Tag Archives: consumer
First Home Buyer Needs Self Education
Any first home buyer is at a great disadvantage seeking a mortgage if time is not taken to understand all the necessary aspects toward obtaining a loan successfully. To find the most favourable deal possible, it is important for a first home buyer to do a good deal of investigation and research that will provide them with the necessary knowledge to make an informed decision. Although a first home buyer can call upon the experience and knowledge a professional broker provides, it is still dependent upon the consumer to do some self educating as well.
Preparation in Advance Securing a mortgage for a first home buyer starts many years before actually needing to buy a home. A first home buyer has to be as attractive a prospect as possible to make sure that this very important loan is approved. In order to be as attractive to lenders as possible, a first home buyer must establish and maintain a positive credit rating in the mid 700s, or higher, to even be considered by a mortgage lender. Establishing rotating credit accounts such as credit card, petrol and retail store accounts and paying these on time will help to establish credit worthiness. Living a product life as an ideal credit consumer will prepare a first home buyer for mortgage approval when the time arrives to buy a home.
Down Payment Always Needed Unless you have financed, sold and financed a home more than once, expect to be required to make a down payment anywhere from 10 to 20 percent of the total home purchase. While preparing for that time to come, conducting positive personal finance management will provide a first home buyer with the necessary history mortgage lenders seek.
Deciding What Can Be Affordable Mortgage lending decisi0ons for first home buyers take into consideration examination of all personal finances to determine the amount of monthly repayments a consumer can afford. A good rule of thumb is a monthly mortgage repayment, insurance and taxes should not be more than what a first home buyer experiences paying rent. Since other monthly expenses such as utility, food, transportation and other living expenses may not change drastically, assuming a mortgage repayment should be possible if it does not exceed a current rent payment.
Seek Pre-Approval All first home buyers should seek mortgage pre-approval prior to searching for a house. This allows a consumer the opportunity to start a process toward home purchase by allowing the lender to examine personal credit worthiness establishing a pre-approved purchase amount. Let the amount the lending institution is willing to “risk” on a first home buyer direct the house search. If that number is not sufficient, certain actions such as coming up with an additional down payment may be necessary to qualify for a larger amount.
Motivation for Action Any first home buyer that has a pre-approval from a lending institution can engage the services of a real estate professional who has a firm understanding off the financial limits that will direct what properties are show, Buying a house is an important step so spending time looking at properties that a first home buyer cannot afford is wasteful.
Although many first home buyers are looking for that “dream” home, choice may be limited in reference to size, type and place for that very first real estate purchase.
Why not to use a Payday Loan to pay for a Vacation
We all run into those financial emergencies at one point in our life. Some people have money saved for these occasions, others use credit cards, and others again use a payday loan to fill the financial gap for the 15 to 30 days where we need the cash. This is what a payday loan is for. Be able to make it to the next paycheck. Pay for the car repair because without a car you will be out of work soon. Situations like this are where the payday loan does its duty.
However, some payday loan lenders advertise their loans to be used for normal consumer needs. Needs? Well, not really. These lenders play with your desire for having a new TV, a new iPhone or iPod, or to go on vacation. Sure, we all like to treat us to those nice things in life, but we need to be able to pay for it and not necessarily to buy these items on credit. Especially, not to buy these items on very expensive credit.
While this article is mainly written with the payday loan situation in mind, it also applies to using a credit card to pay for these items. In both cases you put a consumer purchase onto a very expensive credit account. The initial interest fee on the credit card might be lower, but statistics show that consumers easily need 18-24 months to fully pay off their purchase. That is very expensive at 18%-27% if you ask me. A payday loan is even more expensive, but it forces the customer to re-pay the loan much faster, which is a good thing. The initial interest rate for this type of loan is higher, but the time between when the loan is taken out and when it is paid back is much shorter.
So, while these are the basics the real story is that both types of loans are not designed to be used for normal consumer purchases. We all have seen what the last recession has done to consumers who were in debt way over their head. The number of foreclosures and bankruptcy filings has sky-rocketed. While some blame goes out to the banks and mortgage companies, a lot of blame has to go to those consumers who financed non-critical purchases with very expensive loan type. Everything is good while you have a job, but when the money gets tight these loans are going to destroy your financial status.
Conclusion: Payday loans are a financial product that is designed to be used in a financial emergency. It is expensive, but payday loans are granted faster than a normal bank loan + they do not affect your normal credit history. A fast payday loan is not to be used for normal consumer purchases for gadgets, TVs, iPhones, or cars. Used with the proper understanding of how these loan work is essential to your financial well being.