Tag Archives: borrowers

Low Income Loans – easy low rate loan for deprived people

November 8, 2017   Home Mortgage

There are numbers of people who do not earn enough to provide for buying necessities to have even minimum standards of life. Such people fall under the category of low income. But these people also get loans thanks to many sources in these days available to them. Low income loans are what they can relay on for meeting their expenses. Through low income loans they can even buy a home, a car, clear past debts, go for a holiday tour etc.

Low income loans are meant for those who have a very low or low to moderate incomes. Income is defined usually on the basis of area median income. If the borrower’s income is 50 percent of area median income then it is very low while 50 to 80 percent is low income. Those people who are without sufficient housing but are in a position of making housing payments including principal amount, interest on it, taxes and insurance, are eligible for low income loans.

Low income loans can be availed from governmental sources with ease or there are private lenders who are willing to provide financial assistance to such borrowers. Low income loans provided by government bodies or subsidiaries are easier and take especial care of the personal circumstances of such borrowers. For instance, if a low income earner wants to buy a home, he has many options in taking loan from government through programs like Freddie Mac and Fannie Mae, Federal Housing Authority, Veteran’s Administration Home Loans, Rural Housing Authority and many other state sponsored programs.

Then there are many private lenders who are providing low income loans at cheap rate of interest keeping typical personal circumstances of these people. These loans providers can be located on internet. In offering low income loans these lenders are also ready to relax conditions and therefore even bad credit borrowers are able to take the loans easily. The loan thus gives opportunity in improving credit score of low income earners.

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504: the SBA’s Shining Star (Page 1 of 2)

November 5, 2017   Home Mortgage

The U.S. Small Business Ad-ministration’s (SBA) loan programs have garnered much criticism over the years. Some complaints may have been warranted in the past, but these days, the SBA is different.

Increased accountability and newly implemented efficiencies are a terrific development for U.S. taxpayers and for America’s small-business owners. As we see these changes, I think industry members should work to remove the stigma that exists about certain SBA loans.

Many entrepreneurs — and far too many brokers, ironically — dismiss the SBA because of its more well-known 7(a) lending program. This program is most often in the news and nearly always seems to be in crisis or in need of supplemental appropriations. Whether or not the 7(a)’s reputation is deserved, its negative attention has managed to tarnish other effective and lesser-known SBA programs. But 7(a)’s parameters do not apply to all SBA programs, despite some brokers thinking otherwise.

In my opinion, the SBA deserves its budget — more than $22 billion — because of one program: the SBA 504 loan program. It is for small-business owners who want to acquire or construct their own facilities. Despite fallacies surrounding it and the SBA, this little-used program can be an important tool.

The 504 program provides small-business owners with 90 percent loan-to-cost financing for most commercial real estate projects. These loans are structured with a conventional mortgage for 50 percent of the total project cost, combined with a government-guaranteed bond for 40 percent. The remaining 10 percent is the borrowers’ equity and is usually half as much as traditional lenders require. This lowers the risk for small-business owners as opposed to lowering the lender’s risk profile with more capital injected into the real estate.

These loans are meant to finance total project costs. The first mortgage is typically a fully amortizing 25-year term at market rates, while the second mortgage is a 20-year term but with the interest rate fixed for the entire term at below-market rates. For small-business owners, these loans and terms can provide the highest cash-on-cash return available in the commercial-mortgage industry. Still, myths about it exist.

Myth No. 1: SBA loans take too long The SBA is aware of small-business owners’ time and of how busy they are. Its certified development companies (the SBA’s representatives on these loans) now move quickly. They often can examine borrowers’ underwriting documents in only 48 hours. Once lenders scan their borrowers’ documents, they can actually “drag and drop” them onto some of the certified development company’s or SBA’s secure servers. This technological innovation saves the time of doing overnight mail and is a huge improvement in the slow-adapting commercial-mortgage industry. If an SBA loan’s approval process takes more time than this, it may be that a particular lender is holding it up.

Myth No. 2: SBA loans have too much paperwork There have been great efforts to streamline the overall application process. In some cases, they can nearly match the paperwork of what any ordinary 80 percent loan-to-value conventional commercial lender would need to approve a loan. Some borrowers find this paperwork is far less than what they had to complete when they refinanced their home loan. Specialized commercial lenders have helped this along, too.

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