Credit Tips

5 Factors That Affect Your Business Credit

What makes up your business credit score? What gives you the best chances of getting a loan? Here are a few factors that play into your business credit picture, and what you can do to make the most of them:

1. Payment History – Your payment history is an important part of your business credit profile, and is what your D&B Paydex score is based on. Many credit opportunities come with a minimum Paydex requirement. What you can do: always pay vendors EARLY. On time is “okay”, but paying early (as in before you receive the invoice) is best.

2. Credit Applications – Believe it or not, multiple applications for credit can be a red flag that will keep you from getting approved for a loan. Too many in a short period of time will make your company look desperate and be a sign to potential lenders that things are going downhill. What you can do: plan your use of credit accordingly, and keep applications to the minimum necessary to accomplish your goals.

3. Blanket UCC Filings – One thing that many people don’t realize is that they need to pay attention to the order in which they get certain types of loans, and what UCC filings the lenders will file. Some lenders may file a “blanket” UCC filing, which essentially says they have an interest in ALL of your assets. These blanket UCC filings will then take precedence over any subsequent ones, which drastically reduces your ability to get credit elsewhere. What you can do: plan your credit carefully, and negotiate UCC filings according to what your needs are. For example, if you need particular assets excluded from a UCC filing to use as security for another loan, explain that fact in advance to get those items excluded from any blanket filings, or, alternatively, get the loan or account with the more specific UCC filing first. Some experts recommend opening accounts with competing UCC filings at the same time, and negotiating the details with each party simultaneously.

4. Company Financials – With D&B, it’s important to make sure your financials in your credit file are up to date. If they are not, it could negatively reflect on your company when the lender is comparing the available data. What you can do: update your financials on your credit reports so that they reflect your current circumstances, and plan to do so periodically.

5. Company Legal Structure – The legal structure of your company (LLC versus INC versus Partnership, etc.) can also affect your business credit. Lenders are less likely to loan money to Sole Proprietorship’s and Partnerships than Corporations or Limited Liability Companies. What you can do: if you aren’t incorporated, you should be. The advantages span far past just your ability to get credit.

There are other factors that affect your ability to get credit, such as the amount of debt you already have, how heavily invested you are in your company, and even your personal credit can play a role in your approval or denial. Here we’ve covered five of them. In the end, the better the all-around picture you can paint, the better your chances of getting approved for loans will be.

Day Trading

How Cosmic Disclosure Will Affect The Financial World

I am a great protagonist of cosmic disclosure: One of the biggest questions is of course how it will affect the financial world, as the financial world is possibly the weakest part in a chain of interconnected sectors that affect everyone in case of an unexpected event.

There can be no doubt about it when cosmic disclosure finally happens it will shock many people because the average individual still has no clue of what is going on behind the scenes. Assuming that we will get FULL cosmic disclosure, will be a shock to the world but it will propel our evolution forward in a way nothing else can.

This is also true for the outdated and corrupt financial system which is way past its sell by date.

The way in which finances are handled affects every single sentient being on the planet and beyond aiming not to empower but to suppress the evolution of sentient beings. Full cosmic disclosure, and I have to emphasise that we will need FULL cosmic disclosure, will free the financial system to re-set itself to zero and start again.

Why? Because if we get FULL cosmic disclosure the game will be out in the open: There won’t be any hiding in darkest corners of the Antarctic, face history, or the moon or Mars any longer.

Once the truth of the history of the financial system will be revealed with all its flaws the solution will become glaringly obvious. Note, in my book the solution is not bitcoin, but that’s another story…

Imagine every paper, every news channel, every radio station would reveal the truth about the lies in our history books, in science, in medicine and in technology.

My friends, cosmic disclosure is huge. In the end we can not fully anticipate how cosmic disclosure will the financial world, but we can be assured that it will hasten the demise of a system that has been at breaking point for the last thirty years or so.

The stock market will be interesting to watch:

We might see a surge in share prices for small companies at the leading edge of alternative energy and alternative health.

Bitcoin, gold and silver or diamonds won’t feed you in an emergency.

If full cosmic disclosure happens there may be a period of massive turmoil which few will be able to handle mentally because they are still too deeply steeped in the old survival model of fear, anxiety and the drive to defend and blame in order to survive.

Everyone wants change the easy way:

Humanity at large is desperate for it, yet what the people are forgetting is that nothing can change unless the energy that creates change shifts. While so many are fearful of losing a status quo that is still dear to them, the use of money as a means of exchange is one such status quo, there cannot be any significant change.

The financial system is kaput:

The way traders and investors operate is not a modern, sophisticated means of making a living, but a blatant mismanagement of universal energy which doesn’t return anything of value back into the system.

The insanity of aggressive short selling that has crippled many companies over night might actually work in favour of quickening the collapse of the financial world when cosmic disclosure produces a knee jerk reaction in the markets thus making room for regeneration and innovation that acknowledges and respects the contribution of the individual to the world in its entirety.

Day Trading

Should Octobers’ Reputation As Disastrous Territory Affect Your E-Mini Trading Strategy?

The press has begun their annual warnings and speculating that October is a perilous month for e-mini trading. They tend to dredge up the October 1987 market crash as proof positive of impending doom. Yes, the drumbeats of financial ruin and economic disaster are pounding with impressive regularity based upon that devastating week in October 1987.. But, are these warnings based in fact or an example of “news creation” of dubious accuracy? Let’s look at history to assess October’s performance in the years after the 1987 and relate it to potential issues in e-mini trading, specifically day trading and e-mini scalping.

From the onset I must state my belief that catastrophic events in the past are not a heavily weighted variable in e-mini trading strategy. On the other hand, to summarily dismiss any risk in October would be reckless and counterproductive in my e-mini trading strategy. Benoit Mandelbrot’s “The Misbehavior of Markets’ seminal book, and his discussion of “long tail” events are proof positive that any constellation of variables can produce unexpected trading movement; the hundreds of variables in discovery of market price are difficult to analyze and usually go undetected (or properly interpreted) as market crashes have routinely surprised and confounded both economists and traders with their randomness and scope. Since the commodities and futures exchange tends to produce higher levels of volatility than the NYSE, which I attribute to exponentially higher levels of leverage, you would anticipate the price volatility expressed more profoundly in the price movement on the CME and other futures exchanges.

With my personal bias on the table, let’s have a look at yearly results in the Dow Index to determine if October has been a risky month to trade. In results that can be found on the insightful “Seeking Alpha” blog and data from Dow Jones, here are the facts:

· In the last five years, the Dow has advanced four of the years, not declined

· In the last ten years, the Dow has advanced six of the years, not declined

· In the last fifteen years, the Dow has advanced eleven of the years, not declined

· In the past 15 years, the Dow has advanced at an average of 1.76% in October.

Source: Dow Jones and Seeking Alpha blog

There was only one year (2008) in the past that saw a significant a drop in price levels. In that year the Dow experienced a drop of 14.06%; I would characterize that number as the result of the banking/credit crisis and not attribute it specifically to October in particular, as the previous data has shown that October has not been an overly dangerous month for e-mini trading. The data confirms that in the past fifteen years October has not been a perilous month, or even statistically relevant month for dangerous trading conditions.

In summary, I don’t consider October as a challenging month to trade in relation to other months of the year; in fact, the data would suggest that October may be a good month for e-mini trading. Still, that October 1987 event remains a psychological barrier for traders and apparently is far from forgotten. As always, best of luck in your trading…


How Does the 2018 Federal Budget Affect You and Your Family?

If you sat down at 7:30 last night to watch the 2018 Federal Budget Announcement, you may have found yourself a little overwhelmed. With so many figures and areas of taxation to get your head around, we have sat down, dissected and summarised the answers to the question you may be asking – “What’s in it for me (and my family)?”

Personal income tax

The Treasurer announced plans for a three-step, seven-year plan:

  • Step One: Effective immediate, low and middle income earners are to benefit from tax savings of up to $530 per person (or $1,060 per couple).
  • Step Two: From 1 July this year, the threshold of the 32.5% tax bracket will increase from $87,000 to $90,000, then will again increase in July 2022 from $90,000 to $120,000.
  • Step Three: From 2024-25, there will be just two income tax brackets for people earning over $41,000 per year: 32.5% for incomes between $41,001 and $200,000, and 45% for incomes exceeding $200,000.
  • The Medicare levy will remain at 2%.

Your superannuation

Have you ever considered changing your super fund, but found it cost-prohibitive because of high exit fees? Great news in this years budget– super funds will soon be banned from charging exit fees. But you’ll need to wait until 1 July 2019 to make your move.

Other changes to superannuation include:

The balance-eroding practice of automatically adding life insurance to a superannuation policy, no matter what the age of the person, will end. (To date, super members under the age of 25 pay nearly $200 million a year in life insurance fees through superannuation). Those under 25 are now required to ‘opt in’ to buying life insurance.

Companies can no longer automatically deduct life insurance cover for all funds where no contributions have been made for 13 months.

According to the Association of Superannuation Funds of Australia, more than 60% of Australians have multiple super funds. So, the ATO will turn their eye to inactive super accounts and merge them with their owners’ active funds.

  • Self-managed super funds (SMSFs) can now have 6 members, up from 4.
  • SMSFs with a history of good record keeping will be rewarded by reducing annual audits to 3 yearly audits.
  • People over 65 can put up to $300,000 into super from the proceeds of selling their home.
  • First home buyers who have made super contributions under the First Home Super Saver Scheme can access their money for eligible property purchases.


Young people living in rural and remote communities will find it easier to get access to Youth Allowance payments while they are studying away from home (eligibility for these payments is based on parental income).


The Federal Government will match funding with the states and territories to provide traineeships and apprenticeships for “high-demand” areas over four years. However, there is one caveat: each of the states and territories needed to sign up for this to go ahead.

Ageing Australia

There are a number of changes in this years budget to benefit older Australians. They include:

  • $1.6 billion over four years has been set aside so 14,000 seniors can stay in their homes rather than go into a nursing home.
  • $20 million for mental health nurses to support older people still living at home (the Government notes that men over 85 have the highest risk of suicide of all age groups).
  • $40 million has been budgeted for urgent building and maintenance work for aged care facilities in regional and remote areas.
  • $33 million has been set aside to address a chronic shortage of palliative care in nursing homes.
  • A one-year exemption from the ‘work test’ will apply to recent retirees who have less than $300,000 in total super savings.
  • The Pension Loans Scheme will be available to all Australians over Age Pension age and the maximum payments will increase to 150% of the full Age Pension.
  • Pension Work Bonus increases to $7,800 p.a. from $6,000.
  • Finally, the Government has pledged to make the aged-care system easier for families to navigate, simplifying forms and providing relevant online educational facilities.

Access to more affordable medicine: Granted, you will need to wait years for this, but it’s good to know the government will spend $302 million over four years to improve your access to generic and less expensive medicine.

Your health

There are plans to allocate $130 billion for public hospitals over five years. The government also proposed a crack down on unnecessary diagnostic tests.

Access to your own data. The government announced the establishment of a “consumer data right”. This will allow you to take control of your online personal data and safely share it with credible service providers, starting with the banking, energy and telecommunications sectors.

Small business

No budget would be complete without something for small businesses. If you run your own business, the current deduction on spending on eligible assets of up to $20,000 has been extended to July 2019. Another win: streamlining of GST reporting which, in turn, will save money – a welcome change for around 2.7 million small businesses.

Craft Beer Brewers. There are around 350 craft brewers in Australia, so chances are you aren’t one of them. However, most consider the tax changes that put small craft beer brewers at a disadvantage to be a victory for common sense. Beer sold in kegs larger than 48 litres have been taxed at a lower rate than smaller kegs, which in effect has favoured large producers. The change brings the lower tax level down to beer sold in kegs larger than the 8-litre size.


While not all of these changes are likely to affect you personally, you might give them your ‘tick’ of approval:

  • Multinational companies now to be policed and stopped from shifting profits to lower-taxing countries (they do this by loading up local operations with debt).
  • Online hotel booking websites based outside of Australia will now be taxed at the same rate as Australian businesses, ending the inequality that currently occurs between international and local booking providers.
  • Companies that are currently ‘pushing the boundaries’ and taking advantage of the research and development tax incentive scheme will be stopped. This will ensure funding goes to genuinely innovative spending.
  • A $1.3 billion plan to support Australia as a ‘global leader’ in medical technology, biotechnology and pharmaceuticals.
  • The ATO will turn an eye to the ‘Black Market Economy”, with more audits, ‘mobile strike teams’ and a ‘Black Economy Hotline’ for the public to report suspicious activity of businesses attempting to avoid paying tax.

Budget Questions?

If you have any questions, your mortgage broker is always ready to help.


What Changes Will Affect How Much I Can Receive In Tax Credits?

You may be eligible for tax credits if you are responsible for a minimum of one kid or young person, or if you are working, but getting a low income. Your tax credits can increase, decrease or stop because of changes in your life or work. You must inform the tax credit office of these changes.

Types of changes you may must report

You should report changes when you begin a new job or if your work hours are altered. A decrease or increase in income by more than £2,500 must also be reported as soon as possible. You also must get in touch with the tax office once your state benefits begin, stop or change. Apart from changes in your income, you also have to report changes in your family’s circumstances, like when you get a permanent separation or divorce, live-in with a new partner, have a new born baby, or when a child or partner dies. If you are planning on going on a holiday overseas for eight weeks or more, or if you will be leaving the UK permanently, you also have to call the tax office.

Why it is important to report changes?

Failing to report changes to the tax credit office can result to an overpayment. If you are overpaid from the date of the change, you could be instructed to pay this back. You may even face a penalty as high as £300 if you have been overpaid. It can also mean losing out on money that you may qualify for because of a change in your situation. It is important to remember that even if you can report such changes later on, increases can typically be backdated by up to only 1 month.

How to report changes

You could report changes by getting in touch with the tax credit helpline. You can’t report most changes until they actually take place. Sadly, it is not yet permitted to report changes for tax credits through email or online, unless you’re changing address or reporting to claim a child benefit.

The HMRC strives to pick up your call as fast as possible. However, because of the number of calls that they receive, you may sometimes be placed in a queue. Your call will be responded to once an operator becomes available, but if you need a full and faster service, you can use this tax office number.


Tax Debt Could Affect Your Ability to Travel

Many of you may recall the transportation bill signed into law by President Obama. Did you also know that there is a stipulation in that bill that requires the Internal Revenue Service (IRS) to refer seriously delinquent taxpayers to the U. S. State Department for denial or revocation of your passport. The Fixing America’s Surface Transportation Act (FAST Act), P.L. 114-94, added Sec. 7345, which authorizes the IRS to certify to the secretary of State that a taxpayer is seriously delinquent with his or her taxes. The State Department can then deny, revoke, or limit the taxpayer’s passport.

To qualify as a seriously delinquent tax payer, the tax payer must have at least $50,000.00 dollars in outstanding tax debt including interest and penalties. In addition, a notice of a lien must have been filed and all administrative appeal rights exhausted or lapsed, or a notice of a levy filed. It is also required that both the notice alerting the tax payer to the filing of a tax lien, and the notice of the IRS intent to levy must include information relating to Sec. 7345, certification of seriously delinquent tax debt and the denial, revocation, or limitation of passports for individual with such tax liability.

It is also required by the U.S. State Department that the Internal Revenue Service provide contemporaneous notice to the taxpayer. Once the State Department receives certification from the IRS, no passport will be issued, and those already issued could become limited or revoked. Under certain circumstances exceptions are made, but these exceptions are generally limited to emergency or humanitarian reasons. If the tax payer is already out of the country, the State Department will limit travel to the tax payers return to the United States.

Taxpayers who meet the criteria of “seriously delinquent taxpayer” may be granted an exception if they meet one of the following:

• They requested innocence spouse relief

• Collection activity has been suspended due to a request for a “Due Process” hearing

• They entered into an acceptable payment arrangement referred to as an Installment Agreement (IA)

Though Offer-In-Compromise (OIC) may be a suitable resolution and worth pursuing, waiting for the outcome of a submitted offer does not stop the State Department from affecting a seriously delinquent tax payer’s ability to travel.

Unfortunately, the only way to reverse certification once it has been made is to resolve the outstanding debt either by paying the debt in full, entering into an Installment Agreement, being granted Innocent Spouse Relief, or successful Offer-In-Compromise. Even if you pay the debt down below the $50,000.00-dollar amount, the certification will remain in place until the debt has been paid-in-full. Once the tax liability has been resolved, the IRS must contact the State Department to withdraw the certification.

Liens and Intent to levy notices sent prior to the effective date of the above bill (December 4, 2015) should not cause the taxpayer to become certifiable due to the lack of required language in notices sent. If you find yourself in the aforementioned situation, here is a few things you could do to help. Please note that nothing in this article in any way overrides the advice from a licensed tax professional. The first thing to consider is proper planning. This will help you stay current with your tax obligation(s), and avoid the situation before it gets out of hand. Secondly, if you can’t pay the balance in full try to get the balance below the $50,000.00-dollar mark before certification takes place. Remember, if the balance is below that amount you’re not in danger of being certified. It’s only after certification that reducing the balance has no affect. Next, you can avoid certification by entering into Installment Agreement, requesting innocent spouse relief, requesting “Due Process” hearing, and requesting an Offer-In-Compromise (OIC).


Major Factors That Affect Insurance Premium

1. DMV Records:

Ticket history and past involvement in accidents are major elements. Annual mileage also helps determine the likelihood of road accidents. The logical explanation is that the more time a car spends on the road increases the risk of incidents and the other way around. Clean records with no violation and incident-free experience indicate that the policyholder is a low-risk driver who deserves affordable premium.

2. Car Model:

The cost to repair and replace policyholder's car in case of accident comes into play as well. Insurance Information Institute suggests that the likelihood of theft is also an important factor. For example, a brand new Lamborghini which costs more than $ 200,000 demands more expensive financial protection than a $ 20,000 Toyota. Replacement parts for the former are nowhere near affordable range, so insurance company needs to ask for a higher premium. Criminals tend to target more expensive car, too.

3. Age, Address, and Occupation:

Auto insurance companies look for relevant personal information about the driver to make the quote. Young or teenage drivers have very little experience on the road, while senior drivers have a visual impairment; both of them show signs of higher risk. At the same time, a neighborhood where crime rate is quite high relates to the likelihood of theft and vandalism. Some insurers relate occupations with the possibility of accidents. Stressful jobs such as public relation officers and real estate agents can be the factors that increase premium rate.

4. Credit Score:

Many insurers still use applicants' credit score information to determine approval and price. A person with bad credit score tends to lapse payment due to financial difficulties. Because carrier needs assurance, the policyholder must pay more to cover the possibility of skipping payment.

5. Coverage:

In addition to states' minimum liability requirements, there are optional coverage options. Every auto insurance company has different prices for optional purchases such as Collision, Comprehensive, Rental Reimbursement, and Roadside Assistant. Policyholders can choose not to buy them to lower premium.

Age is the only personal factor that is impossible to control. Address and occupations are not ones that policyholders can change as they like either. DMV records and credit score are always open for improvement, and at some points, they can help to save money on auto insurance. When a vehicle comes to owners through lease or finance company, the optional coverage of collision and comprehensive often become mandatory. However, higher deductible allows for more affordable premium, hence manageable expense. It is worth to compare premium prices from multiple providers and consult an independent to get the best price for the most appropriate and complete financial protection.

How to Get More Affordable Insurance

There is no way to change age, and it is almost impossible to change address and occupations in an instant. In the auto insurance industry, cheaper is not always better, but it does not hurt to shop around and find the best deal available. Companies change prices all the time to attract potential customers; policyholders can do a little comparison before every renewal and switch in case the price difference is profound that it is worth the hassle to file a new application. Apart from that, there are some other effective methods to lower insurance premium at ease. Sometimes policyholders must consider all the options and make changes to habits / style to get the best deal.

PAYG (Pay-As-You-Go) Insurance

This is like a reward program that gives benefits only to safe or low-risk drivers. As soon as the insurance policy takes effect, the insurer monitors car usage such as mileage, average speed, sudden braking, and overall obedience to traffic laws. Drivers who demonstrate improvements over the last policy period deserve discounts for the next renewal. A teenager or first-time policyholder should pay more for premiums because the lack of experience, but PAYG gives the chance for them to showcase their low-risk behavior on the road to get the benefit.

Premium can change in every renewal, which means it can become higher when drivers receive traffic tickets for any reason. Some insurers that offer PAYG require policyholders to install tracker device so the company can monitor the vehicle at all times. For policyholders, such methods can be too intrusive to privacy. In California, tracker device only monitors mileage but not how policyholders drive their cars.

Defensive Driver

It never hurts to practice defensive-drive attitude on the roads. Drive safe and avoid involvement in accidents or traffic violations. There is no need to go faster than the speed limit or ignore the red light. Claim-free history often comes with premium price reduction. Also, safe, calm drive habit helps with fuel economy.

Low Cost of Ownership

Cost of ownership is different from the price of car. After the purchase price, owner has to calculate depreciation, interests (if the car comes from a lease or finance company), taxes, maintenance, and insurance premium. A vehicle with lower cost of ownership comes with lower premium as well. The best thing to do is to consult an insurer's representative about how car choice affects coverage price because this gives the chance to manage expense for many months to come. An independent agent will be glad to provide assistance in the calculation.


How Does Your Debt Affect Getting a Mortgage Loan?

When everyone firsts thinks about applying for a mortgage loan the first concern is their credit scores. And, where your credit scores are really important and must fall within a certain range, your debt holds an equally important status when it comes to actually getting approval for that home loan.

Often a borrower will look at their own income and their own payments and think oh I can make a house payment of ‘x’ amount. However, mortgage lenders have their own view of your debt and what you can afford to make as a future house payment.

Even though debt-to-income ratios vary somewhat a typical example would be that only 39% of your income can be your future house payment and only 43% of your income can be total debt. For example, if your monthly income is $2000, then your new house payment, including taxes, insurance and PMI, can be no more than $780 and your total debt can be no more than $860. Now, this debt does not include the cost of such things as your utilities, groceries and gas for the car.

Typically it is the monthly payments for all the items showing on your credit report. If you have a credit card that shows a minimum payment of $30 on your credit report, but you typically pay $50 each month toward that outstanding balance, only $30 is counted by the mortgage lender in calculating your total monthly debt.

Some items on your credit report that might cause a variance are student loans, child support and/or collections.

If you have student loans that are not deferred for three years then a payment will be calculated for you and that will be included in your debt, even though you are not currently making payments toward your student loans.

If you are making court ordered child support payments then these will also be included in your debt.

If you have outstanding collections, a payment amount may be included as part of your debt even though you are not making any payments toward these collections at the time.

What if some of the debt in your name is being paid by someone else? For example, your parents may be paying your student loans for you, but these loans are in your name and showing as debt on your credit report.

Some lenders will allow this payment to be removed from your debt calculation if your parents can show copies of cancelled checks where they have been making these payments, will sign a letter stating that they plan to continue paying this debt and can show income sufficient to continue making these payments.

Not all lenders will allow this but if you are having a DTI problem it is certainly worth pointing out to the lender to see what they will say. It is also worth trying another lender if you are turned down because of your DTI and this is your situation.

Another example may be that ex-spouse is making a car payment on an automobile loan that is still in your name. The same documentation proof would be required.


What Factors Affect Home Loan Rates?

When you want to get a home loan, a lot of different factors will affect how high or low your home loan rate will be. These important factors will be taken into consideration by the lender you are dealing with and they will decide what kind of home loan with what interest rate you qualify for. Of course if you learn what these factors are and you can change them in some way, maybe you will be able to get a deal which is a lot more to your benefit then if you went with the first option the loan company offered you. So if you want to learn about these factors, please keep reading since in this article we are going to talk about just that.

Lenders usually advertise the lowest rate they can offer borrowers and this rate will usually go up if the borrower doesn’t have the best possible circumstances which they usually don’t. But it still doesn’t mean we can not learn what factors affect home loan rates and try to control them to our benefit. The following factors have the most effect on interest rates going higher or lower:

1. Your credit history

Your credit history plays a big role for your interest rates being decided. The better your credit history is, the more chance you will have for getting a better interest rate.

2. Employment situation

It goes without saying if you have a stable income and your employment circumstances are looking good, lenders will trust you more and offer you better rates.

3. Amount of your income

The higher your income is, the better rates you will get. All lenders want is to feel they can trust you to pay your payments on time.

4. The amount of down payment

The more down payment you pay at the beginning of the loan, the lower interest rate you’ll have to pay later on.

5. What the age of the loan is

6. Purpose of the home

It’s important for lenders to know what the purpose of your home is, this will affect your interest rates quite a lot.

7. Age of the loan

These were the main factors deciding your interest rates, but some other factors may also affect interest rates, but the ones we mentioned are the most important ones which if you learn enough about, you will pretty much be doing everything you can for your interest rates. You should also know the fact that if you want to live in the house you want to buy, or if you want to invest in it, will affect the interest rates you get.

Is the location of your house important?

This may not be fair, but a lot of lenders take this factor into consideration and affect your interest rates by it. This is because some lenders prefer not to finance in some certain areas. One of the main reasons behind lenders not feeling comfortable with offering loans in some areas is them not having a good chance of reselling the house if the whole process ends up in foreclosure. Of course since the location of the house affecting the rates is not a fair thing, a lot of actions have been taken to put a stop to it, but since a lot of different other factors affect how high or low rates will be for certain home loan, no one can really prove if the loan company is doing this discriminatory act or not. The only thing you need to know is that sometimes the location of the house you want to purchase will affect your rates.

Why the variety of interest rates among lenders is a good thing?

If you want to get a home loan and you search through different lenders, one thing you will find out is how much different rates lenders will offer you. This is because some factors are more important to some lenders than others, this will be resulted in you being able to search around enough to find yourself a loan deal which meets your needs the best. This kind of flexibility is good news for anyone who’s looking for getting a home loan. So make sure to research enough before making a decision since if you do, you can find a much better deal which may save you thousands of dollars.


How Badly Will the Four Million Foreclosures Affect the Future Housing Market?

The market changes and changes again.

Foreclosures spiked 19% last month and 257,944 houses were taken back by the banks last quarter of 2010 according to, both record numbers. Realtytrac goes on to say that nationwide, almost 4 million foreclosed homes will ultimately have to find their way back to the market in the next few years before we have any semblance of a normal market.

That’s four million bad credit reports for the unfortunate homeowners.

Whenever I read national foreclosure stats, I break it down further for California investors. California, Nevada, Arizona and Nevada account for the lion’s share of house foreclosures, and California usually gets around 21% of all foreclosed houses. So that means California will see another 840,000 people out on the streets eventually. Southern California will get about half of those so that means there will another 420,000 REOS/short sales show up on credit reports for those unfortunate homeowners.

Will those 420,000 soon to lose their property ever buy a house again, and are they forever locked out of the housing market?

The answer is no, according to Fannie Mae. The mortgage giant is offering troubled borrowers who opt to do short sales (sell their homes for less than the value of the mortgage) or deeds in lieu of foreclosure (essentially just hand the keys over to the bank) the chance to get back into home ownership more quickly. Two years sooner, in fact. Last week it was at least four years before Fannie would underwrite a borrower with a foreclosure on their credit report.

Fannie Mae (i.e. the government) is looking to get Americans out of homes they can’t afford and into homes they can.

That’s right; everything is peachy after two years. Hand over the keys, walk away from hundreds of thousands of debt you promised to pay back and you are healed.

Don’t get your hackles up and join the local Tea Party Rally to bemoan the lack of responsibility of those receiving a free pass from a government bailout. Don’t worry about it; it’s happened before. Only ten years ago, as a matter of fact.

Underwriting guidelines were tight in the depths of the last real estate down turn. Mortgage broker booked lots of problem loans. In 1996, many loans were in process but fewer closed. Properties didn’t appraise for enough money, borrower’s credit was suspect and their job stability was suspect. Many loans were flying into loan offices on a wing and a prayer.

Loan approvals became tough as foreclosures mounted from 1994 to 1999.

But a funny thing happened in the late 1990’s to the early 2000’s. Everybody had marked up credit, or so it seemed. Loan approvals became easier as mortgage companies competed for the borrowers that were buying or refinancing. Suddenly, foreclosures and bankruptcies were OK as long as they were 2 years old. Then in 2002 to 2007, the real estate boom was everywhere, loans were easy and money was loose and if the foreclosure was one year old, you were still OK with some underwriters.

The nature of capitalism is bubble driven; how can it be otherwise? Everybody wants to make money during boom times and the smart ones know how to make money in any market.

So when you read another 4 million foreclosures (440,000 for Southern California) happening this year, remember 3 things:

1. In 3-4 years, they will all be gone

2. Bank loans will become easier to get, but cheap properties will be hard to find

3. Buy and hold investors will get rich. Hold for cash flow now and greater capital gains later.

The market changes, and changes again