Saturday, September 20, 2008

Cope with Financial Stress

It is best to learn financial planning skills early in life to help to avoid financial pitfalls but here are some tips for those of us who are learning the hard way.

Step one is having both short term and long term financial goals. Without this you are just swimming against the tide.
Second is to have a realistic budget and to live within it. This schedule should be structured around the basic necessities such as housing, automobile expenses, etc. but should also allow for occasional splurges.

A good rule of thumb is to spend a third of your income, save a third and invest the rest.
Third is to avoid falling into credit card debt. Use credit cards to help build up your credit score by using only a small portion of their limit and paying them off to avoid interest fees.
Forth is to change your ideals. Excessive materialism brings very temporary satisfaction and contradictorily causes long term stress.

Become determined to work within these guidelines and within a relatively short time you will begin to feel the weight being lifted from your shoulders.

- If you've enjoyed this article, please use the email link "send to a friend" at the top of this page to send to 1 or more friends, family or coworkers. Your support is greatly appreciated. - Thank you. Christina

Wednesday, June 11, 2008

Secured loan

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. The debt is thus secured against the collateral — in the event that the borrower defaults, the creditor takes possession of the asset used as collateral and may sell it to satisfy the debt by regaining the amount originally lent to the borrower. From the creditor's perspective this is a category of debt in which a lender has been granted a portion of the bundle of rights to specified property. The opposite of secured debt/loan is unsecured debt, which is not connected to any specific piece of property and instead the creditor may satisfy the debt against the borrower rather than just the borrower's collateral.
There are two purposes for a loan secured by debt. In the first purpose, by extending the loan through securing the debt, the creditor is relieved of most of the financial risks involved because it allows the creditor to take the property in the event that the debt is not properly repaid. In exchange, this permits the second purpose where the debtors may receive loans on more favorable terms than that available for unsecured debt, or to be extended credit under circumstances when credit under terms of unsecured debt would not be extended at all. The creditor may offer a loan with attractive interest rates and repayment periods for the secured debt.

One popular type of secured loan that is normally only available at a bank or credit union is the savings secured loan. In this type of loan, the borrower must have a savings account with the creditor. A portion of the money in this account is used as collateral to secure a loan equal to the amount pledged. This money is then frozen in the account but continues to earn interest. As the loan is repaid the secured portion of the savings account is freed. This has advantages for both the creditor and the borrower. If the borrower defaults on the loan the collateral is already in the creditor's possession so it is a very low risk. As a result, the creditor usually offers a much lower interest rate. The disadvantage of this type of loan is that it is limited by the available fund in the savings account.
A mortgage loan is a secured loan in which the collateral is property, such as a home.
A nonrecourse loan is a secured loan where the collateral is the only security or claim the creditor has against the borrower, and the creditor has no further recourse against the borrower for any deficiency remaining after foreclosure against the property.
A foreclosure is a legal process in which mortgaged property is sold to pay the debt of the defaulting borrower.
A repossession is a process in which property, such as a car, is taken back by the creditor when the borrower does not make payments due on the property. Depending on the jurisdiction, it may or may not require a court order.

How to create secured debt
Debt can become secured by a contractual agreement, statutory lien, or judgment lien. Contractual agreements can be secured by either a Purchase Money Security Interest (PMSI) loan, where the creditor takes a security interest in the items purchased (i.e. vehicle, furniture, electronics); or, a Non-Purchase Money Security Interest (NPMSI) loan, where the creditor takes a security interest in items that the debtor already owns.


Refinancing refers to the replacement of an existing debt obligation with a debt obligation bearing different terms. The most common consumer refinancing is for a home mortgage.
Refinancing may be undertaken to reduce interest costs (by refinancing at a lower rate), to extend the repayment time, to pay off other debts, to reduce one's periodic payment obligations (sometimes by taking a longer-term loan), to reduce or alter risk (such as by refinancing from a variable-rate to a fixed-rate loan), and/or to raise cash for investment, consumption, or the payment of a dividend.
In essence, refinancing can alter the monthly payments owed on the loan either by changing the loan's interest rate, or by altering the term to maturity of the loan. More favourable lending conditions may reduce overall borrowing costs. Refinancing is used in most cases to improve overall cash flow.
Another use of refinancing is to reduce the risk associated with an existing loan. Interest rates on adjustable-rate loans and mortgages shift up and down based on the movements of the various indices used to calculate them. By refinancing an adjustable-rate mortgage into a fixed-rate one, the risk of interest rates increasing dramatically is removed, thus ensuring a steady interest rate over time. This flexibility comes at a price as lenders typically charge a risk premium for fixed rate loans.
In the context of personal (as opposed to corporate) finance, refinancing a loan or a series of debts can assist in paying off high-interest debt such as credit card debt, with lower-interest debt such as that of a fixed-rate home mortgage. This can allow a lender to reduce borrowing costs by more closely aligning the cost of borrowing with the general creditworthiness and collateral security available from the borrower. For home mortgages, in the United States, there may be certain tax advantages available with refinancing, particularly if one does not pay Alternative Minimum Tax.

In banking and finance, refinancing risk is the possibility that a borrower cannot refinance by borrowing to repay existing debt. Many types of commercial lending incorporate bullet payments at the point of final maturity; often, the intention or assumption is that the borrower take out a new loan to pay the existing lenders.
A borrower that cannot refinance its existing debt and does not have sufficient funds on hand to pay its lenders may have a liquidity problem. It may be considered technically insolvent: although its assets are greater than its liabilities, it cannot raise the liquid funds to pay its creditors. Insolvency may lead to bankruptcy, despite the fact that the company has a positive net worth.
Most large corporations and banks face this risk to some degree, as they may constantly borrow and repay loans. In general, refinancing risk is only considered to be substantial in cases of financial crisis, when borrowing funds may be extremely difficult.
Refinancing is also known as "rolling over" debt of various maturities, and may be referred to as rollover risk.

Home equity loan

Open end home equity loan

This is a revolving credit loan, also referred to as a home equity line of credit, 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.
Typically, the interest rate is based on the Prime rate plus a margin.
Home equity loan fees
Here is a brief list of possible fees that may apply to your home equity loan: Appraisal fees, originator fees, title fees, stamp duties, arrangement fees, closing fees, early pay-off and other costs are often included in loans. Surveyor and conveyor or valuation fees may also apply to loans, some may be waived. The survey or conveyor and valuation costs can often be reduced, provided you find your own licensed surveyor to inspect the property considered for purchase. The title charges in secondary mortgages or equity loans are often fees for renewing the title information. Most loans will have fees of some sort, so make sure you read and ask several questions about the fees that are charged.

A home equity loan (sometimes abbreviated HEL) is a type of loan in which the borrower uses the equity in their home as collateral. These loans are sometimes useful to help finance major home repairs, medical bills or college education. A home equity loan creates a lien against the borrower's house, and reduces actual home equity.
Home equity loans are most commonly second position liens (second trust deed), although they can be held in first or, less commonly, third position. Most home equity loans require good to excellent credit history, and reasonable loan-to-value and combined loan-to-value ratios. Home equity loans come in two types, closed end and open end.
Both are usually referred to as second mortgages, because they are secured against the value of the property, just like a traditional mortgage. Home equity loans and lines of credit are usually, but not always, for a shorter term than first mortgages. In the United States, it is sometimes possible to deduct home equity loan interest on one's personal income taxes.
There is a specific difference between a home equity loan and a Home Equity Line of Credit (HELOC). A HELOC is a line of revolving credit with an adjustable interest rate whereas a home equity loan is a one time lump-sum loan, often with a fixed interest rate.

Friday, November 23, 2007

Auto Car Loan

Auto loan Car Top ten Loan1. Auto LoanAuto loan have always been relatively easy to arrange if a person has good credit, is gainfully employed, and has reached adulthood. Americans couldn't live without their vehicles, so car buying is the most frequent business deal being arranged every day. Whether buying a new or used automobile, a car loan is normally the means of acquiring one. Banks and other lending institutions make funds available at appealing interest rates. Financing offered by a segment of the auto manufacturing companies will also include rebates or special sales that they hope will help buyers choose their product over another.American teens are driving in unprecedented numbers, but they are not able to get financing themselves. It takes an adult to qualify for a car loan, and parents are must be willing to sign for the loan. A Auto loan can be set up for time periods varying from 24 to 70 months at interest rates that vary from 4.9 and up, depending upon the market and the credit worthiness of the applicant. There are lenders who advertise that they take a special interest in customers who do not have very good credit. Nevertheless, it is to the buyer's advantage, when applying for car loans, to have excellent credit so as to get a lower interest rate offer. It is always important to find the best deal, but even more importantly it is important to do what God wants. Prayer and study in financial matters will help anyone make any important (or not so important) financial decision.These loans can be refinanced if the buyer learns of a lower interest rate being offered by another lender after he has had his vehicle for a while. Since the federal government sets the interest rate, it pays for the car owner to pay attention to how that stands in all of his credit dealings, including his car loan. Most car loans today are set up to come directly out of the buyer's bank account instead of sending out statements for payment by check. That is easier for everyone involved, and there is never a lapse in memory or a bill lost in the mail. Some drivers choose to lease an automobile instead
of buying outright. At the end of the lease period, lessors have the option of buying the cars they have been driving for the lease period, and generally do so with car loans.

Home Loan

Home loan
Top Ten Loan2.Home LoanThe textual item bellow raises question about the dilemmas that people who handle the question of home loan cope with every day, in order to make it easier on them to become more industrious. Regarding studying mortgage loan online options, cyberspace offers 24/7 expediency. Though the majority of customers continue to favor concluding their loan transaction with a `real` morgage online agent or lender, there`s lots of valuable information loans Information ("No-Loan") Internet SitesNo-loan sites don`t act as agents or issue loans, but normally give online house loan content, facts and figures, and news, along with interest rates - just the ticket when it comes to the kind of information the majority of house loans shoppers wish to know and need to know.No-loan internet sites daily update online morgage rates, indexed listings, and market triggers that push costs higher or lower. Browse through websites like these in order to obtain the latest average rates in each region that are payable on purchase, refinance (obtaining a new loan to pay off an existing loan) and equity products.Also explore these sites` archives for more factual data: You will be able to explore loan mortgage on line programs, understand underwriting (the process of selecting, classifying, analyzing and assuming risk according to insurability), get explanations regarding the loan qualification methodology, crunch numbers using on-line loan calculators, and so on.No-loan web sites are also called `referral` internet sites as they link you to multiple participating lenders, either through ads or hyperlinks embedded in the textual content. The referrals can prove useful, as long as you garner an ample number of them to sufficiently compare loan charges.

Student Loan

Student Loan
Top Ten Loan3. Student loanStudent loans are loans offered to students to assist in payment of the costs of professional education. These loans usually carry a lower interest rate than other loans and are usually issued by the government. Often they are supplemented by student grants which do not have to be repaid.Student financial aid refers to funding intended to help students pay educational expenses including tuition and fees, room and board, books and supplies, etc. for education at a college, university, or private school. General governmental funding for public education is not called financial aid, which refers to awards to specific individual students. A scholarship is sometimes used as a synonym for a financial aid award.