6-Effective Ways to Shop For a Personal Loan

Shopping for a loan is very similar to finding a new home to buy. Since they both are important financial decisions, it requires more than looking for the best rate or the easiest personal loan to qualify. Before you opt to take out a personal loan there are a few consumer smart – personal loan strategies may consider adopting. Use the following strategies to fine tune your personal loan decision.

1. Know Your Credit Rating

Credit ratings qualify loan approval. Understanding how your credit rating will help a person qualifies for, Depending on a credit score, there are specific personal loans that are applicable to your situation. For instance, certain lenders specialize in extending sub-prime financing. (Sub-prime loans carry a higher interest rate).

2. Organize Financial Documents

For the loan shopper in need of a personal loan or debt consolidation loan, certain personal financial documents may be needed for approval. Generally, lending institutions request the following records:

* W-2 statements from the past two years
* Federal tax returns from the previous two years,
* Investment and mutual fund documents
* Current and recent paycheck stubs, d
* Records that demonstrate other financial sources (2nd job, commissions, interest dividend income, bonuses)
* Child support or alimony documentation
* Home and vehicle titles
* Any other assets

3. Know Your Assets

Before you begin shopping for a loan, understanding where you stand is the first step to take. The first question of consideration involves, how much loan you can afford. Add up your collateral. For example, if you have a home, car, and insured jewelry, these items are assesses to approve or calculate a loan.

* Determine how much you need to borrow
* Review the current interest rates you are paying.
* Analyze how much loan payment you can afford.
* Remember to budget your consolidation loan with a breathing space or leeway. It will prevent you from falling prey to over-extending personal finances – again.

Another important step to include in your debt calculation is to tally all current bill obligations: housing costs, credit card debt, child support, car notes, alimony or student loans. Lenders believe that 36 percent of a person’s debt should account for 36 percent of a borrower’s pre-tax income.

4. Research Different Personal Loan Products

Since personal loans come in a variety of flavors, researching different products can help you find a loan customized to your specific financial situation. To gain a better understanding of diverging lending product terms vary, review glossaries and frequently asked questions (FAQs).

Various Classifications of Personal Loans

1. Debt consolidation loans allow the borrower to refinance or reorganize debt.
2. Mortgage – a loan to purchase property
3. Mortgage refinancing – a loan where the homeowner borrows money against the equity of their property to pay off bills, apply for a lower interest mortgage (Mortgage refis- are tax deductible).
4. Equity loans – are lines of credit that can be taken out on a home with out affecting the state of the mortgage. (Depending on the terms of the financial institution, equity loans- are usually tax deductible).
5. Personal loans – are all options you have to borrow money, and make one monthly payment until you are out of debt.
6. Secured personal loans – are ideal for the consumer with collateral (in example: home, real estate property and certain specialty recreational vehicles can be used as collateral).
7. Unsecured Consolidation Loans – are a personal financial solution for the consumer who does not have assets or own real property.

Advantages Versus the Drawbacks of Secured and Unsecured Personal Loans

Secured personal loans

Advantage:

* Lower interest rate on the loan
* Ease in borrowing money
* Smaller Monthly Payments

Drawback:

* Longer repayment terms
* Risk factor involved in losing property

Unsecured personal loans

Advantage:

* No risk in losing assets
* Condensed payment terms

Drawback:

* Higher monthly payments
* Heftier interest rates

5. Search For a Personal Loan

Selecting the perfect lender requires shopping around with various lenders. Obtaining quotes of lending products available for your financial leads will enable you to make the best personal loan decision. Remember to pose questions regarding the penalties, surcharges and costs for getting the loan approval.

6. Choose a Lender

The final step to obtaining debt relief starts with the selection of a respected lender. Although the choice may be a bit challenging, consider the terms and risk factors involved with each personal loan opportunity. Remember, just because a personal loan comes with an ultra low interest loan – doesn’t mean that it’s the best loan.

The four Steps for debt consolidation loans Includes the following:

1. Applying for the loan
2. Loan approval
3. Modify your budget as debts are paid-off
4. Avoid accruing more debt during the consolidation loan process

© About-Personal-Loans.com. All rights reserved.

Information about Author:

Holly Bentz is a finance writer and a contributor to About Personal Loans.

- posted by Mark Pane @ 5:45 PM 0 comments

 
A Process of Discovery (commercial mortage brokerage defined
At its highest level, commercial mortgage brokerage is a collaborative process of discovery. On the borrower side, the more the broker is able to learn about the property and the borrower’s needs, the more effectively he can focus his thinking and utilize his experience to assist the borrower in structuring the deal. On the lender side, a good broker carefully cultivates an effective and aggressive group of lenders. These are the kind of worthwhile relationships that can only develop over time. With each and every deal the relationship is tested and seasoned with mutual respect. The bar is raised. The boundaries are stretched. The stakes are always high because of the faith that has been placed in the broker by the client. Therefore, if disappointed by a lender’s execution, or by changes that (hopefully won’t) occur from the time a lender quotes a deal to the time the lender issues a commitment letter, that lender may never have another chance to win over that broker.

Part of the value, therefore, of a seasoned mortgage broker, is accumulating and honing these performance-based lender relationships to a fine edge so they can be brought to bear on an individual borrower’s transaction.

At a sophisticated level, commercial real estate financing requires finesse, experience and the aforementioned carefully cultivated, time-tested array of “arrows” in the broker’s “quiver”. Or, to state it more generically: to be effective, one needs the right tool at the right time to accomplish a particular job.

What are the implications of all this for the borrower? In return for a mortgage brokerage fee, all these time-tested lender relationships and the broker’s insight, judgment and advisory skills are leveraged by the borrower for a finite period of time without the need to employ such expertise on a permanent basis. All in all, I’d say it’s an amazingly efficient arrangement.

So, who should you turn to when it’s time to reach out to a broker? Which company should you choose? As in any endeavor, there’s a pyramid of quality and expertise: plenty of mediocrity at the bottom, some decent performers in the middle and a small number of virtuosos at the top. As in choosing a doctor, a lawyer, a contractor or a vacation, nothing beats a word-of-mouth recommendation from someone you know and trust. Next there’s old-fashioned due-diligence which would include doing a web search and reviewing newspaper articles (for example its easy to search the archives of the NY Times), calling accountants and lawyers active in real estate for recommendations, and asking for references from the broker’s past clients. Ultimately, it will come down to a face-to-face meeting, the answers to your questions, and your gut feeling about the broker, his ethics and his company. The depth of the organization is quite important because a great broker must have top-notch administrative, analytical and processing support to be your optimal choice.

When you consider that the owner of an apartment building, office property, shopping center or owner-occupied property will live with the economic consequences, restrictions and conditions of a new mortgage transaction for years, the best option for an owner is unlikely to be achieved by picking up the phone and calling one or two familiar banks. The smart owners know this and are happy to “outsource” the mortgage brokerage function, knowing that they will get the benefit of the broker’s knowledge of the current marketplace.

Since the lending landscape is a constantly moving target, the “alpha” broker guides the client, mindful of the client’s desired loan structure, incorporating late-breaking news and knowledge of shifting market dynamics to fine-tune his approach to best achieve the client’s objective.

You may be asking how, exactly, this knowledge can benefit the borrower, so here are two possible examples:

Lender X recently lost two valuable employees, the shop is overwhelmed and the broker absolutely knows that even though he’s closed hundreds of millions of dollars of business in the past with lender X, and the borrower likes lender X, at this moment in time lender X is not the right choice, and the broker must advise the client accordingly.

Treasury rates drop significantly – prompting a suggestion by the broker to suddenly switch from lender “A” to lender “B” because lender “A” (despite the fact that it offers a better spread than lender “B”) will not be able to lock the interest rate for two more weeks. Lender “B”, on the other hand, can rate-lock immediately. The borrower should employ the broker that will offer him this option when circumstances so dictate, not the broker that will sit tight knowing that the client is already signed up. The broker that is willing to disclose any problems that arise immediately and help the borrower switch to “Plan B” is (of course) infinitely more valuable than the one that doesn’t want to rock the boat.

Clearly, you want the broker that will dig deeper and seek to protect your interest, which brings us to the next rather important point:

What to absolutely avoid in a commercial mortgage advisor: brokers who tend to utilize a small number of lenders regardless of the diminishing effect that will have upon the advice that they can offer their clients. As efficient and convenient as this may be for them, it screams disrespect for their clients. You want a broker that enjoys going the extra mile and pushes to find the best solution in any market condition. Also to be avoided are firms without enough support staff to truly serve the borrower’s needs. The phrase “the devil’s in the details” must have been coined with complex commercial mortgage transactions in mind. There is a lot of work that must occur between the acceptance of a term sheet and the closing of the deal. Make sure that the firm you put your faith in is adequately staffed to keep the paperwork flowing smoothly.

Make the most of your next commercial real estate transaction by taking the time to identify the right advisor to assist you. Tap into the wellspring of knowledge and expertise as needed, knowing your broker is up to speed with all the nuances of the current lending environment. Bringing that expertise in at an early stage will almost certainly ensure that your project will go more smoothly.

Information on the Author:

Gregg Winter - President
Winter & Company Commercial Real Estate Finance
13 East 37th Street, NYC 10016
gregg@winter1.com
www.winterandcompany.com
- posted by Mark Pane @ 8:46 AM 0 comments