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Budgeting & Finance Guide

In our tough economy, interest rates can be our worst enemy when it comes to owning a home. It’s making it difficult for us to even afford a home and it seems as the days go by more and more home are being foreclosed on.

We all try to find ways to prevent that. Paying companies thousands of dollars to have them “modify” your home loan and lower your payments. Well stop! You are able to do it yourself and you’ll save a ton of money doing so.

First, make sure you balance your expenses and see where the problem starts. If on that sheet where you write all your expenses and your incoming income monthly and there is a huge deficit, then you need to see what you can deduct to make your expenses and income more even.

Then, give your lender a call, tell them you are interested in doing a Loan Modification and make that clear to them because some reps on the phone make the mistake and write Short Sale on the notes which is what we are not trying to do.

After you tell them what are your intentions, ask them what it is they need from you to submit your “hardship” package and where you send it in. (Remember to keep notes on all conversations with the lender, so it’s proof that you have done something in lowering your payments and also proof that you want to keep your home.)

The hardship package usually consists of: Hardship letter, financials (that’s were your income and expense sheet kicks in), two months worth of any income you have (pay stubs, profit and loss, rental agreements, child support, social security, un-employment, etc.), two years Tax Returns and W2’s and finally two months Bank Statements.

After you gather everything, type up your hardship letter and be honest, don’t just say payments are high, explain why the payments are high. Did you recently have a loss in income, family member became ill, over time hours have been cut, children started school and your income cannot support their books and tuition. Be honest and the lenders will notice that.

Now, after this is complete, submit your hardship package to the lender and make sure you keep the fax confirmation page to ensure you have submitted the documents and it went through with no errors. Now, it’s the wait time, call within 2-3 days to see if your hardship package has been received, some Lenders are over-loaded with the amount of requests that they have for “modifications” so stay calm.

If they haven’t received it within those 2-3 days give it a week or ask them, what’s their turn-around time for receiving and imaging documents into the system. From my experience, I’ve seen them get received and imaged into their systems from 2-3 days to about 1 1/2 months. So time varies with all lenders.

As soon as your documents have been imaged, ask them what’s the turn around time for completion and if a negotiator is assigned to your file. What process is it in and if it is active in review for the modification. Ask lots of questions, they may tell you, “it’s in review, no updates,” but don’t let that stop you. Keep calling at least 1-2 times a week to find out what the status is. If you don’t call as often you won’t know if they have requested additional documents and that’s what you want to keep up with.

Some lenders are strict, to the point if you don’t send in the documents they’ve requested, they will kick your file out of review and you will have to start all over. I’m not saying this process only takes 1 month to 2 months, this is a long process (unlike online payday loans that are approved in less than 3 minutes), so you should stay dedicated. I’ve seen some loans get modified in 3 months and some in 9 months. So stay calm and just remember to stay focus and keep up to date on calling your file.

When the negotiator or investor has come up with a solution, they will either tell you your file has been denied or approved. If approved, as for the terms and the length of which your new interest rate will take place. Ask for the documents you need to submit and when your new payment will be. Remember, when approved they give you a certain time to gather what ever information they have requested.

If not submitted that can mean automatic denial of a application, because they would consider the file to be “incomplete.” If denied, don’t stop there! Try it again, find out why your file was denied. What reason, there is always a reason. If they don’t tell you, ask to speak with a supervisor or the negotiator that was handling your file. Don’t give up, just resubmit with updated documents and try again.

This is time consuming, hectic and stressful, but in the end, if you stick with it and don’t give up, you’ll be rewarded with lower payments, lower interest rate and possibly a principal reduction! Just give it a try yourself and don’t spend thousands on others to do work you can do yourself!

home loan modification

1. Decide what you are asking for; a forbearance, a deed in lieu, an actual modification, etc. Go to the following website to see if your lender is participating in the Federal HAMP program.

If so, download an application from the website. If not, call your lender to find out if they have an in house loan modification dept.

2. Call your lender. Be ready for the person you are talking to tell you that you don’t qualify for any programs. Then apply anyway. I was asked the initial screening questions by my lender (just someone answering the phone in the loss mitigation dept) and told I would not qualify. I subsequently applied for and got the modification!

3. Be creative with the solutions you think will help your situation. Your lender is limited to what they can offer, but it doesn’t hurt to ask. For example, I asked for a lower interest rate, a principal reduction, a term extension from 30 years to 50 years, and asked them to bring my property taxes current. I got the lower rate, extended-term and they wrapped my overdue taxes into my total loan.

4. Find out who the head of the dept is, then try to get their direct ext and email. They may still farm your package to one of the underlings, but you will have someone to follow up with if you don’t get timely responses.

5. Be nice, even if they aren’t. It makes all the difference. Make them want to help you. They have many files on their desk. If you are a jerk, guess what, your file never seems to reach the top of the pile. They are frustrated too.

6. Be persistent. Treat this as a second job. You must follow up regularly. Make the calls and respond to requests for information. This is a reason that many modifications are turned down. The lender simply did not receive (or lost) the requested information from the borrower and /or the borrower won’t respond.

7. Supply requested information whenever it is requested no matter how many times you have already submitted it. Submit it in the manner they request, whether it be the fax, email, certified snail mail, whatever. I always made sure to fax in the info AND sent a set of the requested items certified mail, return receipt requested so I had a date received and a signature. This may seem over the top, but I had to submit the same set of tax returns three times because the lender said they didn’t receive it! I then followed up with a phone call to make sure the person requesting the items received them.

8. Take care to thoughtfully compose your hardship letter. It is a human being that will be reading it, and sometimes an entire committee that evaluates your situation. Make it compelling.

9. If you are turned down, consider reapplying. I was turned down twice before getting the loan modification.

10. Do not freak out if you are getting different information from various depts. Many times, the left hand does not know what the right hand is doing. You may be working on a modification with one dept, and getting threats of foreclosure from another. I did not succumb to any pressure for payments until I had an agreement in writing from my lender. If I was going to be foreclosed on, those payments would have done me no good anyway.

11. If you are not able to work out a solution for staying in the home, don’t just move out. Find out if you qualify for the many “cash for keys” programs many lenders offer. You agree to be out by an agreed-on date, leaving the property tidy and they give you cash to help with relocation and moving expenses. This can be between 3k and 5k depending on the lender and the state.

The awareness of Loan Against Property is getting increasingly high among the people.

However, as with everything noble, there are challenges on the part of the LAP. We shall be taking a closer look at the Do’s and Don’ts that are involved in LAP.

Here we go:

Non Residential Buildings

It is not the best of times for LAP because of the gradual drift away from the norm. The inclusion of non-residential buildings in the consideration for LAP is not helping matters.

The stats globally go to show that increasing trend in accepting unoccupied residential properties is gradually turning the apple cart in the negative direction. When it comes to selling properties in this category, there are poor returns in terms of sales.

The Percentage To Borrowers

LAP is one easy and quick way to raise the desired cash needed to achieve dreams. It deals with the ownership of landed property. Where an applicant can prove the ownership of a property and he is above the age of 25 and not more than age 70, such will qualify to apply for this loan in question.

It should be noted that the value that you get out of the loan deal will not exceed 60-65% of the property put on loan.  If the property falls in the category where the borrower is already paying a housing loan, there might be a possible rise in value.

What Happens In Joint Ownership?

If the property is joint ownership, then every stakeholder involved in the investment will be required to put pen on paper. In this case, we shall be talking about joint ownership.

The lending bank will insist on all the joint owners to sign a joint ownership form before the loan can be granted. There is no way for a single party to sign away any part of the property in LAP without the joint agreement of all the parties involved.

The Craze For Balance Transfers

We talked about the uneasy time that is sweeping across this sector; it can be blamed on the attitude of most of the borrowers.

In an attempt to cut corners, the majority of the borrowers are looking in the direction of balance transfers in their bid to get higher loan amounts.

The rush in this direction can be attributed to the stress that has come upon the sector according to Manavjeet Singh who is the chief executive officer and founder of Rubique- an online marketplace dealing in financial products.

He went further to say: “There are a lot of balance transfers, as borrowers look for cheaper rates and higher loan amounts. They can get these due to the high competition.

The stress, then, begins to show when property prices remain stagnant or come down”.

This is a glaring don’t in the sector.

Loans Not Used For Productive Purposes

The stats show an increase in property prices in the real estate sector over the past decade.

As for small businesses, about 40% of their capital expenditure can be financed through LAP. The missing link is the fact that the loan is not used for the specific purpose of financing the small business in the first place.

When this happens, the money will not come back to the system and the result of this is an inability to meet up with the payment schedule of the loan.

But if the money is plowed back into the system, the results will rob positively on the small business and loan re-payment and business growth will move on together in a positive direction.

The Role Of The Legal/Technical Team

You can get a loan against any property that appears in your name. For the benefits of the doubt, the lender’s legal team will come in to very if the papers you presented in your claim of ownership is real.

Upon their nod of approval, the technical team from the lender will come in to evaluate the actual worth of the property.

All the technical details will be looked into and it is when the property gets their nod of approval as healthy enough that you can move to the next stage of the loan process. In most cases, the business has to show proof of excellent performances for a period between 7-10 years.

There should be proof that the business can generate enough interest to service the repayment of the loan. The legality and marketability of the property will be tested by the lender’s lawyers. If they are convinced, then the loan will be sanctioned.


If things are to go on well with LAP, then the rules must be observed to the letter. The attitude of cutting corners with the sole aim of paying less should be discouraged. Loans obtained under LAP should be used for industrial purposes only to reduce stress on the line of business.

The high-interest rates and shorter tenures of other categories of loans is the reason why people are shifting their focus on Loans Against Property.

This is a loan regime that helps people get over the cash crunch with peace of mind. How it works is our focus of discussion here

The Eligibility

This loan is not for everybody out there. There is an eligibility status and if you are not up to 25 years f age, you will not be entitled to this loan offer. Further, you are expected to be either a self-employed person or a business entity before you can be given any consideration.

If you are a business entity, then the business should not be less than three years old. The property in question should belong to someone/group that fulfills the age eligibility for LAP. The combination of all the factors mentioned here should be in place before the application for the loan is considered.

The Documents Required

Now that we have settled the issue on eligibility status, it is pertinent to look in the direction of the documents that will be required before this loan is granted. A survey of the majority of the lending banks shows that the requirements are almost the same with little differences here and there.

Also, the documents do change with time and so you have to keep tabs if you want to avoid the minor issues relating to documents. You are required to present KYC, proof of income which includes income tax returns, financial projections, financial statements, and other related documents.

Business entities will be required to produce their company constitution and proof of company registration. Every document relating to the property being mortgaged will be required. The above covers the area of documentation.

What Types Of Property Are Eligible For LAP?

Let us take a look at properties that make the cut for LAP. All the three most common properties in real estate are all eligible for this loan. Industrial properties are not common, but if the owners want to expand their business line of operation, they can put in for this loan. Commercial properties are also mortgaged to avail loans. Most common here are residential properties which are often mortgaged to raise needed cash. Independent houses or buildings also fall into the categories that are eligible for a mortgage through this scenario is not very common. If you have properties that are occupied by tenants, in so much as you can show proof of ownership, it will qualify for LAP.

What Are The Advantages Of LAP?

Let us go into the glaring advantage of LAP over other sources of loans. The amount that you are going to get through this approach is on the high side. If you target the time that the real estate sector on the high, you will get a huge amount because what you get is a reflection of the property that you put up for sale.

The interest rates are pretty low. You are going to get something in the range of 9-12% interest as against personal loans that charge between 16-20%. Another strong factor going for LAP is the fact that it covers all the properties that you can think of in real estate.

Even an undeveloped piece of landed property can be used to get this loan. When it comes to payment options, it has multiple approaches that you can easily fall to when repaying the loan. The final icing on the cake is the long payment period for this loan. Most of the banks allow a minimum of 15 years to repay the loan; some go as far as granting a 25 years period to repay the loan.

How Can You Best Utilize LAP?

One of the best ways to utilize LAP is when you take it for business purposes because of the flexibility that comes with the loan. When you mortgage your factory or industrial land; you can use the loan to develop other areas of business. LAP can be used to offset multiple unsecured debts with a single debt portfolio and at a lower interest rate.

The numbers are easily simplified and the costs brought down from the rooftop. It is an effective way to do away with LSR which is not reliable. The amount you get with LAP is higher; you will not need to worry about regular payments by tenants; with LAP, the EMI is flexible and the interest rates are lower with LAP.


LAP is a way to achieve the goal of getting the needed cash without much stress. Simply go through the steps that we have mentioned above and ensure that you have everything tidied up in terms of all the requirements. The loan will pass through all the stages without hitch and the cash will roll into your account.


If you are faced with the challenge of finances without any reserve to fall back on, then you will be left with no option than to seek help outside your domain. This is where Loan Against Property comes into the picture. Find below all the details that you need to know about this loan.

High Interest Rates

You might want to know why you should risk putting up your home as collateral for a loan while you can take other means of getting the loan; the interest rates charged on other loans as against what obtains through Loan Against Property is one of the major reasons why people take to this form of a loan agreement.

With a cheaper interest rate and the fact that you can put up the house whether you are occupying it or it is under a lease agreement makes this option viable to many borrowers.

The Property That Qualifies For LAP

We should answer the question on the real estate property that qualifies for a LAP. If you can show proof of a house, commercial property, or a piece of landed property; then you are good to go in applying for a LAP. Where the ownership of the property extends beyond a single individual, then all the stakeholders are expected to jointly apply for the loan.

Evaluation Of The Property

When an application is received for LAP, an appraisal of the property will be undertaken by the lending institution through the representative that will be sent to see things for themselves. Only a specific amount of the property’s market value will be sanctioned, it usually ranges from between 40-60%.

Before they arrive at a final figure on the property, the age of the property, as well as the overall condition of it, are taken into account before the release of the final figure. If you want to avoid failure at this stage, then the property should be free from any previous lien and such property should be owned completely by the applicant or applicants if it is joint ownership.

Eligibility Criteria

The criteria for eligibility for LAP loan varies from one bank to the other. Generally, the following are the considerations that are common to most of the banks when they want to consider the loan: your repayment track record (for credit cards, previous loans and the rest); your income, debts, savings as well as the current value of the property in question.

What factors Add Up To The Loan Amount

Aside from the considerations given above, the employment status of the lender is also a serious factor. Every bank wants to be sure that the borrow has what it takes to meet up with the repayment schedule without default. If you have proof of a steady income, then you are good to go.

Age is also a factor; those that have age on their side will be given easy consideration backed up with proof of life insurance. Above all, with a decent credit score, getting the nod of approval for the loan will be easy.

Tenure, Interest rates, EMIs

It might interest you that the repayment period for LAP loan is between 7-15 years. As for the interest rates, this is where you have to survey what obtains based on individual banks if you wanted a fair deal.

The interests vary from one bank to the other and you can expect something within the region of 9-15% per annum depending on the vendor of your choice. The EMI amount can be calculated based on your loan repayment schedule.

Documents Required

You are going to have no issues with the document requirement because it is general to virtually all the lending institutions with minor variations. However, changes do come into the requirements from time to time. What you saw last in terms of documents required might change in between; so it is best to confirm at the point of application.

Loan-to-value (LTV) ratio

The LTV differs from one lending house to the other. Therefore, survey the ratio and go for the one that is most economical among the offers on the ground. Private banks can offer up to 75% of the property value while Public Banks do offer up to 65%. Make sure you get a good deal among the options on offer.


It should be noted that LAP will not provide any tax benefits to the borrower and the interest on the loan begins immediately after the disbursement of the loan.

The processing of the loan requires a few checks by the lending house and the duration of this before final approval can be likened to what obtains in a home loan. It is one of the best ways to raise money in times when the real estate market is bullish.

A home loan is quite different from a loan against property.

The terms involved in both of them are different from each other; on account of that, it is not technically possible to transfer loan against property to a home loan. We shall be discussing how you can technically achieve this shortly.

What You Should Know Between The Two

There is a thin line of difference between the two and it will help our clear understanding if we iron out the difference between the two.

When you take a when you apply for a home loan, the intention is strictly to purchase a home that you want to call your own. It is referred to as a mortgage loan because the house that you are taking over will be used as the collateral for the loan.

You can only use this type of loan for the singular purpose of owning your own home.

On the contrary, when you apply for a loan against property, it is also a mortgage loan but this time around; the loan is borrowed against the house that you already owned. Can we spot the difference? In the first place, the goal is to own a home while you are already a homeowner in the second instance.

The Purpose Of The Loan

We shall take a look at another factor why it is not possible to convert this loan one from the other. In the case of a home loan, it can be used strictly to own your home.

But when we consider what is obtained in loan against property, it can be used for any profitable venture under the sun by the lender. In essence, there is a gulf between the two when we take into account the purposes for which each of the loans can be used for.

The Interest Rates

Another reason why it is not possible to convert one from the other has to do with the interest rates that are applicable between the two. The interest of a home loan is far less when compared with what obtains in loan against property.

There are various reasons for this, first of it is the policy of the government geared towards providing affordable homes for all in the society. As for loan against property, individuals go for this when they are in dire need of finances. This is one of the reasons why the interests on the loan are higher.

The Risks Involved

Another reason why it is not easy to convert easily from one to the other is the risks involved in both loan requirements.

The risks on home loans are by far less than what is obtained in loan against the property because, with a home loan, the home will act as collateral. With the home loan, you are not yet in full possession of the property, so extra care is usually taken towards ensuring that there are no defaults in payments.

Even if the customer is willing to forgo his property in a loan against property, it will be hard for the bank to make an easy sale of the property.

Repayment Tenure

The repayment method is another factor that makes it impossible to easily convert from one schedule to the other. With the home loan, there is a longer repayment period compared to Home Against Property. This factor is considered as a great contributor to the reasons why it is impossible to easily convert one to the other.

Balance Transfer

Every borrower likes to minimize the costs and maximize the profits. If you feel the interests that you are paying on the loan are rather on the high side, then you can switch from one bank to the other that promises a lower interest rate.

For you to make such transfers however, banks will require that you have a minimum balance in your account to effect such a transfer. Your repayment method should be clean for the existing loan to be able to effectively carry out the transfer.

The bank will also want to look at positives from your Credit Card before they can give you the benefits of doubt. With the conditions in place, it will be possible to carry out a balance transfer.

The Foreclosure Charges

This is a factor that you have to put into consideration before you affect the balance transfer. It will amount to no effect if you are on a salary scale.

But where you are self-employed, make sure you understand the charges before making the balance transfer if you want to be on the safe side of the divide.


The loan for home and Loan Against Property are two different things entirely.

You cannot move from one to the other because of the different risks involved and the different interest rates. However, you can make do with a balance transfer from one bank to the other.

Every business out there requires survival.

When a business owner puts in for a loan and such is rejected, the disappointment that comes with it is better imagined than experienced. We are going to dwell on strategies that will ensure successful loan applications for every business loan.

Business Plan

No bank will risk putting their money where there is no proof of a serious business plan of action. Before you approach any of the banks, make sure that you have your business plan in place which must include a summary of your company, the product, your market, team, as well as your finances. Get all the factors listed tidied and be prepared to answer questions bothering on them from the bank officials.

Your Business Financial Details

Another area of interest where the banks will ask likely questions is about your financial details.

They will want to know about your credit score.

The majority of the banks have a limit and if your credit score is below that, the business loan will not be given. It is best to know the required credit score limit and make sure that you are up to it before you put in your loan application.

The details of your debt profile and performance in past loans will also be verified. Details on your bank accounts, investment accounts, credit card accounts will also be demanded.

Complete details on Accounts Receivable/Payable

Questions will be asked on your sales and credit history. Banks will want to know whether your firm can fulfill the weekly or monthly repayment schedules. You are expected to know what your accounts receivables are. Credit references will also be demanded who will vouch for your ability to repay the loans on schedule. This is a condition that must be fulfilled to get the confidence of the lender.

Your Financial Statement

Get your balance sheet ready. It will include all the details on your complete details on Accounts Receivable. The banks are not interested in the past glory of any company; they will show particular interest in your latest balance sheet. The profit and loss statement of your company will be required for at least three years.

If your company is not up to three years, then your credit score must be high enough as well as assets that you can put up as collateral to be given any consideration.

If your business is the one classified as big, then questions will be asked about your audited account. It will cost you some few thousand dollars to have the CPA go over your account and put their seal of accuracy on it. The good thing here is the fact that banks care more about the assets that they can see through your portfolio in their consideration for the loan.

Your Financial Details

You must be prepared to divulge all your financial details before the loan can be granted. Everything relating to your assets and liabilities will be scrutinized.

Think of the following areas: your social security numbers, net worth, the details on your assets and liabilities which include your home, credit card accounts, auto loans, mortgages, vehicles, investment accounts, and several others will be demanded before the loan is given.

If the business is into a partnership, then all the details stated above of the major shareholders will be demanded. All the details above are part of what is called the personal guarantee that the banks will demand.

Insurance information

If your business is a new organization that depends on key founders; then insurance on all such founders will be demanded to minimize the risks on the part of the lender.

In the unfortunate event of the death of any of the founders, the banks will want proof that they will not lose out completely through the provision of insurance on all the founders. The fine print of such insurance will direct the death payment to go to the banks first and they will, in turn, settle their loan.

The Agreement On Future Ratios

If you are taking the loan from a commercial bank, then you should be prepared for what is called loan covenants where the company keeps some key ratios within some certain defined limits. Your finances should not fall below the levels in the future; if that be the case, you are technically liable of default.


We are bringing this at the rear; it is a must for any business that wants to secure the loan from any bank. You will be required to present hard assets that will be used to back up your loan request.


The above are all the banks will demand from any borrower for business purposes. If you are prepared in all the areas stated above, getting the loan for your company will be like a stroll in the park. Answers to all the questions will receive the needed nod with adequate preparations.

An annual review of your life insurance policy is incredibly important to ensure that you are covered in the case of a catastrophic event.

Performing regular reviews of your life insurance coverage will ensure that your beneficiaries are always covered.

You can ensure that you have adequate coverage to meet your needs and lifestyle.