Sunday, April 30, 2006

Interrogate Yourself When Deciding on Your Proposed finance Segment

Target Market is another name for the segment at which you apply your advertizing efforts...

The more correctly you demarcate and understand your legal finance, the better you can market directly to a certain class of finance.

Address the grievances of your customers and empathize with them, this would prove to them that you are concerned about them and get them to do business with you. It is not compulsory to turn your legal finance away from a finance group in advance of targetting another finance group.

Your legal finance would be just right for many finance groups but your propagandizing will be more productive if you escalate legal finance straight to one at a time. Also, you may think about these questions while picking your legal finance market.

First concentrate on what are the demographics of your legal finance trade. You should check out all available information on the finance sector that you are narrowing on. Know about the income, age and vocation of the people you might get in touch with.

All relevant data on the mentality of the consumers in the finance sector you are interested in need to be delved into.

You should have a special interest in this group, or it must be a segment that you delight in being involved with. You should also make a habit of going to the places of interest and community organizations that the finance group attaches itself to.

Have you understood the concerns being confronted by group finance?

Can your legal finance clear up their difficulty for them?

Not unless you observe all relevant facts about legal finance and the finance group aimed at by you, will you get the desired results.

Be clear about the likes and dislikes of this sector and as to how you are going to attract the attention of this group to legal finance!

Tuesday, April 25, 2006

Mortgage Rates are always changing!

Mortgage rates are always changing. This change in mortgage rates is affected by several factors:

One major factor that affects the dynamics of mortgage rates is inflation. Inflation is characterized by a booming economy and an increase in the prices of goods and other commodities. When the economy is strong, prices of goods and services rise, signaling the rise of real estate prices, apartment rents, and mortgage rates as well.

When mortgage rates are high, then naturally demands for mortgages and loans slow down. To avoid this kind of effect, the Federal Reserve Bureau usually lowers down interest rates. This action will cause inflation to reduce, the economy to slow down, and mortgage rates to fall.

Therefore, basically, the dynamics of mortgage rates is directly affected by the rise and fall of interest rates.

But despite the tendency of mortgage rates to follow the direction interest rates are taking, there are also several other factors that affect mortgage rates. Mortgage rates base their movement on the supply and demand for mortgages and loans. And because the supply and demand ratio of mortgage rates slightly deviates from that of other rates, mortgage rates tend to move differently when occasions arise.

For instance, a lender has a certain quota in the amount of mortgages he can close in one month. In an effort to reach that quota, he would have to lower down the mortgage rates of his products in order to attract more buyers. Even though the market suggests that mortgage rates should be high, lowering down his mortgage rates will help him achieve his goal. This is another way of affecting the movement of mortgage rates.

How Mortgage Rates are affected by other key factors

Mortgage rates are not only affected by inflation, the overall status of the economy, and mortgage companies. Mortgage rates are also directly affected by the amount of the money borrowed. If the amount of the loan increases, mortgage rates rise up as well.

Certain standards in the amount of loan money given were established to keep mortgage rates in control. The two commonest standards used in the United States stock market are Fannie Mae and Freddie Mac. Every year, the limits of loan amount is either extended or reduced, depending on how mortgage rates are predicted to move. When the loan money exceeds the limits set by either Fannie Mae or Freddie Mac earlier that year, then the mortgage rate will increase.

Mortgage rates differ with the type of loan a buyer chooses. A fixed rate mortgage usually has higher a mortgage rate when compared to the mortgage rate of an adjustable rate mortgage. The adjustable rate mortgage generally has a very low mortgage rate on its first year but after that, the mortgage rates would depend on the changes on the mortgage company’s prime rate.

Likewise, mortgage rates are affected by the duration of the loan. 30-year mortgages usually have lower mortgage rates compared to 15-year mortgages. Lower mortgage rates allows buyers to save on their monthly payments, thus letting them channel those extra funds to other good investments. On the other hand, higher mortgage rates in 15-year mortgages allow buyers to pay off their loan much quicker. This is because a portion of their monthly payments on mortgage rates are used to pay off the principal loan amount.

Sunday, April 23, 2006

Is A Mortgage The Only Option?

It is quite normal on the part of the buyer to assume their only option when purchasing a home is to obtain a mortgage... but the traditional lending process.

This is not always the case, and buyers and sellers are coming together with creative and accommodating ways to affect the purchase, or sale, of the home depending upon your status as buyer or seller.

Individuals (interested in purchasing a home) lack the 20% down payment often required from the lender very often. Provided the seller has established equity of the home, there are other options for the buy and sale agreement. Seller financed mortgages are the most common alternative mortgage option exercised; seller financed mortgages however, are not the only option that can be considered. In this article, were going to take a look at some of the alternative mortgage options that are rarely exercised, but that do provide tremendous benefit to the buyer and seller.

As a seller, the conditions must exist that allow you to offer the buyer alternative options. Your mortgage balance must be considerably less than the fair market sale price or your hands are basically tied. Imagine a scenario: you're ready to sell your home, the buyer is ready to purchase your home, and they simply do not have a 20% down payment.

What they mostly do have is a 5 % down payment, plus the desire to work with the seller and the mortgage lender.

You're asking price for the home is $ 70,000 and the appraised value of the home is $85,000; your existing mortgage is $ 40,000 and the lender requires the proposed buyer to provide a $ 16,000 "down payment".

How can a solution be reached?

If you, as the seller are willing to take a second lien on the property, there is a workable solution.

The fact that the home appraises for more than the asking price, automatically provides the buyers with a $5,000 level of equity, so they only need $11,000 more to reach a 20% down payment. They have $4000; in order to accommodate the buyers, you could accept $74,000 in upfront mortgage money from the lender, and take a second lien on the $6000 difference. This method works only if you’re willing to take the second lien, and the buyers are credible and reputable individuals.

Taking second liens or second mortgages are increasing in popularity as a means to sale increasing value real estate in today's rapidly expanding market. There are other spins offs from the basic formula described, however the scenario above is the most common and provides the buyer and seller with the basis for expanding with creative add- ons. Of course, the seller financed mortgage is still the meat and potatoes of the alternative financing industry.

How does the seller financed mortgage work? Generally, it works in this manner: if the seller owns the home outright he or she may choose to finance a mortgage for the buyer, and set up an amortized loan. Thanks to the readily available personal computer, loans can be constructed that would have only be available via an accountant or lending institution, 20 years ago.

Of course, how you decide as a buyer or seller to ultimately close a deal, will depend on many factors, this may be just one of the more important aspects.

Regardless of the final decision, the opportunity exists to explore other avenue other than the traditional mortgage lending institutions, or mortgage companies. And, sometimes, you never know, the deal from the seller financed mortgage may open more doors than just a mortgage for homeownership!