Monthly Archives June 2019

What are these events today? 1) The Mortgage Melt-down. Major financial institutions in the United States are incurring billions of dollars in losses due to the loss in valuation of their investments in mortgage securities. The consequence for borrowers is that these institutions are less inclined to take risks when loaning money for fear of additional losses. And their regulators are demanding that regulated lenders raise their credit standards for borrowers to qualify for a loan. 2) The devaluation of the American dollar versus other world currencies. The U.S. government is spending ginormous amounts of money in excess of what it collect in revenue due to the political compulsion to spend taxpayers’ money, the war in Iraq, Hurricane Katrina (and other natural disasters) and the war on terrorism. This makes our currency less valuable. It makes importing to the U.S. more expensive. The American people have less money to spend on goods and services, and their money buys less than it did a year ago because prices of necessities such as gasoline are higher. 3) The current tendency of Federal and State governments to reduce funding for social services, health services and education because of inadequate revenues; this hurts individuals and businesses who have less money to spend on products and services which creates additional drags on our economy. 4) The diminishing value of residential real estate all across the United States. This is related to the mortgage meltdown and the fact that many people incurred debts that they cannot repay. The real causes of these events are complicated and beyond the scope of this article. Suffice it to say that these are hard times and hard times create needs for hard money loans.

What exactly is hard money? Here are seven examples:

1. A commercial real estate loan where the borrower receives funds based on the value of the property, usually 50% or less, at an interest rate higher than a bank would charge. This is the most commonly understood type of hard money. In this financing, neither the income from the property or the borrower demonstrably supports the repayment of the loan.
2. A real estate loan to buy a residential property where the borrower cannot prove their income. This may be accomplished with financing from a seller, the only party willing to take the risk of non-payment.
3. A small junior lien on income producing commercial real estate where the first lien is very large. For example, a million dollar second lien behind a ten million dollar first lien. Most lenders simply do not want to consider a loan of this type because of the potential liability for repayment of the first lien. It is ten times the risk of the secondary loan.
4. Most loans to people with less than excellent credit. Many loans are based on credit scoring. If you do not have a credit score that is high enough for the lender’s requirement, you simply do not get their loan and you may or may not be able to find a hard money loan to accomplish your objective.
5. Accounts receivable financing to construction contractors, medical providers and sellers of agricultural products. Most factors do not offer to these sectors of the economy because of the risks and complexities that are involved.
6. Purchase order financing for items with gross margins less than twenty percent. The twenty percent margin is a benchmark for sufficient profitability in a transaction to pay all financing costs and create profits for the business after all costs are paid. During hard economic times margins are squeezed. It is a vicious cycle.
7. Loans to businesses that are particularly negatively affected by the current economy. For instance, a loan to build a new lumberyard is impacted by the downturn in new real estate construction and a lower need for lumber. Most banks would simply decline to consider such a loan. The same is true for developers seeking to build new housing tracts or office building developments. This is not a good time to try to start a new mortgage brokerage company; although it may be a good time to be a hard money lender provided that you are very, very careful in assessing your transactional risks.

What do all of these situations have in common? In times of easy money these situations would be less costly to finance and more likely to receive funding. Today, the lender’s answer to your request for funding is more likely to be a polite but strong “no way”. Many lenders have effectively (if not actually) shut their doors. Many lenders will simply decline to lend on hotels/motels, gas stations, owner/user properties, properties with any environmental issues. Borrowers who do not have FICO credit scores above 680, with substantial net worth and income will find it is very difficult to obtain many types of loans. Fortunately, the door for accounts receivable financing is still wide open.

Finance news keep you abreast with developments in various critical sectors of the either the national or international economy. For instance if you may want to keep abreast with opportunities that exist for you in domains like forex trader then you need to know what is happening in line with developments of the volatile stock market and money markets. On another front you may want to know where there are affordable foreclosure properties that you can makes the most of to get yourself that dream real estate property as your residence or for investment.

Many people are getting hands on with financial matters because it does not really take an expert to get into financial trade circle and the make the most of what the industry can offer. What happens in the finance world affects your life directly it does not matter if it happens on a national scale or international locale. The fact is that the global economy in intertwined such that financial matters in the Australia economy for instance may affect the whole of the global financial landscape, which has an impact on the state of the economies, inflation, interest rate, etc. These are kinds of issues that get to affect you directly.

Keeping abreast with financial developments has been quiet a critically important aspect in the recent global economic meltdown. The global financial sector has been riddled with negative developments which cost some people huge profits from various business ventures. Keeping up with finance news helped people to stay on the look out and alert on the next move to do for instance in terms of example selling property, buying a property, getting a bank loan etc. the principle of keeping pace with financial developments is very important especially for entrepreneur who want to keep a close eye on the financial developments every second in order to position themselves for expediency and survival.

While a downturn in the economy can be an ideal time for finding great deals, there can be one issue with doing business under these conditions. The biggest issue is that when the economy isn’t doing well, securing financing in a timely manner can be much more difficult. Because banks and other financial institutions are dealing with problems, they aren’t as willing to quickly give out traditional means of financing. Instead, they act in a conservative manner that causes the process to take much longer. The reason this can be a significant problem is because in order to take advantage of the best deals that come up, you need to be able to quickly get financing. Good deals don’t last forever, so you need financing to help you purchase property quickly.

Fortunately, while many financing options may not be viable for these types of fast deals, there is an option that can work for you. Bridging finance can be used to purchase property quickly. The reason this option can work in situations when other financing options won’t is because bridging finance is directly based on the value of properties that you own. As a result, the bank or financial institution you work with doesn’t have to go through a lengthy process to provide you with the financing you need. Instead, they are able to quickly provide you with financing that you can then use to purchase property.

In addition to being available in a short period of time, another reason this is a great option for purchasing property is because the rates offered are generally competitive. While bridging finance doesn’t offer the absolute lowest rates of any financing options, they are still a very reasonable option. Additionally, because you can shop around among lenders, you can use an offer from one lender to negotiate a better rate with another lender.

Flexible terms are another factor that make bridging finance a good option for anyone who wants to purchase property quickly. With many forms of financing, the fact that you have to stick to a specific payment schedule can end up costing you money. However, with bridging finance, this doesn’t have to be an issue. Instead, you will have the ability to choose what works best for you. As a result of all the benefits that this type of financing has to offer, if you need to quickly purchase property, you should strongly consider using bridging finance to get your deal finished as soon as possible.

Experience tells us that the personal impact of major issues and changes is largely unknown until long after the fact, and it’s never the way it was reported or predicted. So then why so many headlines and articles and commentary? There is a very simple answer to this, but not an answer that’s easily swallowed. Sadly, headlines, hype, and drama sell (and prompt people to react and buy and sell assets, and all kinds of things).

We know that when you get down to it, sales are a core consideration for the media. We just choose not to consider it and overlook this. We’re hopeful that the information is reliable and sound. After all, if the information flowing from books, magazines, TV shows, and newspapers is provided in a way to drive sales numbers, then where can the raw facts be found? And since advertisers believe that I won’t buy or watch unless I see an impact to me or my family, then that’s the way things are spun.

After studying finance from an armchair (especially personal finance) for many years, and reading book after book from many authors on the subject, I then ventured into the financial newspaper and magazine world. (By the way, as far as books go there are only about 5 authors that I believe are worth reading and most of them have passed… but isn’t that really the test of solid information? It stands the test of time?). We’ll discuss books and newspapers in another article.

I won’t name the magazines, but would like to relate an experience. I picked up a fairly popular financial magazine at my Dentist’s office and liked the articles. They were candid, focused, and seemed factual with no speculation. That’s what I want. I don’t want opinions (unless they’re unbiased which is rare), speculation, or rhetoric which typically constitutes 75% of the articles I see. I want the facts. I saw a discounted subscription offer for this magazine, and I bought it. Before I received the first issue, a copy of a sister magazine (also pertaining to personal finance) arrived and I assumed that I had made a mistake when ordering. I leafed quickly through the magazine and none of the articles went on my “read this” list so I laid it aside. Two weeks later, the magazine I ordered arrived, and it was pretty good. Similar in quality to the first copy I had read, and interesting articles. So then why was there another magazine? What was the real difference? Every month about two weeks before receiving the magazine that I ordered, the other one would arrive. I never saw much in it of interest, but I decided to carve out some time and go through it page by page. As I went through it, I ripped out the ads as I went along. I stopped at a few articles and read partway through only to find they had sales pitches buried in them. Out they went, one by one, and not one page remained when I was through. Not one. Every page was an ad in some sense or tilted toward a sale… and this is a popular magazine. I determined that the reason I get it for free when I didn’t order it and don’t want it, is because it’s one big ad masquerading as a magazine. An entire magazine with no objectivity or substance, made up of ads and steering articles… and it’s popular. What are people getting out of this? I really can’t say.

After a few months of reading the magazine that I ordered, I found that it too was drifting toward speculation and more ads. Oh well… I gave it a try. Time will tell which way it goes. Even the association that I joined a few years ago which claims to be unbiased, is showing rather obvious signs of bias with sales as a goal. Since we really want to manage our finances, take control, work toward goals, eliminate debt, and establish and maintain a reasonable savings, these are not the articles and recommendations we need. I wonder if we’re not better off without any of them.

The good news: These experiences are my glaring reminders to stick to the basics, and to do the work myself. To manage our finances, we need to be diligent, vigilant, and responsible, and this means allocating time. It means not letting someone else do the homework and just following their lead. It means planning and reviewing, and nose to the grindstone debt reduction and prudent saving… acknowledging the fallacy in the quick-solution mentality. I form a plan toward my goals based on sound knowledge and principles, diligently follow the plan, and review and adjust the plan as things change. It’s pretty straight-forward and not terribly difficult… and this is the good news. Few articles will divulge the tried and true… after all, it doesn’t sell anything.

Wisdom is the proper allocation of knowledge, and prudence is the ability to govern and discipline ourselves using reason. These attributes should form the foundation of how we manage our personal economy. We build on these with diligence and perseverance toward our goals, and that is how we achieve them.

It is an official and organized market in which the exchanges of foreign transferable securities take place under the guidance of a centralized authority. The operation of the financial market rests on the activities of the share market. It is where investors from within the country and the foreign investors invest their money and participate in buying and selling of the stocks. This trade leads to huge amount of profit generation which is then utilized by the government and the private sector for various development activities. The government earns revenue from stock finance and so it is necessary for the swift functioning of a country and its economy.

The economic growth of a country can be ascertained from the amount of Foreign Direct Investment (FDI) that is received by its stock market. When investors have faith in a country’s financial possibilities, they invest in that country for long term returns. The individual citizens of a country can also benefit from it by investing smartly on the shares of companies that are profitable and have shown rapid improvement in their annual balance sheets.

Stock finance is ideal for aspiring entrepreneurs who intend to make good money in a short period of time without having to start any venture of their own; they can instead be share holders in established companies and reap the benefits. However, it is a very volatile and risky market and investors can also end up losing a considerate amount of their money when the economy is not doing very well. For example, during the recession period, stock value of various Fortune 500 companies decreased by more than 25 % which resulted in huge losses for the investors. Thus, it is necessary to have a good understanding of stock finance before taking the risk of investing in any shares.