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|The Seven Deadly Sins In Home Loan Lending
Posted by nick_niesen on October 29th Women's Byron Jones Jersey , 2010
The seven deadly sins in home loan lending are no different from the seven deadly sins outlined in the Bible. The latter damns your soul; the former can decimate your finances. Whether you're buying a house by yourself, with your partner, or with a friend, be sure to avoid the following costly mistakes.
1. Thou shalt get your priorities straight.
Unless you are earning the equivalent of three people's wages, there's no way you can pay off a house loan, car loan Women's Maliek Collins Jersey , and a student loan at the same time. In fact, if you're living on the budget of the recently employed, you have no business setting your sights on that sprawling four-bedroom number in the city's most exclusive neighborhood. Clearly, you cannot serve two masters at the same time. Before you go home loan lending, separate your needs from your wants. Sort your priorities, and decide whether it's a house or a new car that you need.
2. Thou shalt not underestimate home loan lending costs.
In home loan lending Women's Jaylon Smith Jersey , costs follow only one trajectory: upward. Downpayment and monthly payments are not the only costs you have to budget. You need to factor in insurance and "start-up" expenses, in the form of furniture purchases and getting the cable TV and the telephone turned on.
3. Thou shalt not get a mortgage without first window-shopping thoroughly.
Home loan lending experts point out the only way to make sure you get the best deal in the market is to see exactly what type of deals are in the market. So, shop around for as long and as often as humanly possible.
4. Thou shalt not sign contracts without reading the fine print.
Home loan lending is no joke. Whatever contract you sign is legally binding between you and your broker. Be sure to pore over the contract and ask questions about the terms you do not understand. A home loan lending contract, no matter how seemingly straightforward, is one document you should not peruse with glazed eyes and a wandering mind. Ask about suspicious-looking clauses. If it reeks of fish, it probably is fishy.
5. Thou shalt not be blinded by exotic-sounding offers and very long-term arrangements.
Many lenders and brokers will always try to foist huge houses on you. After all Women's Xavier Woods Jersey , the bigger and costlier the house they sell, the chunkier their commission. Be very wary of offers that sound too good to be true. In particular, know that grandfather loans will earn you very small house equity.
6. Thou shalt never go without home insurance.
Unless you can afford to replace everything you own in case of theft, fire, earthquake, or the end of the world Women's Jourdan Lewis Jersey , you need insurance. This can cost you whoopingly large sums, but it will be money well-spent.
7. Thou shalt not default on your payments.
In home loan lending, what has been given can be taken away. If you cannot keep up payments on your house, it could be foreclosed. If you ever find yourself having trouble with the payments, home loan lending experts advice calling your lender or broker immediately and explaining the problem. Chances are, you will be given a grace period or an alternative pay-off scheme.
Buying a house is a rite of passage akin to making the transition from Daddy's little girl to full-fledged adult. To go through the rite successfully Women's Chidobe Awuzie Jersey , take note of the seven deadly sins in home loan lending. There's no point in getting a house in exchange for your financial soul.
There are some people who may wish to know a little about what banks are all about, especially when these financial institutions have had to swim in rather troubled waters just lately.
Banks are here to make money. It is hard to manage without them, and it is hard for them to manage without us. On the face of it, this looks like a marriage made in heaven. However, since all marriages are based on absolute trust and hate turbulent situations, and because these two features seem to be coming into play Women's Taco Charlton Jersey , it is not surprising that this is causing a certain amount of concern to depositors.
Basically, a client places money into his account. The bank will lend that money to other clients and make a profit on the deal. If the client banked say $10000, the bank can lend $90000 out because they must maintain a 10 per cent cash reserve ratio. In other countries, the cash reserve ratio requirement can be higher or lower. Any country can decide to alter the cash reserve ratio if needs be.
There is nothing to stop a bank to set aside more than the required minimum, meaning having excess reserves. It is not particularly rewarding for banks to do this, since they get no interest on that money Women's Connor Williams Jersey , albeit they can channel it out on short and overnight terms to banks which need to maintain their minimum reserve ratio.
Getting back to that $90000 the bank can lend out, and let us say grant overdrafts but creating of course a liability factor, as the bank has to pay out whenever the various borrowers issue their cheques.
The position of the bank is that it has a total cash sum of $10000 received.
However, it has lent out deposits of totalling $90000. Add this together and you get a figure of $100000 representing total assets which are the $90000 in overdrafts plus the original $10000 cash received, which of course includes the required 10% reserve.
What took place is that the bank granted loans worth $90000 giving birth to money which did not exist before, based on the $10000 received in cash and locked in the safe.
People do not put in all the money on the same day Women's Leighton Vander Esch Jersey , and they do not take out all the money on the same day. Cash in form of bank reserves is there to meet some withdrawals that may possibly be required. Banks have been managing quite well with small cash reserves in their safe, because they hold a number of liquid assets which they . wholesale air max 97 nike shoes wholesale Cheap Nike Shoes cheap air jordan shoes Cheap Nike Shoes Free Shipping Cheap Jordan 5 cheap nike shoes for sale Nike Air Max Shoes Wholesale Wholesale Nike Basketball Shoes Cheap Air Max 270 Light Bone