tax benefits carefully. Review the IRS Publication 936 for details.

Avoid lines of credit unless you have the discipline to make the principal payment on time.

In conclusion:

It is important to carefully consider how you plan on using the equity in your home. If it is for home improvements, education like college or medical expenses then you are adding even more value to your home and personal growth and well being, which is good. If you are using it for daily spending, vacations, cars or other items that quickly depreciate in value, then you could be risking your nest egg and run the risk of owing money on your home far longer that the average 15-30 year mortgage.

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Dennis Watson - Just helping others succeed. More Home Equity Loan Articles Free Classifieds Web Site

Friday, February 23, 2007

Home Equity Loan: What You Need to Know

The idea of getting a home equity loan while interest rates are low to help you pay off your bills, buy a car, or even pay for your child’s education may seem like a great idea. However, you should educate yourself first so you know exactly what a home equity loan is and if it is really right for you.

The basic idea of a home equity loan is that you can borrow against the current equity in your home, so the more equity you have the larger home equity loan you can receive. In essence, to receive a home equity loan you are using your home as collateral, or the basis, for the home equity loan. If you do not pay the home equity loan back, then your home is at stake and may be foreclosed upon. This is sobering news many people are not aware of, so getting a home equity loan requires some thought and the ability to repay the home equity loan as well.

However, you might be reading this and actually interested in a home equity loan, but have no idea what equity is or if you have any. Equity is how much of your home you have paid for. So, you take the home’s current value and subtract it from the amount you still owe, and that is how much equity you have in your home and what will ultimately be used to approve or deny your home equity loan application. For example, your home is currently worth $400,000 and you have $280,000 left to pay on your mortgage. Your current equity is $120,000.

You will need to know all of this information before you apply for a home equity loan to know if you have enough equity to even apply for a home equity loan. Plus, the more you know about applying for and negotiating rates for a home equity loan the better deal you will receive. Remember, knowledge is power and the more home equity loan knowledge you have the more powerful you will be able to negotiate.

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Is The Home Equity Loan Game About to Explode

The rapid increase in home values has proven to be as good as lottery winnings for homeowners in many areas. But look out - old tricks may no longer fool anyone.

The real estate boom has bailed out many folks who have been caught between higher bill payments and flat incomes. These homeowners have been able to tap their increased home equity to support a life style that they really could not afford. Home equity has provided the juice that has been keeping our national economy afloat.

Home equity loans have allowed home owners the chance to pull out cash that they then spent on new cars, furniture, vacations and other luxuries. Another boost to their life styles was generated when home owners refinanced using adjustable-rate mortgages that cut their monthly payments. They seemingly had more ready cash to spend.

Consumers who had buried themselves under a mountain of credit card debt have been able to evade foreclosure and bankruptcy by quickly selling their homes. With the proceeds from the sale they've been able to pay down at least some of their debts and gain some financial breathing room.

All that was yesterday! Take a close look at what's happening today. In many areas of the country real estate prices are flattening out and even beginning to decline in some areas. With little or no increase in home equity, or even vanishing equity, home owners may find themselves in a tight spot. They just won't have that reservoir of cash to fall back on.

Oh gosh, now it gets even worse. Because personal debt seems nearly out of control the federal government has mandated that credit card companies increase the minimum payment required on credit card debt. For many people that payment will now be twice what it has been in the past.

Wait, there's more! Energy prices are at an all time high and health care costs are zooming out of sight. A growing number of people are stretched thin and actually are spending more than they earn. People who are living on the financial edge could be in big trouble without any equity in their homes to use as emergency cash.

This bad news is good news for real estate investors who are looking to buy property just before foreclosure. Many homeowners pulled out all their equity (sometimes as much as 110% of their home's value!) and now values have declined and they are upside down... they owe more than they can sell the house for. They can't pay their debts and they can't find a buyer for their home. Ouch!

Smart investors know how to help these folks and make a little profit in the process. We are entering one of those rare times when the opportunity in preforeclosure real estate will be mind boggling.

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