AIA Chiangmai

Everyday people go to the bank with a loan request written on the back of a napkin and end up getting denied for a loan. Ever wondered why? The obvious reason is they are not qualified for the loan because of a lack of employment, insufficient income, too much debt, poor credit, no previous credit or any combination of these factors. But are these the only reasons? Maybe, maybe not. Keep in mind that bankers are on a salarythey get paid the same amount of money whether they work hard on your deal or not. You see, lenders tend to group people into categories known as A, B or C-borrowers.

A-borrowers tend to be perfect people with perfect credit and high income to debt ratio. B-borrowers tend to be people who have decent income, decent credit and a decent income to debt ratio. C-borrowers, on the other hand, have marginal income and marginal to poor credit ratings. And then there are the projectslenders also tend to group projects into categories known as A, B and C-projects. Here are a few examples of how projects are ranked: A-projects are the kinds of loans the lender likes to doclass-A residential home loans from, say, $100.000.00 and up. B-projects may be a used car loanC-projects could include a debt consolidation loan for a marginal borrower. C-borrowers and projects are often quickly denied. You can see more clearly now how borrowers and projects are basically ranked in the mind of lenders.

Remember; bankers are human and humans tend to take the path of least resistance. If you were a banker, would you rather do a slam-dunk million dollar loan to someone who didn’t need the money or work real hard (day in and day out) trying to fund risky C-projects for marginal borrowers? Most people are not perfect borrowers and you may fall into this category. So what do you do to increase your chances of getting the loan you need? Here’s a few secrets that can help get the loans you need: First, ask yourself a few questions Does your loan request make economic sense? If it doesn’t make sense to you, it probably won’t impress the lender. What can you do to structure the loan to make sense? Secondly, if you were a lender, would you (really) loan yourself the money considering your income, credit and project?

Whether you answer yes or no, you should identify why or why not? Do you have a professional bank package or is your loan request written on the back of a napkin? By having a professional bank package you will get the attention of the lender because most people don’t know how to assemble a bank package. By having a bank package, you can move yourself from a C-borrower to a B-borrower status in the mind of a lender. If you are a B-borrower you can move to A-borrower status. Why? By creating a bank package you have done your homework (and much of the work the lender needs to make a decision) in a format that professionally communicates with the lender. Here’s an outline for a basic bank package for consumer (or business) loan proposals in the order shown below:

1) Cover letter (to the lender, lending institution, brief overview of package and purpose)

2) Loan summary (purpose of loan, use of funds, payback plan, economic justification, etc.)

3) Table of contents

4) Standard bank application for review (get it from the bank)

5) Statement of assets (everything you own that can be used as collateral)

6) Statement of credit debt (all outstanding debts with totals and account numbers)

7) Photo-copies last two (2) years of tax returns

Photo-copies last two (2) years of payroll stubs

9) Supporting documentation (borrower’s resume’, explain past credit problems, documents, etc.)

You want to organize your bank package using an inexpensive 3-ring binder. A bank package does not guarantee financing but it can greatly improve your chances for funding tough deals.

Copyright © 2006
James W. Hart, IV
All Rights reserved

James W. Hart, IV, a consumer advocate and CEO of Smart Books Publishing http://www.smart67.com has been involved in the field of residential and commercial real estate mortgage financing since 1987. Hart, previously licensed to engage in the sale of real estate in the state of Ohio, has been directly involved in the origination of residential and commercial mortgage financing and has worked with residential and commercial mortgage lenders, large commercial mortgage banking firms and life insurance companies for financing. Hart is an honorably discharged veteran of the U.S. Army, graduate of the University of Toledo and graduate of the Cleveland Institute of electronics. He is a member of the National Panel of Consumer Arbitrators and the Council of Better Business Bureaus, Inc. During 1992/93 Mr. Hart appeared on a number of radio and TV stations throughout the U.S. including WJR-AM, WWWE-AM, WHUR-FM, WRC-AM, WLW-AM, WTVN-AM, WSPD-AM, KDKA-AM, KBGS-AM and CNBC-TV and many others

Tags: Banking, bankruptcy, cash, financing, lending, Loans, Money, personal financeBanking, bankruptcy, cash, financing, lending, Loans, Money, personal finance

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The bond market always seems so confusing
to almost everyone. It does look to be upside down.
Why is it so?

When an investor buys a bond that matures
in 20 years he plunks down his cash, say $10,000,
and each quarter (or annually or as agreed) the
bond issuer sends him a check for the interest.
If it was 6% the bond holder will receive $600
annually until the twentieth year when the bond
issuer returns his $10,000. Very simple.

But suppose the bond owner suddenly has a
need for cash and must sell the bond. The bond
issuer is not required to take back the bond
until the 20th year. The investor must find
someone to buy that bond now. Of course, the
new owner will then receive the interest
checks. The bond is still worth $10,000 at
maturity so it should bring $10,000 on the open
market. Or will it?

Not necessarily.

If the interest rate market has fallen to
3% for this type of bond then it should sell for
an amount that will yield $600 on an amount of
money at 3%. Now that bond is worth $20,000
($600/.03X100). Conversely, if the interest
rates have increased to 9% the amount received
from the premature sale of the bond will fall
to $666 ($600/.09X100). The bond holder gets
less for the bond than the face amount, but the
new owner will receive the full amount at
maturity. The amount received from the sale is
directly related to the current yield for bonds
of the same quality.

As the interest (yield) goes up the principal
amount the bond holder can realize from the
sale of the bond goes down. As the yield drops
the bond can be sold for more than the face
amount, but will still bring the face amount at
maturity. The amount of time to maturity is not
being considered; however, the closer to
maturity the more value the bond will have.

When an investor buys a bond he wants two
things: safety of principal and return on his
investment (ROI). There is no consideration for
appreciation of capital. There are many types
of bonds and they are rated in term of safety.
The number one safety is the U.S. Treasury
Bond. It is where almost every foreign
government invests its money even beyond their
own government securities. There are various
rating agencies with the best known being
Moody’s.

Bonds are rated from AAA to junk with the
latter being speculative with the chance they
could default meaning you lose your money. Even
better graded bonds such as municipals are
questionable, but these and other bonds can be
bought with insurance to guarantee you will get
your money back.

Most financial advisors recommend that
portfolios contain a higher percentage of bonds
as people get older. That is for the investor
to decide.

Each person must determine risk versus
guaranteed return.

Al Thomas’ book,
“If It Doesn’t Go Up, Don’t Buy It!”
has helped thousands of people make
money and keep their profits with his simple
2-step method. Read the first chapter at
http://www.mutualfundmagic.com and discover why
he’s the man that Wall Street does not want you
to know. Copyright 2006 All rights reserved.

Tags: bonds, cash, invest, investment, mutual funds, stocksbonds, cash, invest, investment, mutual funds, stocks

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