Business and Investment Center

Running a business can involve many sacrifices for families and individuals in order to achieve their dreams of financial stability and freedom from the daily grind of being an employee. Many businesses run themselves while others take an often insurmountable amount of time to get the ball rolling well enough to sustain revenue. In many cases, it can take years for a business to make money and it is often impossible to survive during the lean years. Credit cards and loans from friends and family only go so far and after a certain amount of time; we have to turn to financial professionals to get some help. Banks and credit unions are good choices for many reasons. They offer great interest rates as well as top-notch customer service. Because they check credit and often require collateral of some sort, they can offer cheaper loan products than other, non-traditional financial institutions as their overall risk is less and their cost to borrow the funds is quite a bit less as well.

If bank loans are not an option due to time frame constraints or credit issues, business owners can turn to merchant cash advances for quick and easy funding options. While not a loan technically, merchant cash advance companies can provide a business that accepts credit cards with money as a payment for future earnings. These types of advances come at a cost, of course, and business owners must weigh that cost against their need for money. If they can avoid them, they can save quite a bit, but there are situations when it is imperative to sell the future earnings or go under. In those cases, the cost is inconsequential, but a way to stay and business and get through a tough period. When the money is paid back for the advance, hopefully things are better and the business will not need to sell any more of its receivables.

People usually apply for a second mortgage or home equity loan when they need money for debt consolidation, to pay large expenses or for home remodeling and home improvement. Second mortgages are generally categorized as fixed interest rate home equity installment loans (HELOANS) and adjustable mortgage rate home equity lines of credit (HELOCs). Which you choose depends on your needs, but the application and approval process is similar for both. These nine tips will help your loan process be as hitch-free as possible:

1. Compare options like mortgage refinancing and other loan options to determine if a second mortgage is the best choice.

2. Make sure you can tell lender what the purpose of the loan is. Your answer will help determine whether or not you are approved.

3. Check your credit report for errors and get your FICO scores (myfico.com/12) because lenders will review your FICO score to determine your loan rates. Check “How to Improve Your Credit Score” for more information on cleaning up your credit.

4. Compare several home equity loan options. Discuss the loan programs with your broker or lender and find the best loan for your situation. Getting a good interest rates isn’t a bad idea either.

5. When applying for a loan, you will get a mortgage checklist from your lender containing the list of paperwork you need to close the loan, including:
• Copy of deed to property.
• Recent tax appraisal.
• Last two years’ W-2’s, tax returns and current pay stub, or two years’ tax returns if self-employed. Be sure to include all schedules.
• Proof of income from alimony, child support, disability payments, lawsuit settlement, inheritance or other income source.
• Copies of your last 3-6 bank statements.
• List of all open credit accounts (account numbers, payment amounts, and balances).
• Your current mortgage statement.
• Homeowners insurance information (name, account number and phone number of agent).

6. Faxing documentation from the checklist will expedite the loan process more than mailing it.

7. Fill out your loan application thoroughly, or it may delay approval and loan closing.

8. Beware of bad loans. The Federal Trade Commission (FTC) warns that you may be signing into trouble if the lender encourages you to falsify your application to get the loan, urges you to borrow more than you need, pushes you into unrealistic payment terms, shows up at closing with a different loan product than you agreed to, asks you to sign blank forms, or denies you copies of documents you signed.

9. Has your mortgage application been rejected by a lender? Ask why it was rejected to find out what you need to do to secure mortgage loan approval in the future. Sometimes paying down some credit cards can increase your credit score just enough to qualify.