credit score – Small Biz 3000 http://smallbiz3000.com/ Mon, 18 Apr 2022 03:17:05 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://smallbiz3000.com/wp-content/uploads/2021/11/profile.png credit score – Small Biz 3000 http://smallbiz3000.com/ 32 32 Alliant Credit Union Mortgage Review 2022: Low Down Payment Options https://smallbiz3000.com/alliant-credit-union-mortgage-review-2022-low-down-payment-options/ Tue, 15 Mar 2022 16:04:32 +0000 https://smallbiz3000.com/alliant-credit-union-mortgage-review-2022-low-down-payment-options/ Personal Finance Insider writes about products, strategies, and advice to help you make smart decisions with your money. We may receive a small commission from our partners, such as American Express, but our reports and recommendations are always independent and objective. Terms apply to offers listed on this page. Read our editorial standards. The bottom […]]]>

Personal Finance Insider writes about products, strategies, and advice to help you make smart decisions with your money. We may receive a small commission from our partners, such as American Express, but our reports and recommendations are always independent and objective. Terms apply to offers listed on this page. Read our editorial standards.

Types of loans offered

Compliant, Jumbo, Alliant Advantage Mortgage, HELOC

Types of loans offered

Compliant, Jumbo, Alliant Advantage Mortgage, HELOC

Benefits

  • Offers a 0% mortgage with no PMI for “well-qualified” first-time homebuyers; others have a 5% down payment option, no PMI
  • See personalized rates without registering
  • The Home Rewards program offers cash back at closing
  • Easy online application

The inconvenients

  • No government backed mortgages
  • Must be a member of Alliant Credit Union
  • No other credit data

More information

  • Mortgage lender online only
  • The Alliant Advantage Mortgage program allows borrowers to secure a mortgage with as little as 0% or 5% down without paying PMI
  • Fixed rate mortgages are not available in Maryland
  • Minimum credit score and down payment shown are for conforming mortgages

Overall Lender Rating

Advantages and disadvantages

Mortgage Interest Rates and Fees Alliant Credit Union

Alliant’s website lets you easily customize rates to suit your situation by scrolling to its main mortgage page and clicking “Get Your Custom Rates.” You’ll need to provide basic information about how much you plan to borrow, the location of the home you’re buying or refinancing, and your credit score range.

Alliant Credit Union charges origination fees on its mortgages, and the exact amount you pay will depend on the type of mortgage you get. Fixed rate mortgages come with an origination fee of $1,795, while the fee for variable rate mortgages is only $995. According to the Alliant site, setup fees can go up to $1,930.

Mortgages Alliant Credit Union vs. Connexus Credit Union

*Alternative forms of credit are only permitted on ARMs for borrowers with a limited credit history.

Alliant and Connexus are both


credit unions

with similar offerings, but there are a few key differences between these lenders that may make one a better choice than the other, depending on your needs.

Alliant Credit Union’s most attractive mortgage offering is its Alliant Advantage Mortgage program, which allows first-time homebuyers to buy a home with no down payment and no private mortgage insurance (PMI). Repeat buyers can also get a PMI-free mortgage with a 5% down payment.

In contrast, the lowest down payment you can make on a Connexus Credit Union mortgage is 3%, and you will have to pay PMI on down payments below 20%. Alliant borrowers who do not qualify for the Alliant Advantage Mortgage program can also obtain a mortgage with 3% down payment with PMI.

Connexus may be a better option for borrowers with limited credit history. Although this lender does not accept alternative credit data for those with no credit or bad credit, it may consider alternative data from those with thin credit records. However, he can only do this for his adjustable rate mortgages.

Alliant Credit Union vs. Ally Mortgages

Ally is a fully online bank that offers conforming and jumbo mortgages that require as little as 3% down payment. For buyers who want to deposit less than that, or those looking to avoid PMI on down payments of less than 20%, Alliant’s Alliant Advantage Mortgage will likely be the best option, provided your credit is strong enough to do so. be eligible.

When it comes to fees, Ally is the clear winner, with no loan fees. However, there are a handful of states in which Ally does not do mortgages, while Alliant offers mortgages in all 50 states, with one small exception: it does not do fixed rate mortgages in the Maryland. (ARMs are available in all states.)

How Alliant Credit Union Mortgages Work

Alliant’s mortgage application is completed online and over the phone. Borrowers can get a mortgage from Alliant in all 50 states, but can’t get a fixed rate mortgage in Maryland. Alliant Advantage mortgages are not available in Florida or Nevada.

Alliant Credit Union offers conforming and jumbo mortgages for purchase and refinance transactions. It also offers a low down payment option for what it considers “qualified homebuyers” called the Alliant Advantage Mortgage program. These mortgages allow first-time home buyers to purchase a home for up to $500,000 with 0% down payment and no PMI. Repeat buyers can buy a home for up to $650,000 with 5% down (or refinance with just 5% equity) and no PMI.

For its traditional mortgage offerings, borrowers can potentially deposit as little as 3% with PMI.

Alliant charges setup fees ranging from $995 to $1,930. Borrowers generally need a credit score of at least 640 to obtain a mortgage from this lender. Since Alliant is a credit union, you will need to become a member before your mortgage closes. However, you do not need to be a member to apply for a mortgage.

To become a member of Alliant Credit Union, you must meet one of the following criteria:

  • Be an employee of one of the companies or organizations with which Alliant is partnered
  • Be a domestic partner or immediate family member of a current member
  • Live or work in one of the eligible communities near the credit union’s Chicago headquarters
  • Be a member of Foster Care to Success (Alliant will pay your $5 membership fee)

If you have any questions, you can email or call Alliant Customer Service between 8:00 a.m. and 6:00 p.m. CT Monday through Friday and 8:00 a.m. and 2:00 p.m. CT Saturday.

Is Alliant Credit Union Trustworthy?

Alliant Credit Union has an A+ from the Better Business Bureau. A company’s BBB rating is based on its honesty in advertising, the transparency of its business practices, and the effectiveness of its response to customer complaints. Alliant also has strong customer reviews on its Zillow lender profile and has had no recent public scandals.

Alliant Credit Union Mortgage FAQs

What credit rating is needed for Alliant Credit Union mortgages?

Alliant Credit Union generally requires mortgage borrowers to have a credit score of at least 640.

Are credit unions safe for mortgages?

Yes, as long as you work with a reputable organization, credit unions are as safe as other mortgage options.

Is Alliant legit?

Yes, Alliant Credit Union is a legitimate credit union that has been around since 1935. According to its site, Alliant has over 600,000 members. Alliant deposit accounts, including savings accounts and


check accounts

are federally insured by the National Credit Union Administration.

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What is a Signature loan and how does it work? https://smallbiz3000.com/what-is-a-signature-loan-and-how-does-it-work/ Thu, 03 Mar 2022 21:48:17 +0000 https://smallbiz3000.com/what-is-a-signature-loan-and-how-does-it-work/ If you’re looking for a loan that doesn’t require collateral, a signature loan might be a good option. A signature loan can be used for almost any purpose. Plus, you can receive funds quickly – some lenders issue funds the same business day. However, like all financial products, these loans have drawbacks. Some lenders charge […]]]>

If you’re looking for a loan that doesn’t require collateral, a signature loan might be a good option. A signature loan can be used for almost any purpose. Plus, you can receive funds quickly – some lenders issue funds the same business day.

However, like all financial products, these loans have drawbacks. Some lenders charge fees and you may receive a high interest rate. Before applying for a signature loan, review the details of these loans to make sure it’s the right choice for you.

What is a signature loan?

A signature loan is an unsecured personal loan. Unlike a secured loan, this type of loan doesn’t require you to post collateral — something of value, like a bank account or a house — that a lender can seize if you don’t repay the loan. Instead, the loan is secured by your signature, which represents a legal promise to repay the loan funds.

Since the loan is unsecured, lenders generally charge a higher interest rate than secured loans, such as mortgages and car loans. The average interest rate for signature loans is often lower than the average credit card interest rate.

Also, loan funds can be used for almost any purpose, such as medical emergencies, debt consolidation, and major life events.

How does a signature loan work?

When you apply for a signature loan, a lender considers factors such as your credit history, income, and credit score to determine if you qualify for a loan. These factors also help a lender determine your interest rate and loan amount.

If you are approved for a signature loan, a lender will give you a cash lump sum. You then repay the loan amount, plus interest, over a set repayment period that typically ranges from 24 to 60 months or more.

What are the best uses for a signature loan?

The best use of a signature loan depends on your unique financial situation. Here are some scenarios where using one might make sense.

Debt Consolidation

If you have high-interest debt, such as credit card debt, using a signature loan to consolidate debt might be a good financial decision. Debt consolidation involves paying off your existing debts with a new loan. If you qualify for a signature loan with an interest rate lower than the average rate of your current debt, you can save a ton of money on interest.

Emergencies

Signature loans also work well for covering unexpected expenses, such as medical emergencies, auto repairs, and home repairs. If you don’t have emergency funds or the expense is too large to cover, you may be able to receive funds quickly.

Major life events

If you need to pay for an expensive event, like a wedding, moving to another state, or a birthday party, a signature loan could help. Remember to only borrow what you can afford to repay.

Where can you get a signature loan?

You can get a signature loan from several financial institutions, including banks, credit unions, and online lenders.

Banks

Traditional banks offer signature loans. If you already have a relationship with a bank, contact their customer service to see if they offer signed personal loans. You may qualify for an interest rate reduction for being an existing customer. Alternatively, you contact a bank by phone to see if they offer unsecured personal loans.

credit unions

Some credit unions offer signature loans, and the interest rate is often lower than those offered by banks. For example, the average rate for a three-year unsecured personal loan at a credit union was 8.95 percent on June 25, 2021, according to the National Credit Union Administration. In contrast, the three-year average rate on a personal loan at a bank was 10.09%.

To take out a personal loan from a credit union, you must be a member or apply for membership.

Online lenders

Several online lenders offer unsecured personal loans. To find them, you can visit an online marketplace or search for individual lenders. One of the benefits of applying with an online lender is that most allow you to prequalify to check your estimated rates and terms, without hurting your credit score.

Advantages and disadvantages of signature loans

Before taking out a signature loan, be sure to weigh the pros and cons.

Benefits

  • Quick funding. Do you need cash fast? Some lenders may issue your loan funds the same business day or a few business days after loan approval.
  • No collateral needed. Since all signature loans are unsecured loans, you don’t have to worry about a lender repossessing your car or foreclosing your home (unless a court grants judgment to the lender) .
  • Lower interest rates than credit cards. The average personal loan interest rate is generally lower than the average credit card interest rate. For example, since March 3, 2022, the average personal loan rate is 10.28%.

The inconvenients

  • Some lenders charge fees, such as application fees, late fees, and prepayment penalties. These fees can significantly increase your borrowing costs.
  • Potentially high interest rates. If you have bad credit, a lender may charge you a high interest rate. Some lenders have advertised maximum interest rates above 30%.
  • Late payments can hurt your credit score. If your payment is more than 30 days late, it can cause significant damage to your credit score, making it harder to qualify for future loans.

How to get a signature loan

If you think getting a signature loan is right for you, follow these steps to get one:

  1. Review your credit report. Inaccurate and incomplete information can lower your credit score. Before applying for a loan, review your credit reports to make sure they are accurate. You can view your Experian, Transunion and Equifax credit reports for free each week until April 20, 2022, by visiting com. If you find a credit report error, dispute it with every credit agency that lists it.
  2. Prequalify with multiple lenders. Compare your loan options by prequalify with as many lenders as possible. After you submit your application, a lender will perform a soft credit check to review your credit, which has no impact on your credit score. If you prequalify, you will receive an estimate of rates and terms.
  3. Submit a formal loan application. Once you have chosen a lender, complete a loan application. You will likely be asked to provide personal and financial information, such as your name, employer, social security number (SSN), income, and bank statements.
  4. Sign the loan agreement and receive the funds. If your application is approved, a lender will send you a loan agreement to sign. Read the conditions carefully and sign if you accept them. Then the lender must deposit the funds into your bank account within a few business days.
  5. Repay your loan. Be sure to repay your signature loan as promised. If you make late payments, you could pay late fees and it could hurt your credit, preventing you from taking out future loans. Sign up for automatic payment or use a spreadsheet to stay on top of your due date.
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How to get a home improvement loan that’s right for you in 5 steps https://smallbiz3000.com/how-to-get-a-home-improvement-loan-thats-right-for-you-in-5-steps/ Mon, 28 Feb 2022 23:02:42 +0000 https://smallbiz3000.com/how-to-get-a-home-improvement-loan-thats-right-for-you-in-5-steps/ Photo: istockphoto.com Finding the right home improvement loan or home improvement loan can seem like a daunting prospect. It is essential to understand all parts of the loan, such as loan repayment terms and how interest rates can affect your payment. Without this information, owners could end up incurring debts that they may struggle to […]]]>

Photo: istockphoto.com

Finding the right home improvement loan or home improvement loan can seem like a daunting prospect. It is essential to understand all parts of the loan, such as loan repayment terms and how interest rates can affect your payment. Without this information, owners could end up incurring debts that they may struggle to repay. Read on to find out how to get a home improvement loan to secure a loan deal you can afford to repay with confidence.

Before you start…

How to Get a Home Improvement Loan

Photo: istockphoto.com

A home improvement loan is money that homeowners borrow specifically for a home improvement project. This money can come from a home’s equity, or a homeowner can get the loan amount themselves separately. A homeowner would repay this money on a fixed schedule, plus associated interest and fees.

First, a homeowner can make sure he really needs the loan. For example, if the project is not essential at the moment, such as a luxury addition, someone might think about saving money from their monthly budget for a while to pay for the project directly. If you’re in a place where you’re comfortable taking out a loan, read the steps below to get a home improvement loan right.

STEP 1: Assess your finances.

The first step is to assess your financial situation and determine how much you can spend each month. Create a realistic monthly budget, which includes all outgoing expenses for each month, such as mortgage payments, utilities, food, entertainment, credit card payments, savings goals, and any other obligations. Then subtract that total from the amount of money you bring in as a household. This difference should reveal how much money you have to spare for a home improvement loan payment. You can also check your credit score, as this will affect the type of interest rate you might get. Lower credit scores often mean higher interest rates. You can get your credit score in several ways: you can get it through your credit card lender, use a service like Credit Karma, or even just get the credit score through the lender you you may be considering opting out. These methods tend to be free and won’t hurt your credit score. You can also get a free copy of your credit report once a year from each of the three major credit bureaus (TransUnion, Equifax, and Experian).

Many home improvement loans also use your home itself as collateral for the loan, such as home equity loans or home equity lines of credit (HELOC). Using your home as collateral means that if you can’t repay the loan, the lender can repossess your home to make up for the money you haven’t repaid. But these loans allow you to borrow money based on the equity in your home. If you’re considering these options, you can also talk to your mortgage lender about your current home equity and how much they recommend borrowing. Typically, a new mortgage has a payment that goes mostly toward interest, not principal, and you may not yet have enough equity to borrow.

How to Get a Home Improvement Loan

Photo: istockphoto.com

STEP 2: Learn about your home improvement loan options and their costs.

In general, there are six types of loans people can access to help with home improvement costs, all of which work differently. As mentioned above, two types are home equity loans and home equity lines of credit (HELOC). You repay the borrowed amount, usually as a monthly payment over a set period of time. You’ll also have fees and interest built into your monthly payment; the amount of interest depends on home improvement loan rates. The difference between a home equity loan and a home equity line of credit is how the loan is disbursed: the loan is a lump sum with a home equity loan, and the HELOC is a revolving loan amount that you can use according to your needs.

How to get a renovation loan without equity? A personal loan can be an option: It is simply a loan of a certain amount of money. Homeowners who choose a personal loan can repay the loan amount gradually on a monthly schedule, plus any interest and fees. An advantage of this type of loan is that you are not using your home as collateral like with a home equity loan or HELOC. Likewise, you can also consider using credit cards if the project is smaller. However, credit cards are not the best option if the amount needed is large; you may end up pushing your credit limits too high. But if you only need a few hundred to a few thousand dollars for materials because you’re the do-it-yourself type, you might consider using credit cards.

Two other options are cash refinancing and an FHA 203(k) rehabilitation loan. Cash-out refinancing means that you take money out of your home equity and then refinance your mortgage to pay off that amount plus the loan balance. The FHA 203(k) Rehab Loan is offered by the U.S. Department of Housing and Urban Development (HUD) and is intended for repairs to older homes that need upgrading. A lesser-known route is also to seek home repair grants through the US Department of Agriculture.

STEP 3: Decide which type of home improvement loan is best for you and your project.

All of the different types of home improvement loans work for very specific situations. For example, a home equity loan would be best if you have significant equity in your home or have even paid off the house. If you have a lot of wiggle room in your monthly budget and have a good chance of repaying that loan, a home equity loan may be a good option. It is also a good choice for people who need a large amount of money for a huge project because the loan is in one amount. For a HELOC, similar advice applies, but the revolving line of credit means you can use as much money as you need when you need it, making it better for smaller or ongoing projects. . Plus, you only pay interest on the amount of money used, not the total amount you have.

For people who do not have significant equity in their home, or those who are uncomfortable with the idea of ​​using their home as collateral against the loan, personal loans or credit cards will the best option. Consider a personal loan for larger projects, as you often get a lump sum as part of the loan. Similarly, cash-out refinance and the FHA 203(k) rehab loan work in specific situations, such as if you’re looking to refinance your mortgage or have a repairman on your hands. Consider using a home improvement loan calculator to help determine payments.

How to Get a Home Improvement Loan

Photo: istockphoto.com

STEP 4: Talk to potential lenders and compare your options.

Finally, look at the loans themselves. For home equity loans and HELOCs, your current lender is a reference. You can see what they offer for home improvement loans, and since you are already borrowing through them, they might offer you an offer on fees and interest rates. However, you can check with other lenders for their terms. Online lending companies, physical lending companies, banks, and credit unions are all options to consider. Financing your real estate project with credit cards is the easiest option, as there are a variety of well-known credit cards to consider. To get cash refinance, you need to go to banks, credit unions, or loan companies, often those that specialize in mortgages. The FHA 203(k) rehabilitation loan is offered by the US Department of Housing and Urban Development (HUD), but you will work with an FHA-approved lender to apply for this type of loan. How to get a home improvement loan with bad credit? If this is your case, you can discuss your situation with individual lenders. Some even specialize in working with people who have bad credit.

STEP 5: Apply for your loan.

Once you’ve decided what type of loan is right for you and where the home improvement loan is coming from, it’s time to start the application process. Is it hard to get a home improvement loan? This process varies greatly, depending on which home improvement loan you choose. Work closely with the lender to make sure they provide all the information you need. Lenders also need information, and it’s common for lenders to require personal information about you, especially during the application process and sometimes before. They may require pay stubs from the last 30 days, W-2 forms, signed federal tax returns, documents from other sources of income, bank statements, social security numbers, proof of identity, and possibly other documents. Make sure your information is accurate and complete, as incorrect information could result in the application being denied. Your personal situation may even affect the documents you need to provide, for example if you are self-employed, have irregular income or have non-wage income.

By following these steps on how to get a home improvement loan, you can enter the loan application process more informed, prepared and confident. Ultimately, it pays to know the types of legitimate loans and the types of lenders to work with. Knowing which home improvement loans are best for your plans and finances can also save you from a situation where you are putting an unnecessary strain on your budget.

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Explained: Importance of credit rating in getting a loan and how to fix it https://smallbiz3000.com/explained-importance-of-credit-rating-in-getting-a-loan-and-how-to-fix-it/ Sat, 26 Feb 2022 06:27:37 +0000 https://smallbiz3000.com/explained-importance-of-credit-rating-in-getting-a-loan-and-how-to-fix-it/ Recently, there have been several cases where fraudsters used permanent account numbers and other identity documents of people to avail loans from fintech companies and non-bank financial companies (NBFCs). As these loans remain unpaid, it affects the credit rating of a customer even if he does not avail these loans in case of default. What […]]]>

Recently, there have been several cases where fraudsters used permanent account numbers and other identity documents of people to avail loans from fintech companies and non-bank financial companies (NBFCs). As these loans remain unpaid, it affects the credit rating of a customer even if he does not avail these loans in case of default.

What a credit rating downgrade does is that it leads to the denial of future credits or the imposition of interest rates that are much higher than market rates. So what can a customer do in such a situation? We explain the options that are available to rectify the credit score.

How can one get their credit score fixed?

A customer can check their credit score and whether a loan (which has not been taken out) is outstanding through reports provided by the respective credit bureaus. These reports can be obtained by connecting to CIBIL, Equifax or Experian, or via net banking.

Experts say that the easiest way to fix the credit rating would be through an institutional process initiated by the Reserve Bank of India (RBI). Data subjects can also contact the information provider and offices directly, although this is usually a cumbersome process.

“This rectification process should be case specific…if a CIBIL score has been misrepresented, the client should contact the specific institution where their security was compromised. The lender, who is also the information provider, will need to approach CIBIL to regularize the client’s rating. In addition, aggrieved parties will also have to contact CIBIL and initiate a dispute request, either online or by writing to them,” said Surya Bhatia, certified financial planner.

A simpler way suggested by financial experts is to request the RBI to step in and provide relief to aggrieved customers as many people have been affected recently.

“The easiest and most transparent way is for credit institutions to correct them with credit bureaus. As thousands of customers have been affected by such scams, the RBI may order specific institutions to put in place a process to address this issue,” said Srinath Sridharan, Business Advisor and Independent Markets Commentator.

“If individuals have to do this, it will be a painful process and they will have to provide a lot of documentation. The ombudsman can also be approached if one does not receive a satisfactory response from the lender. The burden of proving this should be on the institution, not the individual,” he added. If the issue is still unresolved, customers should contact the RBI through its mediation program.

Where to go if the problem is still not solved?

The Reserve Bank of India has launched the Integrated Ombudsman Scheme which provides solutions to customer complaints such as deficient service from banks, NBFCs and payment system operators.

The program enables nearly 44 crore loan accounts and 220 crore deposit accounts to file any grievance with the RBI through an online portal. It offers a single interface for customers to file complaints, submit documents and track the status of their issues.

A centralized reception and processing center has been set up at RBI Chandigarh for the reception and initial handling of physical and email complaints in all languages. The scheme integrated RBI’s three existing ombudsman schemes – the Banking Ombudsman Scheme, 2006, the Non-Banking Financial Companies Ombudsman Scheme, 2018 and the Digital Transactions Ombudsman Scheme, 2019.

How do I file a complaint with the Ombudsman?

Since loan providers are mainly banks, NBFCs or payment service providers, most complaints will be covered by this scheme. Here’s how to contact the ombudsman:

  • Complaints can be filed online at https://cms.rbi.org.in.
  • Complaints can also be lodged through the dedicated email at crpc@rbi.org.in or sent in physical mode to the Centralized Receipt and Processing Center (CRPC) set up at the Reserve Bank of India, 4th Floor, Sector 17, Chandigarh – 160017.
  • A contact center with a toll-free number (14448) manned by RBI staff members operates to provide assistance to customers in filing complaints and providing information. This center operates from 9:30 a.m. to 5:15 p.m. and is available in Hindi, English and eight regional languages.

Electronic and physical complaints received at the CRPC are recorded on the CMS (Complaints Management System) by the staff after obtaining additional information, if necessary, from the client.

Has India seen an increase in such complaints?

The RBI witnessed a 22.27% increase in the volume of complaints under various mediation schemes between April 2020 and March 2021. Complaints related to ATMs and debit cards, banking mobile phones and credit cards represent the bulk: 42.74% of the total number of complaints. against 44.65% the previous year. There were 60,203 complaints about ATMs and debit cards, and 40,721 about credit cards.

The volume of claims amounted to 4,04,143 over the period at an annualized rate. Chandigarh, Kanpur and Delhi received the maximum number of complaints, according to the latest data from RBI.

The number of complaints received against NBFCs and digital transactions stood at 8.89% and 0.98%, respectively. The overall kill rate improved to 96.59% from 92.52% in 2021, despite higher volume. This was achieved through the end-to-end digitization of the complaints handling flow in the CMS.

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First Internet looks at the bank-as-a-service trend https://smallbiz3000.com/first-internet-looks-at-the-bank-as-a-service-trend/ Fri, 18 Feb 2022 19:00:00 +0000 https://smallbiz3000.com/first-internet-looks-at-the-bank-as-a-service-trend/ First Internet Bank opened its headquarters late last year on East 116th Street in downtown Fishers, off the Nickel Plate Trail. (IBJ Photo/Chad Williams) The rise of fintech companies means that it is increasingly possible for consumers to take out a loan, transfer money or perform other financial transactions without going through a bank. This […]]]>

First Internet Bank opened its headquarters late last year on East 116th Street in downtown Fishers, off the Nickel Plate Trail. (IBJ Photo/Chad Williams)

The rise of fintech companies means that it is increasingly possible for consumers to take out a loan, transfer money or perform other financial transactions without going through a bank.

This may be bad news for these banks, but Fishers-based First Internet Bank sees an opportunity.

First Internet is one of a relatively small number of US banks looking to do business with financial technology companies – fintechs – using an emerging business model called banking as a service, or BaaS.

In this model, a bank offers its expertise and capabilities to a fintech for a fee. This allows the fintech to provide its customers with services that require the intervention of a federally regulated and insured institution.

“The banking industry is really being revolutionized by the entry of fintechs,” said Nicole Lorch, president and chief operating officer of First Internet. “It’s vital to our very survival to be part of a growing movement like this.”

First Internet has been involved in BaaS to a limited extent in the past, but is now looking to expand this line of business. Last month, the bank announced that it had reached an agreement with Synctera, a San Francisco-based startup that launched in 2020. Synctera will act as a matchmaker to help First Internet find suitable fintech partners.

mike horrock

Lorch said she knows about 48 nationwide financial providers active in the space. First Internet and the Indiana Bankers Association said they were not aware of any other Indiana-based banks currently involved.

But First Internet, and others, say the BaaS model is poised to grow, in part because the pandemic has accelerated the pace of adoption of online financial services. And the rollout of the federal Paycheck Protection Program, with its ever-changing rules and regulations, underscored the value of fintech in helping banks respond quickly to customer needs, said Mike Horrocks, vice president of product management at Carmel-based Baker Hill.

Baker Hill is a fintech that offers lending software to banks and credit unions.

These and other factors have created overriding conditions for the BaaS business model, Horrocks said. “I think that’s a trend that’s going to get stronger and stronger.”

As fintechs go mainstream, he said, banking regulators and the federal Consumer Financial Protection Bureau are beginning to examine what fintechs do and whether they should be regulated.

Fintechs lack the ability to comply with onerous regulations that govern banks, Horrocks said. “These fintechs are going to have to find a partner who is already used to the pressures and the demands and how to deal with the CFPB and any other regulators.”

First Internet President and COO Nicole Lorch said the bank is currently negotiating partnerships with three fintechs for BaaS services. (IBJ Photo/Chad Williams)

Partner or purchase

The partnership model pursued by First Internet is an alternative to what many large banks do, which is to acquire a fintech. Especially in today’s market, where valuations of tech companies have skyrocketed, acquisition might be out of reach for smaller banks.

“Occasionally, [the fintechs are] so expensive it’s prohibitively expensive,” Lorch said, adding that First Internet wouldn’t rule out an acquisition if the price was right.

With assets of just over $4 billion, she said, First Internet is one of the biggest banks to have jumped into the BaaS model.

The bank is currently working on forming partnerships with three different fintechs, two of which were discovered through Synctera. Lorch declined to name those companies because First Internet is still doing due diligence and hasn’t finalized the deals.

“We carefully track how we bring these partners on board,” Lorch said.

But in a recent interview with the American Banker publication, First Internet CEO David Becker broadly described two of those three potential partners: One offers workers a way to access their pay at the end of each working day rather than waiting until payday; the other works with immigrants who work in high-paying tech jobs but don’t have a traditional credit score.

Lorch said two of the pending fintech deals are expected to close by the end of this quarter, with the third closing by the end of the second quarter.

Once these partnerships are in place, First Internet will charge fintechs for the services it provides to them. The bank will then share part of this income with the matchmaker Synctera.

The arrangement offers a few benefits for First Internet, Lorch said. Not only will the bank earn non-interest income from the fees it charges fintechs, but it’s also a way for the bank to do more business while letting fintech do the work to attract those companies.

Although Lorch said First Internet hasn’t set specific goals for how much revenue it hopes to generate from BaaS, the bank has seen success with a few previous BaaS partnerships.

In October, the bank announced a partnership with San Francisco-based ApplePie Capital, which offers a marketplace that connects franchise owners with lenders. ApplePie interacts with lenders and borrowers and handles most lending services, while First Internet handles underwriting and lending. Last year, First Internet lent $85 million through its ApplePie partnership, and the bank expects that number to grow to $150 million this year, Lorch said.

And in 2017, First Internet announced a partnership with San Francisco-based Lendeavor, a technology lender for dental and veterinary practices. Lendeavor, which now operates as Provide, was acquired by Fifth Third Bank last year and First Internet is no longer involved with the company.

Even further than that, First Internet worked with Indianapolis-based ChaCha Search Inc., the now-defunct company founded in 2006 that offered a human-powered search engine. People who did this research for ChaCha could access their pay through a ChaCha-branded debit card linked to a First Internet account.

Transformation

Ken Gavrity

Another bank active in BaaS is Cleveland-based KeyBank, which formed an internal team two years ago to pursue BaaS opportunities. To date, the bank has formed around 10 fintech partnerships, said Kenneth Gavrity, head of corporate payments at KeyBank.

In some cases, Gavrity said, KeyBank has acquired fintechs. In others, he has invested in fintechs or has fintechs as clients, or both.

KeyBank has assets of $186.3 billion, does business in 15 states, and operates 19 branches and 26 ATMs in central Indiana.

Gavrity said BaaS is a way to enable what’s called integrated banking: allowing consumers to perform financial transactions within another app or experience. Ride-sharing app Uber was an early adopter of the concept, he said, because riders could both hail a ride and pay for that ride in the same app.

In five to 10 years, Gavrity predicted, the concept will become mainstream, allowing people to seamlessly do everything from paying a dental bill to receiving an insurance claim. In some cases, consumers may know the name of the bank involved in the transaction. In other cases, they won’t.

“It will transform financial services,” Gavrity said.

Nymbus, a Jacksonville, Florida-based fintech, offers a similar vision. The company, which works with banks to help them improve their digital offerings, launched a BaaS service late last year to help banks seek out integrated banking opportunities.

Katherine Murrie, vice president of BaaS innovation at Nymbus, said she expects the current low level of BaaS participation to increase significantly within 24 months.

“It’s a bet that Nymbus is also making in the market,” Murrie said.

Gavrity sees so much opportunity in BaaS that he has predicted plenty of deals for First Internet, KeyBank and other financial institutions.

And if banks aren’t already active in this area, he warned, it would be wise to start partnering with fintechs now.

“There are going to be significant haves and have-nots in banking,” Gavrity said. “If you are not [building fintech partnerships now]you can’t catch up. »•

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How to apply for a mortgage: the process explained step by step https://smallbiz3000.com/how-to-apply-for-a-mortgage-the-process-explained-step-by-step/ Sat, 12 Feb 2022 08:01:34 +0000 https://smallbiz3000.com/how-to-apply-for-a-mortgage-the-process-explained-step-by-step/ We earn a commission for products purchased through certain links in this article. If you don’t know how to apply for a mortgage, it can seem like a daunting task. It is, after all, one of the biggest investments you are likely to make, without any experience – if this is your first time! But […]]]>
  • We earn a commission for products purchased through certain links in this article.

  • If you don’t know how to apply for a mortgage, it can seem like a daunting task. It is, after all, one of the biggest investments you are likely to make, without any experience – if this is your first time! But we’re here to reassure you, it doesn’t have to be stressful. If you know what to expect and prepare ahead of time, you’ll navigate the process easily.

    We outline the key steps in the mortgage application process, so you know what to expect.

    How to apply for a mortgage – the step by step guide

    Image credit: Future PLC/ David Giles

    1. Prepare your mortgage

    To improve your chances of getting the lowest mortgage rate and highest loan amount, put away your bank statements and credit report before you apply.

    “One tip for new buyers is to make sure you’re on the voters roll,” says Rachel Dixon, mortgage advisor at RH Dixon. “Lenders want to see where you’ve lived and what credit you’ve had in the past before making a decision” You can register online to vote.

    “Late or missed payments will hurt your credit score and affect the mortgage rate you’re offered,” says Rachel. ‘Pay your bills on time by setting up direct debits for your commitments.’

    Manage a small amount of credit to show lenders that you are good with money.

    To improve your credit score for a mortgage Try not to use your overdraft or exceed the pre-agreed limit before your mortgage application. Looks like you’re living beyond your means.

    2. Calculate your purchasing power

    To find out how much you can borrow, complete an online budget planner or ask a mortgage broker to do it for you.

    You will be asked for your:

    • Average annual salary or profit
    • Monthly debts
    • Cost of utilities, transportation, food, and socializing
    • Other regular commitments

    A budget planner gives you an estimate of your maximum loan. You can ask a lender for a more specific mortgage offer by requesting an Agreement in Principle (AIP). Your credit will be checked before getting a response.

    David Hollingworth of L&C Mortgages says: “An AIP demonstrates to the seller and estate agent that you are a serious buyer and can provide security for those who have had credit problems in the past and are concerned that they will not succeed. a lender’s credit rating. ‘

    The loan amount on the PRA is unsecured. Try our mortgage calculator to see how much you could borrow.

    3. Gather your supporting documents

    Now that you know how much you can spend, it’s time to look for a house. You can gather the documents you will need for your application at the same time.

    You will need:

    • Payslips for the last three months
    • P60
    • Bank statements for the last three months
    • ID, usually a passport or driver’s license
    • Savings proof for your deposit
    • Accounts for the last two years / SA302 forms and tax overviews if self-employed
    home office with green walls and a white desk chair and shelves

    Image credit: Future Publishing Plc/Paul Raeside

    4. Choose the right mortgage offer

    Aaron Strutt of mortgage broker Trinity Financial says a key decision for borrowers is choosing a deal that offers security or flexibility.

    “If borrowers choose a fixed rate, they know how much their mortgage payments will be for a fixed term,” he explains. “But many do not consider the heavy penalties they face if they sell or mortgage before the end of the fixed term.

    “Or you can choose a tracker mortgage that goes up and down in line with the Bank of England base rate. Although the interest rate fluctuates, there is no penalty for exiting early.

    5. Submit a complete application

    Once the seller has accepted your offer, it’s time to apply for your mortgage.

    You will need to provide a few additional details to your lender at this stage, such as the purchase price and the address of the property. Specify the amount you want to borrow, the value of your deposit and where it comes from, such as your own savings or a gift from parents.

    You’ll also need to give your solicitor’s contact details, so if you don’t already have one, it’s time to hire a firm to act for you.

    The lender will have a surveyor appraise the property to make sure it is worth what you are willing to pay.

    6. Accept your mortgage offer

    Once the lender is satisfied with all the information provided, you will receive an official mortgage offer. This is valid for three to six months.

    Once the legal work is done, your lawyer will ask the lender to send you the funds for your mortgage. Your mortgage as well as your deposit are transferred to the seller’s lawyer before the property becomes legally yours.

    Ways to Apply for a Mortgage

    If you like managing your finances online, you can apply for your mortgage on the Internet. Habito, Trussle and Mojo Mortgages are the best known online brokers.

    The in-person appointment is replaced by an online application form and mortgage offers from all mortgage lenders will be offered to you based on a computer algorithm.

    Or you can make an appointment with a traditional mortgage broker over the phone or in person. They can search the entire market for the best deal.

    If you prefer to deal with your own bank, talk to the mortgage adviser at your local branch. They will only be able to recommend the bank’s mortgage offers.

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    Using a Mortgage Refinance to Pay Off Debt https://smallbiz3000.com/using-a-mortgage-refinance-to-pay-off-debt/ Wed, 09 Feb 2022 01:00:33 +0000 https://smallbiz3000.com/using-a-mortgage-refinance-to-pay-off-debt/ Should you refinance your mortgage to consolidate your debt? As with any financial decision, you’ll want to do your research and consider all of your options. To determine if a cash-out mortgage refinance is best for you, ask yourself the following questions. Will I be eligible for a mortgage refinance? To be eligible for a […]]]>

    Should you refinance your mortgage to consolidate your debt?

    As with any financial decision, you’ll want to do your research and consider all of your options. To determine if a cash-out mortgage refinance is best for you, ask yourself the following questions.

    Will I be eligible for a mortgage refinance?

    To be eligible for a mortgage refinance, you will need to meet the following criteria:

    • A credit score above 620 (580 for VA loans)
    • At least 20% of your home equity (excluding VA loans)
    • A debt-to-income ratio (DTI) of 50% or less
    • Enough money to cover closing costs
    • proof of income

    Do I have enough equity?

    Since you will be using the equity in your home for a cash refinance, you will need to have enough money to borrow while still retaining some of the equity in the home. This is a requirement of most mortgage lenders.

    The amount of equity you leave in your home after refinancing matters because it affects your loan-to-value (LTV) ratio. Your LTV determines if you need private mortgage insurance, or PMI, which can cost you hundreds of dollars on your mortgage payment each month. If your LTV is over 80%, your lender may require you to pay for this insurance.

    Recent changes mean that you also have trouble withdrawing money if you have an LTV above 80%. In most cases, only borrowers using a VA refinance loan will be able to withdraw money with LTVs above 80%. Indeed, the VA loan program allows qualified borrowers to use the equity in their home even if it is less than 20%. For VA loans specifically, you can cash out all of your existing equity if your credit score is 680 or better. Otherwise, you must have an LTV not exceeding 90%.

    To see how a cash-out refinance might affect your LTV, follow the formulas below to calculate your numbers and compare.

    To calculate your LTV before refinancing, divide your loan balance by the appraised value of your property. The formula looks like this:

    Loan Balance / Appraised Property Value = LTV

    Let’s say your home is worth $200,000 and your loan balance is $140,000. Your LTV would be 70%.

    Property value = $200,000

    Loan balance = $140,000

    140,000 / 200,000 = 0.70

    To determine your LTV amount with a cash refinance, simply add the amount of equity you wish to borrow to your current loan balance, then divide it by the appraised value of your property. The formula looks like this:

    (Borrowed Equity + Current Loan Balance) / Appraised Property Value = LTV

    Using the example above, we’ll add the $16,000 you would borrow to pay off your credit card debt. Your new loan balance would be $156,000 and your new LTV after your withdrawal rollover would be 78%.

    Property value = $200,000

    Loan balance = $140,000

    Cash out amount borrowed = $16,000

    New loan balance – $156,000

    156,000 / 200,000 = 0.78

    With an LTV of 78%, you can refinance in cash with enough equity remaining to avoid PMI.

    Use this formula to calculate what your LTV would be after a refinance. If it’s over 80%, you might want to seriously consider whether removing that capital would give you enough money to meet your goals.

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    I’m a Mortgage Expert and Here Are 10 Bad Habits That Could Stop You From Buying a Home https://smallbiz3000.com/im-a-mortgage-expert-and-here-are-10-bad-habits-that-could-stop-you-from-buying-a-home/ Thu, 03 Feb 2022 15:43:00 +0000 https://smallbiz3000.com/im-a-mortgage-expert-and-here-are-10-bad-habits-that-could-stop-you-from-buying-a-home/ 10 bad spending habits that budding buyers might not know that could actually be keeping you from buying a home, a mortgage expert has revealed. If you’re applying for a mortgage, chances are you’ll need to provide at least three months of bank statements, possibly six. 1 A mortgage expert revealed the 10 bad habits […]]]>

    10 bad spending habits that budding buyers might not know that could actually be keeping you from buying a home, a mortgage expert has revealed.

    If you’re applying for a mortgage, chances are you’ll need to provide at least three months of bank statements, possibly six.

    1

    A mortgage expert revealed the 10 bad habits to avoid

    But you might not know that some of the things you spend money on are actually “red flags” for lenders.

    Whether it’s playing bingo or making payments to friends with jokes or rude referrals, you could be ruining your chances of getting a loan, according to Gerard Boon, partner at mortgage broker Boon Brokers.

    With six years of experience in the mortgage business, Mr. Boon reveals 10 bad spending habits you need to avoid now – or risk having your application turned down.

    It comes as Britons are still desperate to buy their own home, with growing demand driving up prices.

    The latest figures show the average house price was £270,708 in November 2021, 10% higher than the previous year.

    The price increases were driven by a large shortage of homes on the market, which means buyers are battling it out in bidding wars across the country.

    But even if you’ve beaten rival bidders and a bid is in the bag, make sure you don’t fall at the last hurdle when closing your mortgage deal – here Mr Boon explains why.

    Work for a family business

    If you work for a family business, keep in mind that lenders might dig deeper into your situation.

    “Lenders may be nervous that the family used the relationship solely for the purpose of being able to take out a mortgage,” Boon said.

    This might make them nervous about agreeing to lend you money on this basis.

    Rude references or jokes in payments

    Although forwarding to friends and family may seem harmless, it could hamper your chances of getting a loan approved.

    Making a joke about illegal activities or putting a bad word in payments to friends and family is unlikely to impress lenders who scan your statements.

    “Using ‘funny’ references that could be misinterpreted may mean a lender needs to investigate further,” Boon said.

    This could mean that your application is blocked or even rejected.

    The Sun has reported instances where clients have been denied loans due to inappropriate jokes like this.

    Luxury Splashes

    While it’s tempting to get busy and indulge, your lender may be hesitant to accept a loan if you overdo it.

    Mr Boon said most wouldn’t be too worried if you could afford expensive purchases.

    But splurging beyond your means — or doing it while you’re in debt — could be cause for concern.

    “Lenders will be concerned if they feel the expenses are out of control and beyond what they would expect based on the applicant’s income,” Boon said.

    Lots of PayPal transactions

    You can pay, send and accept money using PayPal.

    But you may not know that using it frequently could prevent you from getting a mortgage down the line.

    “While PayPal transactions themselves aren’t a problem, as it’s not always clear who is being paid, having a lot of vague PayPal transactions can raise concerns,” Gerard said.

    Use buy now, pay later

    If you use a Buy Now, Pay Later service, this will appear on your bank statement.

    But be aware that some lenders may want to dig deeper into why you’re using it to pay for goods.

    They’ll want to see if you’re using it because you don’t have the money to pay for your purchases all at once – that could be a problem for your app.

    “Buy now, pay later can signal to a lender that you are unable to prepay for common items or that you are buying things beyond your means,” Boon said.

    He added that the same goes for catalog payments – where you spread payments for goods purchased from a retailer over weekly or monthly installments.

    play bingo

    You may not know that playing bingo can be a red flag for mortgage lenders.

    “Gambling once in a while for fun with friends won’t be a problem, but a regular habit with larger sums would be classified as gambling, which can raise a red flag,” Boon said.

    The same enemies to make regular payments on gambling sites or online casinos, which also appear on your bank statement.

    This could be seen as risky spending behavior that lenders will be wary of – and it could mean you lose out on a home purchase.

    Multiple store cards

    A store card works like a credit card, but you can only use it at the store or retailer where you applied for the card.

    Interest rates for these are generally higher than for a credit card, according to Money Helper, and you’ll be charged interest if you don’t repay in full.

    “Store cards by themselves aren’t a problem, but if you’re struggling to pay off the balance each month, given their notoriously high interest rate, that could be a warning sign for the lender. “, Mr. Boon said.

    Frequent payments to unknown third parties

    If an unknown third party is involved in the transactions, this could worry lenders.

    This means that someone other than the payer and the beneficiary is involved in a payment.

    This could arouse the suspicions of lenders, since they do not know who is involved in these transactions and why they are carried out.

    “There are many obvious reasons for making frequent third-party payments – but where possible it is best to clarify the reason to minimize any risk of a red flag,” Mr Boon said.

    Cashier work

    If cash is the primary payment method, be aware that this could affect your mortgage application.

    Some lenders may refuse your application because of this – although many Brits still get paid this way.

    For example, if you hire private clients as a housekeeper, dog walker or tutor, you could be paid cash.

    But lenders might not see cash on hand as “stable, reliable and legitimate income”, Mr Boon said – and that might mean you get a no to your application.

    Recently issued credit cards

    If you recently took out a credit card, be prepared for your lender to ask questions.

    This could be interpreted as a sign that you don’t have enough money to cover your expenses or that you might be in financial trouble.

    This could make you a risk to lend to.

    It could also hurt your credit score, which is what all lenders look at when deciding whether or not to lend you money.

    Interest rates have risen to 0.5%, adding £700 a year to the mortgages of two million homeowners.

    And here’s what rising interest rates mean for your mortgage.

    Another mortgage expert explains if you need to pay off your mortgage early.

    We pay for your stories!

    Do you have a story for The Sun Online Money team?

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    5 Ways Millennials Can Use a Personal Loan to Meet Their Financial Needs https://smallbiz3000.com/5-ways-millennials-can-use-a-personal-loan-to-meet-their-financial-needs/ Fri, 28 Jan 2022 06:39:00 +0000 https://smallbiz3000.com/5-ways-millennials-can-use-a-personal-loan-to-meet-their-financial-needs/ Changing times also lead to changes in spending as well as borrowing habits. The financial preferences of millennials are very different and interesting compared to older generations. India’s budding working generation is increasingly opting for personal loans to fund their travel plans or purchase expensive consumer durables. According to a 2020 report from credit bureau […]]]>
    Changing times also lead to changes in spending as well as borrowing habits. The financial preferences of millennials are very different and interesting compared to older generations. India’s budding working generation is increasingly opting for personal loans to fund their travel plans or purchase expensive consumer durables. According to a 2020 report from credit bureau CRIF High Mark, millennials and younger borrowers between the ages of 18 and 30 are primarily driving demand for personal loans. Their share of personal loan applicants has risen from 27% to 41% over the past two years.

    The younger generation understands that personal loans are one of the best ways to get funds for any unexpected expense like medical emergency or even planned expenses like weddings. Plus, getting a personal loan is quick and easy, especially if you have your paperwork in order and a good credit history.

    Decide on the loan amount
    Securing the right loan amount is essential, which will make it easier for you as the borrower to repay the loan. Therefore, the first step is to calculate your probable EMI using this
    EMI Personal Loan Calculator
    . You just need to enter a few details to perform certain permutations and combinations to arrive at the right loan amount for yourself.

    Once you have decided on the loan amount, you can apply for a loan via Net Banking on the Kotak Mahindra Bank website, at an ATM or by visiting a branch near you. Then there are also pre-approved personal loans for existing bank customers that can be availed within minutes.

    Since personal loans are unsecured loans, you do not need to post collateral or collateral. The bank will look at your income and expenses, employment details and credit score to understand your repayment capabilities and sanction an amount accordingly.

    Here are the five situations in which a personal loan can be practical for your needs.

    say your wishes

    Your wedding is one of the most eventful days of your life. The commemoration of this personal step calls for great festivities. However, this could require you to incur significant overhead in terms of fare, decoration, accommodation, food, clothing and jewelry, and more depending on how lavish you want the celebration to be. Get a quick
    wedding loan
    may be a better option instead of disrupting long-term savings that you have reserved for other financial goals.

    Improve lifestyle

    Whether it’s vital repairs or renovations to your home, whether it’s for festivals, other celebrations or just to pamper your soul, a personal loan can be a practical choice. It can also be useful when you want to upgrade to the latest smartphone or trade in an old laptop for the latest version on the market. Along with these discretionary lifestyle expenses, there may also be critical lifestyle needs like purchasing or upgrading household appliances like a refrigerator, washing machine, or air conditioner. Taking out a personal loan and repaying in easy EMI is a more convenient option than spending the income for an entire month all at once.

    To pay medical expenses

    Let’s admit that the collective medical policy offered by companies is often not enough and that medical expenses are increasing every day. To top it off, COVID-19 and its comorbidities have made doctor visits much more frequent and expensive. If you find yourself in a medical crisis and you or someone close to you needs hospitalization, you can use a personal loan as a medical loan to pay the bills. The repayment can occur over a period of time in easy installments.

    Get a high value loan without any restrictions

    Emergency doesn’t come with a warning, and when faced with an urgent, unforeseen expense, you have two options: dip into your bad weather funds or take out an emergency loan. If you choose the former, you may run out of money and need more. However, this risk can be mitigated when you take out an emergency loan. Depending on your eligibility and credit profile, you can access high value loan amount with this option. Moreover, emergency loans have no constraints on how you consume them. You can use these funds to meet any kind of expenses.

    To satisfy your wanderlust

    Whether it’s a spontaneous weekend getaway at a mountain resort or a well-planned international expedition, travel loans can help you get the most out of your life. A recent report from
    online loan market IndiaLends revealed that there has been a 55% increase in personal loans taken out to fund travel. Of these, 85% appear to be millennials seeking personal loans ranging from Rs 30,000 to Rs 2.50,000. With options such as remote and hybrid working becoming the new normal, the line between work and leisure fades away with each passing day, and millennials are making the most of this opportunity to take a break and indulge their wanderlust.

    You can also consider a personal loan if you need to borrow for other reasons, such as consolidating various informal loans or credit card fees. Borrowing a personal loan at a relatively lower interest rate than a credit card can be a prudent choice.

    Choose the right banking partner

    A personal loan can now be applied for directly from your smartphone or from your computer, without the hassle or risk of going to a bank branch. However, be sure to avoid unregulated digital lending entities that can scam you or misuse your data in several ways. Along with usurious tariffs and fees, the hassle of dealing with unscrupulous elements can become a major stressor.

    Instead, opt for a trusted banking partner that not only offers a loan, but also transparency in loan pricing and other terms and conditions. When you opt for a personal loan from established institutions like Kotak Mahindra Bank with a rich heritage, the repayment schedule can also be tailored according to your repayment capacity, in addition to being able to apply for the loan in just a few clicks.

    With such ease and convenience at your fingertips, worrying about immediate financial needs is a thing of the past. Apply for a personal loan today!

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    Here’s how to lock in a low rate https://smallbiz3000.com/heres-how-to-lock-in-a-low-rate/ Sun, 23 Jan 2022 14:31:23 +0000 https://smallbiz3000.com/heres-how-to-lock-in-a-low-rate/ Select’s editorial team works independently to review financial products and write articles that we think our readers will find useful. We may receive a commission when you click on links to our affiliate partners’ products. Pandemic-related consumer issues began with toilet paper shortages and evolved into record house prices, leaving would-be buyers scrambling to find […]]]>

    Select’s editorial team works independently to review financial products and write articles that we think our readers will find useful. We may receive a commission when you click on links to our affiliate partners’ products.

    Pandemic-related consumer issues began with toilet paper shortages and evolved into record house prices, leaving would-be buyers scrambling to find an affordable home.

    In addition, the supply of homes for sale has reached its lowest level in five years, with only one month’s supply available according to Redfin. So if no more homes came on the market and people kept buying at the same rate, the current supply of homes would completely disappear after a month. In addition, the Federal Reserve plans to raise interest rates from historic lows several times this year.

    This leaves a bleak picture of fewer and more expensive homes available for purchase and more expensive financing. This sentiment is reflected in the January 2022 Fannie Mae National Housing Survey, where a record 26% of consumers survey think now is a good time to buy a home.

    However, there are several things consumers can do to give themselves a chance to secure a home without having to pay significant mortgage interest.

    Select details on how we got here, the current state of interest rates, and what the experts say you can do to be a competitive buyer.

    Subscribe to the Select newsletter!

    Our top picks delivered to your inbox. Shopping recommendations that help you improve your life, delivered weekly. Register here.

    How we got here and where things are heading

    As the economic shutdown took hold in March 2020, the The Federal Reserve cut interest rates to virtually zero almost overnight. In February 2020, the interest rate was around 1.5%. Two months later, it was 0.05%.

    Fed actions have contributed to a steady decline in mortgage rates, where the average 30-year mortgage rate bottomed out at 2.65% in January 2021. Since then, the average mortgage rate has climbed to 3.56% to January 21. rate before the first closings and reaching a 22-month high. And it doesn’t look like they will be slowing down, as several members of the Federal Reserve have said they are planning three interest rate hikes to combat inflation rates not seen in more than 40 years. However, no final decision has yet been made.

    Josh Westreich, branch manager at US Mortgage of New Jersey, told Select that it’s “doubtful that rates will slow until the [Federal Reserve] makes a decision.” He added that the only two factors behind the spike are “speculation and uncertainty.”

    Mortgage rates and interest rates set by the Federal Reserve are closely tied to each other. As the Fed cuts and raises interest rates, mortgage rates will generally follow. Additionally, rates tend to oscillate as the 10-year Treasury yield rises, and it is currently approaching pre-pandemic levels. But each lender may offer different rates to customers depending on their level of risk and the types of customers they decide to serve. But in this case, the banks raise their rates in anticipation that the Fed will do the same.

    And while borrowing money for a home has historically been cheap throughout the pandemic, home prices haven’t reflected that. Due to a lack of housing supply and record high mortgage rates, home prices have skyrocketed since March 2020. In the first quarter of 2020, the median home sale price was $329,000. In the third quarter of 2021, it was $404,700.

    In summary: housing has become extremely expensive and the cost of borrowing to buy a home is rising rapidly, with no signs of slowing down. So how can you guarantee a favorable interest rate in this difficult environment?

    How Consumers Can Get a Low Interest Rate

    While economic factors are beyond consumers’ control, Westreich thinks homebuyers can still improve their chances of getting a lower interest rate because mortgage rates “are determined for the most part based on two factors: credit rating and net worth/down payment.”

    He strongly advocates saving as much as possible for a down payment while simultaneously working to improve your credit score. He told Select that consumers should “repay all revolving debt to 30% of the credit limit and try not to open or close an account.” Essentially, you need to keep your credit utilization rate low and avoid opening or closing new credit cards or loans before applying for a mortgage.

    Tara Falcone, CFP and founder of Reason, the goal-oriented investing app, reiterates Westreich’s mantra, adding that consumers need to think and prepare carefully before buying.

    “It’s important to focus on the total purchase price rather than the monthly payment,” she said. It can be tempting to buy a home that you qualify for, but even if you lock in a low interest rate, being “housing poor” (meaning a majority of your income goes to paying for your home ) is not a recommended strategy.

    And like any other financial decision, Falcone recommends consumers take the time to shop around for the best interest rate.

    “Get mortgage lender recommendations from people you know and trust in your area,” Falcone said. “Talk to everyone from banks to online mortgage lenders and be sure to do your own rate research beforehand.”

    So to get the lowest possible mortgage interest rate: improve your credit score (keep your credit utilization rate low and don’t open and/or close new accounts), save for a solid down payment and shop around for the best rate.

    How to prepare for buying a house

    At the end of the line

    Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.

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