Tips for First Time Loan Borrower

Thinking of availing a home loan or mortgage for the very first time?

First time home loan shoppers are highly likely to fall for the sugar words and marketing tactics of banks or home loan providers. The following tips may help you strike the best deal without having to sulk over potential mistakes usually committed by inexperienced borrowers.

For your First Time Home Loan…

(Please note that these are just a few guidelines and there may be a lot more that you might want to check out with respect your specific scenario in your country or state)

1. Shop around for the best deal

You may want to compare the loan offers – in terms of rates, monthly installment as well as overall mortgage package – from at least four to five different financial institutions before arriving at a final decision. In addition, you may want to discuss with your friends or relatives who might have had experience with each of these banks. Please note that the lowest interest rates do not mean the best deal. You have to know exactly how they calculate the interest (daily reducing balance, monthly reducing, quarterly reducing etc) and if there are additional charges. In addition, understand if there are any processing fee or lawyer fees along with the rules for prepayment or foreclosure.

Click here for some loan ideas!

2. Negotiate for a discount rate

It might sound odd but most of the banks have the flexibility of offering 0.5% or 0.75% (might vary in certain countries) less interest than the standard advertised rate. This is particularly true if you are having a stable and high earning profession (e.g. doctors, lawyers,…). In addition to these so-called ‘professional packages’ there are also corporate discounts available from some banks targeting specifically people from certain high profile corporates. Hence don’t be ashamed to negotiate.

3. Plan the rest of your life ahead

Never take a home mortgage assuming certain raise in salary or additional income that ‘might’ come in the future. Instead, plan from the point of view of additional financial burdens that you might encounter in the coming years (or the tenure of the loan). This may include wedding expenses, child education, purchase of vehicles or even expensive vacations.

4. Insurance, riders and deposits

It is highly advisable that you take home mortgage insurance for 25% to 30% of your home loan value to avert any risk of non-payment due to critical illness, accidents, job loss due to the above or even death. Mortgage insurance is mandatory (from the lender’s point of view) in most countries if the home purchase contribution from your side is less than 20% or so. If you do not wish to take mortgage insurance, set aside 10% to 15% (or even 20%) of your loan amount towards a term deposit or low risk bank investment. This will indeed help to repay your loan in the case of temporary no-income situations. This will also help in reducing your monthly outflow towards loan.

(You can have both the deposit as well as mortgage insurance which can help you with a little bit of tax planning as well)

5. Go for it ONLY when you are ready!

A home loan is a lifelong burden for most people. Hence before taking a loan, do a readiness and feasibility check from your end to see if it’s the right time to go for such a financial commitment. Also chew only as much as you can swallow – a huge home may be your dream but you have to really think whether you can afford it.

The other aspect of readiness check is to have a good credit history and stable background. Building your credit history by paying back your credit card bills on time, not withholding tax dues, not having several loans etc will boost your credit record. In addition, you may jump jobs and rented homes as little as possible to establish a good history. Frequent address changes are not considered good by financial institution in certain countries.

I hope these tips for first time home buyers were interesting to you. You may want to share this page with your friend who is in the lookout of a home loan.

A Handy Guide to Decorating For Less

Your home is your castle, so it only makes sense that you would want it to be beautiful, practical and perfect for your unique personality and lifestyle. It is easy to find a wide variety of great ideas online, but all too often they cost more money than the average person can afford. Decorating a home shouldn’t break the bank. If you need to decorate for less, get off the expensive websites and try these five great suggestions instead.

1. Paint

It is amazing how something as simple as a coat of paint can completely transform the look of a room. If your home is in serious need of an update, try painting the walls a new color. Sky blue is perfect for creating a relaxing sanctuary, yellow is perfect for creating an upbeat and cheerful space and gray is perfect for a sophisticated, elegant gathering place. Be sure to try a few paint samples on the wall to test how the colors will look at various times of day, but do not be afraid to put color on the wall. Your room’s paint color is easy to change when you decide you want something new.

2. Repurpose

Once you have the perfect color on the walls, you are ready to add in the little decorative elements that make your home truly your own. Do not rush right out to the store, however; shop your home first. You may be surprised at what you find. Use an empty wine bottle as a unique vase for fresh flowers. Frame your children’s drawings on the wall for fun and colorful artwork. Use old sheets to make new curtains or old clothing to make new throw pillows. Stack old hardcover books next to an armchair to make a unique side table. The possibilities are endless.

3. Visit the Right Stores

If you decide you still need to buy a few more interesting pieces after you have finished raiding your own home, be sure to choose the right stores. Start by visiting pound shops and thrift stores. Keep an open mind and you will be amazed at the unique and interesting things you can find. Many items that look worn and dingy on the shelves would make perfect accent pieces with just a good cleaning and a coat of paint. Clearance sections, auctions and antique shops are a great place to find interesting and unique finds for less as well.

4. Have Something Custom Made

One of the best ways to create a beautiful and unique space for less is to have a key piece or two custom made. Hire a quality handyman in London to build a custom fireplace mantle, custom bookshelves or a custom coffee table for you. Your entire room does not have to be custom made or expensive. If you have one key piece that truly pops, it will make your entire room look amazing.

5. Less is More

As you start decorating and finding great deals and must-have pieces, keep in mind that “less is more” when it comes to home decorating. A room that is full of knick knacks is sure to look crowded, cluttered and messy. Instead of buying and using every interesting thing you find, choose a couple eye-catching pieces and spread them throughout the space, leaving plenty of white space for the eyes to rest. This will make sure people’s eyes are drawn to your best pieces, not left to roam around the room without a focal point.

Creating a beautiful and unique space does not have to be expensive. Try these five tips and achieve a look you love today!

The Best DIY Projects to Save Money and Sell Your Home

The winter months are generally accompanied by a lull in the real estate market.  There are fewer buyers looking for homes and fewer sellers ready to list theirs.  Now that the New Year has begun, buyers are starting to browse the market again.  The rejuvenating, renewing feeling that spring exudes, creates a surge in home buying.  This is a great time to list your home if you are considering selling in the near future.  However, coming off of the holidays, you may not be able (or willing) to allot large amounts of your savings to home improvement.  The following are do-it-yourself projects aimed at freshening up your home, without spending a lot of money. 

Spruce Up Your Paint Job

A fresh coat of paint can make a huge difference in appearance and appeal of your home; both inside and out.  Add a fresh coat of paint to your walls, moldings and cabinets, and completely revamp your interior space.  This project is one that can be done yourself, without having to spend large amounts of money. Spending a little extra on proper tools will make your life much easier when it comes to painting (think edging tools, roller extensions and paint tape).  If your budget allows room to spend a little bit more, a new coat of exterior paint can have a drastic impact on your curb appeal as well.

Restore your Hardwoods

Years of wear and tear can damage hardwood floors, making them appear drab and worn.  With a little bit of money and some patience, you can completely restore and refurbish the hardwood floors in your home.  This do-it-yourself project won’t cut into your finances and can greatly increase the value of your property, making your floors look brand new.  This three-step process simply requires that you thoroughly clean the surface, sand down the top layer of wood and what remains of the seal, and apply a new layer of polyurethane.  While it takes some time and you will have to rent an automatic sander made for floors, this project offers the chance for a huge return on investment.  Floors are often the first thing people see when they enter a home. For more detailed information about renovating hardwoods yourself by visiting Comfree’s post about it here.

Organize and Get Rid of Clutter

When prospective buyers come to view your home, they want to be able to envision it as their own.  That can be hard to do if it is cluttered and organized with your belongings.  It can be difficult to see past the objects, and glimpse the real potential of the house.  Invest in some great storage options and use them to neatly organize your things.  This home staging trick can actually be applied to both indoors and outdoors, says this post by Canadian Living. The de-cluttering trick will let potential buyers see themselves in your space.  It also exemplifies the functional storage and organization options that your home offers, thus increasing its value.

Enhance your Outdoor Space

During the spring, buyers are more apt to pay attention to the outdoor spaces of your home.  These months are often enjoyed with cookouts and time spent outdoors.  You can spend a small amount of money and still greatly add to the appeal of your yard.  Consider building a stone patio, ramping up your landscaping, or adding a water feature.  All of these additions can be done yourself, won’t drain your funds, and will help your home sell.  The biggest investment of these options is likely the stone patio.

Increasing the appeal and quality of your home, doesn’t have to mean draining your savings.  These affordable, do-it-yourself projects will increase return on investment come spring-sell time.  The result will be a home that looks completely renovated and restored, but you won’t be paying for it.  If you are considering putting your home on the market, use these tips to get the most out of the sale and good luck!

Essential Home Owner Tips: Know Your Bed Bugs

Bed bugs are literally a worst nightmare—they are tiny creatures that feed on peoples’ blood in the middle of the night. A single bed bug can quickly escalate into a huge infestation. Worst of all, people normally have a very hard time actually seeing bed bugs. They are very tiny and their measurements depend on their age.

Experts usually compare the size of baby bed bugs to a speck of dirt and adult bed bugs to an apple-seed. Baby bed bugs who have not fed on blood tend to be light in color while adults who have recently sucked blood appear brown or rusty. They also love to hide, making it even harder to see them. They are paper-thin and enjoy to hide in cracks, box springs, and the insides of the edges on your mattress. Finally, bed bugs like to feed at night or during the early dawn, when most people are asleep.

By the time their victims wake up, the bed bugs have gone back into hiding. Most of the time, people need a professional bed bug exterminator to kill off their infestation. However, before they call an exterminator, many people like to confirm that bed bugs are infesting their home.

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Although bed bugs are experts at hiding and going unnoticed, there are still ways for people to determine if bed bugs are infesting their personal space. Anyone can conduct their own bed bug investigation but a professional bed bug exterminator will know exactly what to look for and where to look for it. They might even use the aid of a bed bug-sniffing dog.

One of the easiest ways for anyone to look for bed bugs is to conduct a visual inspection of mattresses and other sleeping areas. The most common area to find bed bugs is to look along the edges of mattresses. Those areas make great hiding places for bed bugs. They also tend to hide in baseboards, around door and window casings, in electrical outlets, behind lose wallpaper, under carpets, or anywhere that is dark.

If a room shows no physical evidence of bed bugs, there are several other ways to look for signs of them. While inspecting all mattresses, look for dark spots that closely resemble ink stains. These stains are usually the bugs’ dried fecal matter. Fecal stains are also commonly found on mattress tags, on the frame of box springs, and near electrical outlets. Baby bed bugs that are growing will also shed their skin after a blood meal.

Every bed bug goes through five shedding processes before it becomes an adult. The shed skin looks almost identical to the actual bug except that it’s immobile. Bed bugs commonly leave shed skin along mattress seams and around head boards. Large infestations will leave behind more shed skins than smaller infestations, making them easier to spot. Finally, sometimes a bed bug infestation can give off a musty, sweet odor.

If a house has an official bed bug infestation, there are some steps that people can take to get rid of them. If only a mattress or sleeping area has a bed bug infestation, people can buy mattress covers to put over their beds. These mattress covers will trap the bed bugs and will kill them after a year, provided that they have no access to blood. Exposure to heat will kill bed bugs on sheets, blankets, and clothing. Exposing bed bugs to a high temperature (between 104 and 122 degrees Fahrenheit) for 30 minutes will get the job done. Freezing bed bugs for two hours or more will also kill them. Do-it-yourself methods generally just provide a temporary solution and is not guaranteed to get rid of the entire infestation. A professional bed bug exterminator, Heat n Go Pest Control.com, can properly get rid of the infestation by performing a special treatment method.

What is A Home Equity Loan?

Home Equity Loan Explanation: A home equity loan is an additional (secondary) loan taken against the value of your home. In other words, home equity loans are secured consumer loans for which the collateral would be the borrowers’ equity in their homes.

Now, what is home equity? Home equity is nothing but the difference between a property’s cost and its value.

The money raised via home equity loans can be used for any purpose related or unrelated to your home or property. You could use this money for your children’s education, for further furnishing or extension of your home or even to pay off your high interest debts or credit card dues. The home equity loan interest rates are usually lower than car loan rates and hence it may make sense to use your home as collateral to buy a vehicle.

The interest on home equity loans is tax deductible.

In order to apply for a home equity loan, one should have a decent credit history. There may be finance institutions that provide home equity loans for people with bad credit. However, you may take extra care while signing up with such deals and especially be aware of hidden charges etc.

Home equity loans have their pros and cons as in the case of any other loan types. The advantages include low interest rates, fast approval and possibility to use the loan amount for any purpose as mentioned above. The main disadvantage of home equity loan is that your home needs to be appraised for its home equity that can be secured against your loan. Also, home equity loans are available only if the owner is occupying the home under consideration.

Just like the case of selling a car with a lien, selling a home with a home equity loan on it usually requires you to pay a penalty remove the loan.

Taking an additional loan by using your existing home as the collateral is an exercise that has to be done after analyzing the above pros and cons. If used judiciously it can really work to manage your finance needs.

Home Mortgage Disclosure Act

Home Mortgage Disclosure Act (HMDA or HUM-duh) is a federal act that was enacted in 1975 that requires home mortgage lenders or federal home loan banks in the US to disclose information regarding their lending practices.

The importance of Home Mortgage Disclosure Act

The information provided as part of this act is beneficial for the borrowers because it provides all details such as the number of pre-approvals made by the lender, loan amounts requested, number of approved and granted loans etc.

The act helps the authorities monitor the lenders’ activities and make sure that the government approved resources meant for mortgages are rightly disbursed by the lenders. The main beneficiaries are the borrowers.

In addition to displaying the public disclosure of the data on the lenders premises, this can be viewed online on the FFIEC website.

In short, the borrowers have at their disposal all information regarding the history of the lender. Such disclosures made not only helps the home loan industry run their business fairly but also helps the lender to pick and compare potential lenders.

Loan Application Registry

The details recorded by the lenders in their loan application registry (LAR) include the following information on every single loan processed by them.

  • The loan amount
  • The loan purpose
  • Type of property
  • Type of loan
  • Location (State/County)
  • Race, Ethnicity and Gender of the borrower
  • Loan approval status
  • Any reason for denial and if so the interest rate proposed
  • Secondary market selling details of the loan if any

Next time you apply for a home loan, you might want to look at your lenders online records. You may not be interested in individual records but a consolidated history of the lenders reputation over the past few years might definitely help you as a home loan mortgage.

Don’t you think that the Home Mortgage Disclosure Act has made your life as a borrower a lot better?

How much Car can I afford based on Salary?

A lot of financial advisers and loan agents may say that you can afford to spend up to 33 or even 35 percent of your net income towards paying off loans – all types of loans included, that is.

However, that kind of financial planning by Americans is what exactly led us to the credit crisis that we are facing today. Spending more than what one can afford doesn’t help your life at all.

How much car can I afford?

If you are talking about less-risky route, 25% is an ideal figure (in terms of your net income) that you can afford to spend, on all your loans or mortgage together, to be on the safer side.

For example, assume that you have a monthly take home or net salary of $4000.
Your total monthly mortgage outflow in this case would be $1000 or 25 percent of 4000.

This should include your home mortgage, car loan, car insurance premium etc. In this case, how much of it can be on car loan alone?

In the above example, something like $250 or $300 per month is what you can afford to spend on car and related expenses such as car insurance. Obviously, then you need to do your home loan math as well based on the remaining amount which may not be too bad a figure if your spouse is working.

Another guidance

Another question here is how much of your net income you want to spend on monthly transportation (i.e. car loan, car insurance, maintenance and gas)

The answer is ideally 10% of your net income or $400 in the above example. Now you may split that into car loan premium, insurance and gas expenses.

Sounds scary? Aren’t we all spending a little too much on our cars?

Please note that the above figures are for working individuals and the same calculation may not apply to students etc