Business and Finance

Archive for February, 2011

The FHA Home Loan Program is becoming the most popular way to finance the purchase of homes across the nation. It has always been popular but have become more so in the last couple of years because of the problems in the housing market.

Conventional loans are becoming harder to get and the down payment required is 20% or more. Another problem with conventional loans is that credit has tightened and you need higher credit scores. This is why the FHA Home Loan Program looks so attractive to current homebuyers.

Here are some of the advantages of a FHA Home Loan.

1. You Can Get Qualified Easier.

FHA does not directly lend money to the homebuyer, what they do is insured the mortgage. This will give lenders the incentive to give better loan terms and make it easier for you to get qualified.

2. You Do Not Have To Have Great Credit.

In today’s housing market you need to have pretty darn credit to qualify for a conventional loan. You can qualify for a FHA Home Loan with less than perfect credit scores, even as low as 585 credit score. But most lenders will want a credit score of 620 or above. If you have had a bankruptcy in the past you have a better chance of getting a mortgage with the FHA Home Loan Program than a conventional loan.

3. Low Down Payment.

This is probably is the best advantage to a FHA Loan Financing. You only need a 3.5% down payment versus 20% or more for conventional loans. You really do not have the have the down payment, it can come from a family member, employer, or charitable organization. Conventional loans do not allow this.

There is an exception to the 3.5% down payment. Currently you only need $100 for a down payment if you buy a HUD foreclosed home. You can get more information on The HUD $100 Down Payment Incentive by clicking on the links at the bottom of this article.

4. Cost Less To Have A FHA Loan.

FHA Home Loan Mortgage has very competitive interest rates because they are insured by the Federal government. You need to compare their rates with rates of conventional loans.

5. What If You Can Not Paid Your Loan?

6. FHA loans can be used not only to purchase existing single family homes but also new construction homes, 1-4 family homes, and manufactured homes. It is very hard to get financing for manufactured homes with conventional financing.

FHA has been around a long time, since 1934. They have programs available to you that will help you save your home if you happen to run into hard times. And there are a lot of hard times going around in today’s economical times. They can help you to avoid foreclosure.

Remember, FHA does not provide direct lending nor does it set the interest rates on the loans. You need to shop around with different FHA approved lenders for the best terms and rates. The FHA Home Loan Program may be your best and only chance to get your dream home!

Prepaid phone cards have a multiple role when it comes to usability and versatility. Calling cards are used by students, busy travelling executives, military personnel on overseas duties and by just about anyone who likes to keep a tight control on what they spend on telephone calls.

Some people do not have free access to a land line service, in particular students of all ages, such as high school students still in their teens and also college students living away from home and sharing accommodation with a dozen other people who also have no phone facilities.

Worried parents are using calling cards and prepaid cards more and more to ensure a safe and secure communication with young adults living away from home for study or work experience. The option of being able to pay in advance for calls provides peace of mind for parents who might otherwise be uncomfortable with teenage kids being out of communication range.

Thriving businesses utilize prepaid cards for a different reason: the prepaid calling card system provides an excellent expense record to monitor phone expenditure for traveling executives and sales representatives, allowing an accurate and reliable table of reconciliation. In addition, there are so many attractive offers and special deals available when bulk purchasing prepaid call cards, any company with a sensible policy for economy would be crazy not to take advantage of the possible savings.

Prepaid calling cards may be purchased just about anywhere, even in gas stations and your local convenience store. It might be a good idea not to load a prepaid calling card with more credit than you project you might actually be able to use, however, as many cards have a ‘shelf life’ and credit will be withdrawn if not used by a certain date. Obviously, the offers and packages available through prepaid phone card companies are often compromised by expired deals, so try to moderate your purchase and buy only the level of credit you think you can use to avoid wasted credit.

When comparing calling cards, it might be a good idea to try a couple of carriers as some provide a better quality of phone reception than others and also beware of hidden costs such as connection fees and penalties for top ups. Some prepaid calling card providers are cheeky enough to charge for calls that are dialed but not completed so shop for the ones that allow a little flexibility.

Prepaid calling cards are a particularly useful commodity when travelling in countries where overseas calls are charged at an extortionate rate. Purchasing the card before departure can allow you to budget sensibly and schedule a reasonable number of calls home.

Investing in bonds by owning a bond fund is easy compared to selecting individual bonds. Few average investors can analyze bonds, so the vast majority investing in bonds buy a mutual fund called a bond fund, and let professional money managers make the selections for them. Hence, when you own a bond fund you own part of a professionally managed portfolio of bonds, often called an income fund.

Don’t get confused. Investing in bonds or an income fund has little in common with buying U.S. Savings Bonds. The government guarantees that you will not lose money in savings bonds. There is no market risk in these savings products. When investors speak of bonds they are not referring to savings bonds.

A bond fund is sometimes labeled as an income fund, because the primary objective is to provide higher income vs. other investments. These funds pay dividends from the interest earned on the bonds in the fund portfolio. Along with this higher income, investing in bonds involves risk. Bond prices or values fluctuate because bonds are marketable securities that trade in the open market, much like stocks do.

In order to understand investing in bond funds, you first need to learn some bond basics. Let us turn our attention now to a simplified bond example, a new issue of a very basic corporate bond.

ABC Corporation decides to raise a large sum of money to expand their operations. Instead of selling stock to the public, they decide to sell bonds. In other words, they will borrow money from investors. Each bond has a face value or initial bond price of $1000. The coupon rate will be 6%. These are high quality bonds and mature in 2039. Once all of the bonds are sold ABC gets their money, and these bonds begin to trade in the bond market.

If you buy an ABC bond for $1000, ABC promises to pay you $60 per year, or 6%, for as long as you own it until 2039 when the bond matures. At that time the bond owner gets the $1000 back, and the bond no longer exits. Up until that time the deal never changes. ABC promises to pay the bond owner $60 per year, period.

You as a bond holder are not required to hold the bond until 2039. You can sell it at will on the bond market, or buy more bonds at market price if you wish. But beware that bond prices fluctuate, as do stock prices. Bond prices or values can go up and they can go down. In other word, a $1000 bond is not necessarily worth $1000 after it is issued. Hence,there is market risk involved when investing in bonds.

Now picture an income fund invested in a portfolio of bonds similar to ABC bonds. Because this bond fund holds a wide variety of different bonds, investors need not worry about a company like ABC going broke and not making interest payments or not paying investors back upon maturity. The fund is broadly diversified.

The real risk you should be aware of when investing in bonds and bond funds is of a different nature, and this risk is called interest rate risk. Interest rates in the economy fluctuate, but a bond’s coupon rate does not. ABC bonds, for example, pay $60 per year, period.

What happens when long term interest rates in the economy go up? Simply this: the value of existing bonds, in other words bond prices, go down.

Look at it this way. If interest rates double and go from 6% to 12%, new bonds will be paying investors $120 per year in interest vs. $60. What do you think investors in the bond market would be willing to pay for a 6% bond under these circumstances? Since investors buy bonds for the higher interest they offer, the price of our 6% bond will fall like a rock. The bond price will not likely fall in half, but it will be heading in that direction.

Interest rates peaked in 1981-82, and have generally been falling since. Contrary to our above example, falling interest rates send bond prices higher. Investors in bonds and bond funds get income from interest or dividends when interest rates fall, plus the value of their investment increases.

But interest rates can not fall forever. When they do head north again many folks invested in bond funds or income funds will be caught standing flat footed. Invest informed and understand this: When interest rates go up significantly, the value of your bond investments will fall.

Debt-to-income ratio is a financial measure that determines your affordability for availing mortgage loans. It compares the total debt amount you are paying every month as compared to your monthly income. A lower debt-to-income ratio is always preferred. A higher debt-to-income ratio indicates that you are not being able to manage your finances in an optimum manner.

Debt-to-income ratio is of 2 kinds. One is a front ratio and the other is a back ratio.

Front ratio
The front ratio indicates your capacity to make payments for your basic living expenditure. It includes payments for mortgage principal, interest, insurance as well as taxes (PITI).

Back ratio
The back ratio not only includes PITI but also includes the debts that are recurring. Recurring debts include alimony, credit card loans, student loans, car loans etc. It includes debts that have been recorded in your credit report.

What is a standard debt-to-income ratio?
A debt-to-income ratio of 28/36 is usually accepted by traditional lenders. The 28/36 ratio can go up to a maximum permissible limit of 37/40. There are a couple of lenders who agree to give you a loan even at higher debt-to-income ratio. However, it becomes risky and you may land up in serious trouble if you are not able to make payments for the loans you avail.

In case of FHA loans, the permissible debt-to-income ratio. is 31/43. Subprime borrowers can have a back ratio of 55. It is better not to avail loans if you have a high debt-to-income ratio.

Why is debt-to-income ratio so important?
Debt-to-income ratio is vital due to the following reasons.

Credibility
Creditors approve of your loan application by seeing your repayment capacity or your credibility. If the lender finds that by giving you loan, he may not get back the loan amount, he stays away from the deal or settles for a loan amount that has a very high rate of interest. A higher debt-to-income ratio is a disqualifying factor and gives a wrong impression about your financial responsibility.

Aftermath of subprime mortgage crisis
It is a well established fact that subprime mortgage lending is one of the factors that led to subprime mortgage crisis and the recession worldwide. The main reason was consumers who did not qualify for the loan were also given one.

Evaluating your financial health
It is essential that you evaluate your financial health from time to time so that you don’t fall into a vicious debt cycle.

Calculating your debt-to-income ratio from time to time enables you to keep track of your debts and your payments habits.

If you have bad credit, you probably think that great idea for a new business that has been building in the back of your mind for years will never see fruition. Most people do not know that there are opportunities for those with damaged credit or poor credit scores to receive the money to fund their dream – being their own boss. You may have just been looking in the wrong place.

People with bad credit have no luck with traditional lenders when they apply for credit of any kind, and this certainly applies to loans to open up new businesses. However, the lending environment online via the Internet has more to offer these types of borrowers, including those who want to end the daily grind of nine to five and become their own bosses.

Online Lenders To Choose From

You may think that with the economic turmoil in the country today that there is no chance of receiving funding for business, even for those with good credit. That is just simply untrue. There are lots of businesses that are booming financially, and lots of lenders who can loan you the money to start yours, regardless of previous financial mistakes you have made that are reflected on your credit file.

Learn From Your Bad Past Behavior

Before you begin your search for your new bad credit business loan, you should think about the reason that your credit has gotten into its current foul shape. If you have issues with overspending, managing money, or other behaviors that might bring your new business down, now is the time to identify them. You want to start off on a good foot with your new online bad credit business loan.

When you have decided on an amount that you will need to start up your new business, finding a lender is easy online. Because these lenders have more money to lend than the bank down the street, you have a much greater chance of approval. Also, because there are so many online lenders for bad credit business loans, you can rest assured that these lenders offer you loans with the least amount of interest possible and the most flexible payment options in the industry.

Borrow $200,000 Or More

Online bad credit business loans can be up to $200,000 or more. Be sure to only borrow the amount you truly need to get your business up and running. You can choose from flexible repayment plans featuring either payment of principle and interest or interest only for a certain period of time, whichever suits your business needs best.

To begin the application process, you will visit the lender website. From there, your bad credit business loan application can be completed in full, and most documentation can be uploaded to the lender. You can even sign your application electronically without ever leaving home. If you are applying with a creditworthy cosigner, you cosigner can complete their part of the application online also.

Once you are approved, you can expect to receive the proceeds of your bad credit business loan usually within twenty four hours. You might choose to have the funds directly deposited into your banking account, or have a paper check mailed to your home.

Bad credit business loans offer financial assistance to those business entrepreneurs who are seeking financial help for their business despite having poor credit. Bad credit owners or those willing to start their own business with poor credit like arrears, defaults, late payments, bankruptcy, missed payments, IVA and CCJs can easily grab this loan assistance for meeting their financial needs. For bad credit business aspirants it’s a good opportunity to start their business and resolve their poor credit as well.

These loans can be acquired in secured and unsecured form. Secured bad credit business loans can be procured by pledging your valuable asset such as property, car, stock or other such valuable asset as security against the loan amount. You can raise a higher loan amount