Category Archives: Credit crunch
It is not only you, but the entire nation is struggling to survive the debt trap and to find ways to manage it effectively. The economic crisis along with housing and credit crunch has impacted the lives of many all over the world. You may even at times feel powerless and confused facing the ever-changing and turbulent economy. Therefore, as a good citizen, you can contribute to the nation’s management of debt by carefully and strategically planning and managing your personal economies which include your monthly income, investments, and all your expenses. To have a debt management plan is therefore extremely essential.
Control In Your Hands
It is true that you cannot have everything under your control and neither take the reins in your hands. There are some aspects of the economy and financial market that you should accept and work with, but there are also some aspects which are entirely in your control. At all times, you can have the control of your spending and your budget to cope up with the ever changing financial situation. No matter how confusing and disturbed things might get at the national level. Your fundamentals of smart management of personal finance remain the same always.
The first step to the ladder of success in debt management is to change your spending habits. To survive the financial crisis to have to make certain sacrifices which are not at all easy, given that you have been doing it for so many years. But you should think about the benefit and the ultimate peace that you would have in mind when you achieve financial freedom would be an enough boost to do so and also for the benefit of your family, who matters the most to you. If you go to the mode of denial as if nothing has happened would result in insurmountable debt situation and make things even more challenging.
Be Wise And Smart
When you have to take some life changing decisions, it is imperative that you be wise and smart. To take some bold but useful decisions does not need big changes but even a small change can make a huge impact. Being a smart shopper is one of them. When you shop with a list in hand and cash, you do not overspend. Try to stick to discount items more so that you can also save while spending on your bare necessities. If you have dues on your cards, try to pay them on time so that you avoid penalties and surmounting debt as well. This would prevent you to take any credit card consolidation loans to clear them as well.
Go For Negotiation
Negotiating helps a lot in clearing off debts, and if you explain your condition and ask for a reduction in the interest rate or waiver of a certain amount, it would help you to clear the dues faster with less amount. Plan for exigencies and have an emergency account to save money for such purposes. Maintain a god credit score and make wiser long-term investments to have a better borrowing capacity.
The stock market is tumbling and most of the mortgage lenders are going out of business due to the credit crisis. In such a situation many people are having problems in investing in the real estate. Getting traditional mortgage from banks and lenders is becoming tougher because they now require 800%2B credit scores, personal guarantees, and collateral as a guarantee up to 40% of the purchase price. Most of the lenders are not willing to lend money in the market.
In such a situation, what should a real estate investor do? Private real estate money is the answer. Private real estate money can be used to purchase real estate investments. This kind of money is borrowed from the private individuals instead of borrowing money from the banks or other commercial lenders. Private lenders can be any ordinary person such as a doctor, lawyer, accountant, business owner, and possible retired person. Most of these private lenders are looking for better returns on investments than they can typically get from a bank CDs, money markets or even bond investments. Over the past couple years these type investments have yielded a paltry 3% to 6% pretax rates. Private money lenders can earn up to 9% to 15% on their money from the borrowers. That’s the reason the private lenders are interested in investing in real estate investments to get good returns on their money.
Before the private lenders invest their money, they would like to know a few things about the property. These include:
1. What is the purchase price?
2. How much is the property worth once fixed up and rehabilitated?
3. What will the rehabilitation cost be?
4. How much do you want to borrow?
5. What is your exit strategy i.e. do plan to flip to a first time buyer or hold to rent?
6. When will you pay off the private investor
You may want to have a short little presentation book or business plan laid out in a professional looking format to present to a private lender that addresses these issues. This booklet will show you have a well thought out plan and help to establish credibility.
In the new era of real estate investing, you should find out the new and different ways to financing your real estate investments and private real estate money is the key to your investing future.