Welcome to the world of understanding mortgages according to Bob Quinlan. 
For the benefit of those who may just be beginning to look for their first home and for even those who haven’t purchased in many years, let’s start with the basics. 

Most of us think of only banks being the lender but in the modern world and with the help of the internet the lending institutions now include not only chartered banks, but credit unions, investment institutions, brokerage “A” lenders, “B” or sub-prime lenders, both on the branch or street level and through brokerage lending.  Private or equity lenders are available through the branch or street level as well as through brokers.  These are your options…legally. 

The other ones, you know…da “wize gize” have their own rules.  That is all I know and all I ever want to know.  I will stick to the “legal lenders”. 

For the sake of simplicity and respect to all I am going to refer to all the banks and lenders as “lenders”.  If I think I need to be specific, I will.

The banks have the ability to lend up to 80% of the value of a home based on their own criteria.  (The Canada Bank Act was just revised by our Federal Government as of Friday, April 20^th, 2007).  This is called the loan to value ratio or in bank language:  LTV%.  It is a standard that is generally adhered to no matter the level of lending.  However, each lender can vary from this, higher or lower depending on the “amount of risk” they are willing to accept.

Approximately 60 years ago, the Canadian Government created the Canada Mortgage and Housing Corporation (CMHC) to help people purchase principal residences with less than the required 20% down payment (originally 25% until last Friday). 

Their main purpose is to get more people owning their own homes.  This creates more demand in the market, increases the values and generates more jobs from the selling, transferring of titles, administration, construction of new homes and servicing and updating of existing homes.  The more people who are buying homes, the healthier our economy is. 

There is a downside to this though.
Rapid increase can result in sudden decreases from time to time.  Nothing grows at a steady rate of increase.  Three steps forward, two steps back and over time…we have growth and success. 

This is where the rates pertaining to risk are levied by CMHC for their service.  They know the economy ultimately experiences “corrections” like we did in the late 90’s here in Prince George.  The majority of those who will lose their homes are the ones who started with the least amount of down payments.

Until recently, that was 5% down or the ones who had mortgages of 95% of the value or purchase price.  Today if you have “AAA” credit you can borrow 100% of the value of the home. 

So why do I mention all this?  Less down payment means higher risk.  Higher risk means that CMHC has to charge a higher premium to insure the mortgage to the lender.  The borrower is charged the premium and it is added to the mortgage. 

That means today if someone was to qualify to borrow 100% of the purchase price of $200,000 and amortize it over 40 years they would walk out of the lawyer’s office owing $207,400.00 on their home.  CMHC (ultimately the government) is counting on the premise that your property value is going to continue to rise because at the end of five years of paying $1,025.44/month ($61,526.40 in total) you will still owe the bank $198, 550.12. 

Yes that is correct, you have paid $52,676.52 in interest. 

Now my point is not how much the banks are earning.  Remember, you asked to borrow more than the purchase price of the home based on a good credit record and minimal employment security. 

My point is that the higher the risk, the higher the cost.  The basics of lending are:  the value of the asset + the credit history of the borrower + the income of the borrower and the equity, risk or down payment of the borrower =what a lender is willing to risk in any given situation. 

Remember, they have to answer to their shareholders.

In a couple of weeks I will get into how the banks or lenders qualify you and what you can do make your situation better.

Bob Quinlan is a Mortgage Broker with Meridian Mortgages of Prince George
www.pgmortgages.ca  or send him an email  bob@pgmortgages.ca

Have you consolidated your credit card debts, and find that things are still getting worse? A lot of people consolidate their credit card debts. The idea is to repay the debt back with simpler interest rates and monthly payments to a single credit card company. But, how many of them repay their debts timely? What keeps a borrower fall into a debt trap after credit card debt consolidation? Listed below are three things which can ruin a borrower’s credit card debt consolidation process and lure him into a debt trap. 

1. Relaxed attitude 

Credit card debt consolidation brings immediate relief to the borrower. There are no multiple payments now, no nagging calls, no keeping of record, and if the borrower, got a good deal the interest rates are also low and so are the monthly payments. All this is too comfortable to drive the credit card holder into a false sense of security. It is good to remember that there are debts are just consolidated. Few small things now become one big and it has to be repaid, that too with interest. So, forget the minimum monthly payments, get serious on that debt and repay it as soon as possible. This will keep your credit report in good shape. Else this relaxation will cause endless tension and could lead towards bankruptcy, which is disastrous. 

2. Uncontrolled spending habits 

It is this reckless spending on useless items that got the credit card holder, this trouble of credit card debt in the first place. And now after the credit card debt consolidation, if the temptations again drive a borrower’s spending habit, he is doomed. Remember small things here and there add up at the end of the month and can make the whole process of debt consolidation useless. 

3. No money management 

Multiple credit cards? No budgeting? No keeping track of expenses? No savings plan? If this is the financial regime prevailing in a borrower’s life, debt consolidation simply won’t work. The need of the hour is that the borrower takes control of his finances and try to become debt free. The good financial habits acquired in the process of repaying debt should last a lifetime and ensure no further consolidations are necessary. Don’t keep more than one credit card unless absolutely necessary. If a credit card comes by mail cut it into four pieces and mail it back to the credit card company. 

Debt consolidation is only a temporary solution to any borrower’s debt problems. It is there to make your repayment process easy, not to forget about debt and relax. Debt consolidation without proper attention to above mentioned three factors can ruin your entire effort. On the other hand if you take care of these three things carefully, a fantastic financial future awaits you. 

Payday loan companies make supply cash at higher rates than other types of credit programs. But these rates are for short periods, so fees are often small. While payday loans are not for every credit situation, they can assist during a financial emergency.

Are Rates Too High?

Payday loan rates are higher than other word forms of credit for a couple of reasons. First of all, payday loans are for a small amount for a short period. Lenders have got to cover the cost of processing such as transactions. Unlike mortgage companies, payday companies don’t add up interest charges for 30 years.

Secondly, payday loans are at a higher hazard of defaulting. Since there are no credit checks, people are more than likely to neglect to pay back these types of loans. That cost is passed onto everyone else.

Understanding The Numbers Rates

Most people get excited about APRs, annual percentage rate. If you compared the APRs of payday loans and mortgages, you will happen the payday loan will have got the larger number. But, that is misleading.

For one, payday loans are held for days, not a year. So you never pay that percent. With mortgages and other types of loans, you take old age to pay the interest and principal. So with a payday loan, on average you would pay 15% of the loan in fees. With a mortgage, more than than likely you will pay over 100% inch interest charges.

Rates Lower Than Late Fees

Taking a expression at late fees on some measures or credit cards, they can be significantly higher than the fee for a cash advance. Fees can also really add up with bank and merchant charges for bounced checks.

On average, a cash advance of $100 will have got a $15 finance fee. Often bank fees average around $25 for each NSF check. Merchant fees are often higher. So while it will cost you for a payday loan, they are cheaper than paying late charges. You should also see the impact on your credit report.

In the end, you have got to make up one’s mind if a payday loan is in your best interest. With instant service and fast cash, payday loan fees can be trivial compared to other costs.

Are you thinking about purchasing a rental property? In this two-part article, I will explain why this might not be a good idea AND provide an alternative way to diversify some of your investment dollars into real estate.

When There’s Nothing Real about Real Estate:

Real Estate is a misnomer in most conversations these days. Real, meaning actual and Estate, implying money or value are the two parts of this compound word. However, these days many people are involved in Real Estate as a means to make money. I’m talking about the flippers and the would-be landlords out there.

Rich Dad talks big about investing in real estate. In fact, it is clear that Robert Kiyosaki is all about real estate investing when you read his book. He has done well at it and therefore made decent money. Most people that I’ve heard about lately though, are not so lucky.

Instead of being lucky and doubling their money or tripling their money in real estate, many people are getting hammered by expiring AR mortgages (many of which have negative amortization anyway, but that is a whole separate issue) and the fact that housing prices are actually deflating in value.

Why is this happening? It is simple supply and demand economics. There are more houses that are expensive than there are people to buy them. The result is that people that have more expensive homes are discounting them (if they can afford to). This pushes the lower end people out of the next bracket down, so on and on it goes until the people at the bottom have a difficult time selling at all and end up losing their homes in foreclosure when they cannot sell.

Getting Back To Real Reality:

Common sense tells you that if you don’t know a business or what a business really costs, you have no business being in business. This is basic. You will end up with a pile of debt and no help repaying it. Somehow, though, this common sense goes out the window when it comes to real estate. People who have existing mortgages, credit card debt, and even HELOCs are getting into the business of real estate.

Rental Income Fantasyland:

Unfortunately, for many of these people they are using the technique called leverage to make money on money that is not really theirs to begin with: that is, a mortgage on the property that they bought as a source of rental income. The problem with leverage is that it leaves you extremely vulnerable during bad times. Instead of one mortgage payment, you have to pay two. So you go down the drain twice as fast. And the rental income you dreamed about is nowhere to be found. But don’t worry, the second house or property will still have heating, plumbing and repairs that are needed along the way.
Look for part two where I will provide an alternative for real estate investing. 

Best Syndication - Only you can decide, based on your situation, if that price is worth paying. By: Marjorie Salada Marjorie Salada is the owner of debtmanagement1.com , a website that contains information on debt consolidation, debt settlement, debt counseling and how to Source: bestsyndication.com

New Broker Referral Program Creates Business Opportunities

24-7PressRelease.com - This program offers entrepreneurs the opportunity to earn a minimum of $200 for each client they help enroll into Debt Shield’s debt settlement or FSI Tax Corp’s tax resolution program. Registered brokers who have relationships with consumers in need Source: www.24-7pressrelease.com

New King papers has estate ready for battle

Philadelphia Tribune - She said she secured the papers as part of a debt settlement with the old WERD radio station, which shared the building that housed the King-led Southern Christian Leadership Conference on Auburn Avenue. The documents, in a faded green folder Source: www.phila-tribune.com

Not Saving? Some Strategies to Help You Start WSTM - If you’re looking to buy a home or apply for a loan, or are simply worried about identity theft, this is the best time to order your credit report. When millions of Americans struggle to save any money from month to month, as research suggests they Source: www.wstm.com

Debt Settlement, Debt Management, Debt Termination What’s The Best Syndication - Editor s Note: The slight downturn in the Real Estate market has put an increased burden on many Americans. Some have found themselves in a tight situation. But there are some things you can do. Here is an article: When you’re facing a mountain of
Source: bestsyndication.com

Auction of documents offered by anonymous King associate called off Daily Citizen-News - Brown said the woman said she got the papers in a debt settlement with now-defunct radio station WERD, which broadcast upstairs from King s office at the Southern Christian Leadership Conference. King co-founded the organization in 1957. Brown said
Source: www.northwestgeorgia.com

Gilroy - Residents wanting to purchase a first home have a chance to qualify for a low-interest loan of $50,000 from the city of Gilroy. 

By attending a May 19 financial training session, first-time homebuyers will receive a certification that the city and other private and public lenders require before doling out home loans. But that’s not all residents will gain from the program, which is sponsored by the city and run by Project Sentinel, a nonprofit housing assistance agency. 

“The trainer (from Project Sentinel) goes through the entire process of owning a home, from beginning to end,” explained Housing and Community Development Technician Sandra Nava. “What they want people to do is figure out for themselves if they’re ready to purchase a home. They talk about budgets, how it will affect them to have a home, what their costs will be, how to work with the real estate agents and mortgage brokers and how to protect the investment once they purchase a home.” 

The training program is only offered once or twice a year in Gilroy, and the city is encouraging residents to attend the full-day session in order to qualify for the city’s next round of home loans. City officials are proposing to dole out $600,000 in home loans starting July 1, with two-thirds of those funds earmarked for homes constructed after 2006. 

In addition to the first-time homebuyer training, the city is offering a May 2 workshop to help residents understand the ins and outs of the city’s loan program. Low-income families of four earning less than $85,000 can qualify for loans of up to $50,000, payable over 15 years at 3 percent interest. Families of four earning “moderate” incomes of less than $127,000 can qualify for up to $30,000, according to Gilroy Housing Planner Regina Brisco. Those income thresholds are from 2006 and vary depending on the size of a family, Brisco pointed out. 

Though the May 2 workshop is not required to qualify for a city home loan, Brisco urged residents to attend the session and learn more about the income thresholds and the details of Gilroy’s loan program. 

“The workshop provides valuable information on getting your foot in the door to home-ownership in Gilroy,” Brisco said. “The training course is essential for anyone who wishes to purchase a home now or in the future.” 

To sign up or learn more about the May 2 or 19 events, contact Nava at 846-0290 or snava@ci.gilroy.ca.us.

One of the smallest, quickest and shortest terms of homeowner loans is referred to as a bridge loan. Compared with other homeowner loans such as first and second mortgages, refinances, home equity loans and debt consolidation loans that use the home as collateral, bridge loans are rare.  A bridge homeowner loan is short term and designed for the purpose of helping a homeowner bridge a cash crunch gap. Hence the name bridge loan. The most common for of bridge homeowner loans is the situation in which someone has bought a new home but has yet to sell their current home. The most common reason for this double ownership is a geographic relocation for a job.  Some homeowners will rent an apartment, condo, townhouse, mobile home or single family home for a short term while waiting for their home to sell. Others, however, see that for convenience, monetary advantage or things like not uprooting their children once again with a third move to a new school, they would prefer the bridge homeowner loans. 

Short term rentals can be more costly than the interest paid on the short term bridge homeowner loans.  There is a wide variation on the rates and terms of bridge loans, however, and the origination fees can be quite high. Most bridge loans are written for six months and the collateral used for these homeowner loans is the home that the borrower is attempting to sell. 

The problem with these bridge loans, besides the potential high cost, is that homes don’t always sell in six months, and markets and market values can change. Consider, for example, the difference between the market value of a home in the once thriving mining area of Allentown PA where jobs were plentiful and homes in demand.  That same property today may well be worth one tenth of what is was about 40 or 50 years ago. This kind of thing can happen overnight as plants close and industries struggle to survive. 

Who would have thought, for example, that there would come a time that 20,000 IBM employees would vacate the Triple Cities (Binghamton, Endicott and Johnson City) area of upstate New York with the close of that original plant, or that Knight Ridder Newspapers would cease to exist?  Before you consider homeowner bridge loans, look elsewhere for funding. Your best financial bet is, of course, to avoid the two-home ownership situation in the first place. If you can’t stay in your current home until it sells, sell other assets such as your boat, your second or third car, or borrow against your 401(k). 

You might even consider a temporarily lengthy commute or leave your family in your current home, take an inexpensive rental in your new location and fly or drive home alternate weekends.  There are plenty of homeowner loans that are smart, that are good buys, and that will save you considerable money and may actually make you some money. Debt consolidation loans are an example of the latter. Bridge loans, however, are seldom the best financial deal you can find, and are often one of the worst.

Bill consolidation loans can lower rates and assist you pay of your debt faster. However, you desire to be certain that you factor in the cost of fees, happen low rates, and pick a short term loan. These tips will guarantee that you don’t end up disbursement more by consolidating.

Factor In Fees

Depending on the type of loan you choose, fees can change from thousands to nothing. Refinancing a home mortgage and using the equity to pay off measures is appealing to many. But the thousands that it costs to refinance should be considered, especially if you aren’t getting a better rate on your mortgage.

Home equity loans and lines of credit can be used with small or no fees. Their rates are higher, but for smaller amounts they can still be cheaper. Personal loans are also an option since they still beat out high interest credit cards.

Make Rates Pay

Before consolidating your bills, do certain that your loan rate will be lower that what you are currently paying. This mightiness mean value that you don’t consolidate all your loans. For example, student loans often have got the lowest rates possible, better than a mortgage rate.

If you can only consolidate portion of your debt, wage off the accounts with the highest interest rates for the top savings.

Go Short – On Terms

Choosing shorter terms on your loan will salvage you money on interest costs. While smaller payments are tempting, the long term interest payments can easily be more than than what you pay now. Credit card payments are put to pay off your balance in five years. So if you can financially manage your current payments, choice a five term loan.

Shop Online

Shopping online for a loan can also assist you salvage money in interest and loan costs. Many funding companies offer more competitory rates online than in their conventional offices. Request quotes from respective lenders and expression at their terms. Even a difference as small as an 8th of a percent can financially do a large difference.

Close Paid Accounts

To protect your credit score, do certain to fold accounts once they are paid off. This reduction in your available credit will put you up for better rates when you make take to open up a new account, such as as a mortgage.

Given that your monthly monetary liabilities develop into too much for you to handle, it makes sense to use debt consolidation or debt negotiation for solving debt and credit concerns. Debt Consolidation Debt consolidation plans have prearranged debt repayment solutions with multiple credit card and collection firms. Should you sign up with a debt consolidation association you’re proposed a smaller overall monthly payment established on a decreased interest rate they have arranged with the creditor.

The payment is less than what the credit card companies extend you, saves you currency every month additonally, is often the perfect way to consolidate debt. One blessing of a debt consolidation repayment program is it plans to prevent you from getting harassed by your creditors due to the fact that you make the new, lower monthly payments. The drawback of the debt consolidation repayment plan is that you have to cut up all credit cards which you enter in the program.

You are also charged your first payment you make toward the program and an additional monthly administration fee. This service charge varies from flat fees of $30>, given that others charge a $5 charge for any creditor. Which suggests you will pay nearly $30 a month which does not go to paying off your debts.

The present debt consolidation plan advantages you as long as you have elevated interest rates or hold higher credit card bills than you can manage. Some families would like to make only one payment to one firm for all of their debts. Debt Negotiation Debt negotiation is From time to time considered to as debt settlement.

This is most times given to families who can not take care of a debt consolidation plan. If you won’t make the minimum payments of a debt consolidation repayment plan or have not made payments in the past 3 months, a debt negotiation plan is the next phase for solving debt and credit matters.

One benefit of a debt negotiation plan is you halt making payments to your creditors. The debt negotiation firm either takes monthly payments from you and keeps it in an account, or lets you hold the currency in your own account. As long as you are rendering these kinds of monthly payments to the debt negotiation organization, they negotiate with your creditors for a smaller payoff of around 40-50% of your overall amount of debt.

After the negotiated settlement is agreed upon with your collectors, the debt negotiation company makes an one time payment to them. A drawback of the debt negotiation plan is it dimishes your credit score for as long as you are in the program. But, most debt negotiation firms force the creditor make the credit report show paid in full so it doesn’t show up as a negative on your report once your account is settled.

Certain debt negotiation companies include a credit repair program that will Do away with the unfavorable items produced by the debt negotiation service. You pay for this tool as part of their program. Now that you have an idea what debt consolidation versus debt negotiation is choose which one will work best for solving debt and credit problems for you.

This article should provide you the ground rules in regards to selecting a Debt Consolidation company.

Do you understand the common debt per U.S. consumer is substantiality over $10,000? If not controlled closely, even smaller sums of debt could quickly spin out of control.

Should you only provide minimum payments on credit cards, make use of a large portion of your income to pay monetary obligations, have been deprived of credit recently, or receive phone calls or letters from lawyers, these might be warning signs you want to manage and decrease your debt before it gets a great deal worse.

You ought to take control of your monetary obligations and attempt towards lowering or eliminating debt totally by comprehending the fundamentals of Debt Consolidation. If carried out thoroughly, Debt Consolidation might provide you lower financial rates and monthly committments, avert those phone calls from collection agencies, and even end up in a single monthly charge you provide to your Debt Consolidation company.

Provided that you choose to control and lessen your debt, there are several things you are able to, and should, do before researching your Debt Consolidation choices. Beforehand, get a handle on precisely how much you owe, and to whom.

This may include credit cards, loans, and other installments. In regards to every debt, record the total sum you owe and the interest rate. You can now have a complete depiction of all your debts.

If you are certain you may be not able to handle your debt yourself, try and ask for help based on data from a honest Debt Consolidation company sooner as opposed to later, because the longer you procrastinate, the worse your debt will end up.

A decent Debt Consolidation agency will make it easier for you come across the proper answer for your needs, and consult on your behalf with credit card companies, collection agencies, and other debtors.

To keep away from ‘fly-by-night’ operators in what is still a largely unregulated business, always review an agency’s passed history with your local BBB and better yet the State Attorney General’s Office. Now that you can identify the ground rules of Debt Consolidation, you are able to begin your search for the answer that best fits your needs!