Banking Finance

Again about investment financing of the banks. As practice shows, long-termed financing of programs doesn’t take place spontaneously, but it means analyzing and control of current activities of the enterprises. For satisfaction of such requests, unfortunately, not every enterprise appeared to be ready. There, where all these requests are satisfied, banks become active participants in processing plans of strategy and financial provision of investment activities of the enterprises.

A special attention is required by such direction of the activities of commercial banks, as project financing is, which, to our mind, requires administration and financial support from the government, we mean the condition, that for effective salvation of investment problems it is necessary to create finance-industrial groups, and holding unions, which, in its turn, represents initial form of forming thick financial capital at the market and confluence of bank capital to the industrial one.1 This will give rise to the growth of investment volume in the economy and growth of effectiveness of capital investments. Of course, creation of such unions will be actually supported by commercial banks, but this is interrupted by such condition, that groups created today provide this activity in unregistered form and nobody is interested in their registration. This is supported by incomplete logistic, slow development rates of the institute of private property, interruptions in realization of agrarian reforms, provision of accounting calculations of financial structures in incomplete form and existence of separate statements working opposite to the creation of holding unions in the low about industry. All mentioned above may be solved immediately, by processing special low about investment activity and on the basis of its setting by the parliament in a short period of time.

It must be mentioned, that there are enough conditions for widening financial investments in the economy from the bank side because of the existence of free cash means. It is important, that these financial resources were influxed and to create a system of rational organization of purposeful usage, which must be expressed by processing of the investment policy. Here an important meaning belongs to the investment policy and correct definition of tactics.

What problems are there in front of the banks? It is also to be mentioned, that commercial banks have numbers of problems while realization of their investment activities, which prevent their normal functioning. We mean the banks, working on financing investment projects, in fact, represent only one unit in the system of private institutions. We consider following to be preventing conditions of their activities:

· Existence of marketing center of the investment projects, a coordinating organ in the country scale, which would play a function of regulator in the financial provision of the investment projecting;

· Unacceptability o the information about position of a potential borrower or investment institution;

· Refusal of creation of deposit web;

· Low level of development of the investment funds existed today;

· Absence of state investment bank, total specific organ of financing investment activity and, consequently, spontaneous distribution of the functions of investment banks working abroad under the conditions of market economics among Georgian commercial banks.

It must be also mentioned, that there are many economical factors, which may influence negatively upon realization of investment processed by the banks and nobody can define beforehand nontransiency of expected risk danger of these factors. Herewith, widening of working sphere in the investment activity of commercial banks objectively requires: giving more independence and rights to the commercial banks, growth of effectiveness of long-term investments and growth of incomes, relatively with those received from short-term financial operations, fastening of this process, ll kinds of supports from the side of the government and finally, further statement of trustfulness and firmness of the activities of banking system.

About necessities of providing structure institutional reforms in the country. For guaranteeing firmness of banking activities structure-institutional reforms, min goal of which is preparation for new stage of development of banking field, come to the first place. Necessity of the mentioned reforms is conditioned by the position of financial market of the country. New institutions, as mentioned in the works of D. Nort – the laureate of Nobel Premium, are formed in the case when the society sees the possibility of making profit, which is impossible during active institutional system. Maximal investment activities of banks are possible during many-fielded system o a financial market. This is a result of logical development of competition, as it solves problems of optimal usage of financial resources. Exactly this many-fielded character reduces and stops crisis in the country.

Many-fielded character of the banking system is characteristic to the most part of developed countries (the USA, countries of western Europe, Japan) and also for the countries having transitional economics, which applied for firm economical growth in the last decimal (China, Poland, Brazil and others). Exactly this many fielded banking system gives possibilities for using various types and forms of financial service in economics by credit department.

In this system the state creates various mechanisms of artificial reduction of competition among financial organizations. An evident example of this is separation of credit institutions into commercial and investment-credit institutions in the USA, also reduction of the bans of countries in the sphere of realization of many year credit investments and separation of state bank into separate category.

About development of small-scale business in Georgia. Creation of advantage regime for small-scaled business, in the first place, regulates creation of competition able outer conditions of the investment activity, which must be definitely foreseen in the activities of the country’s banking system. It must also be mentioned, that according to the development and improvement of the economy in the future, perhaps, such activities may not be needed, but under the conditions of transitive economics their importance may not be specially noticed. It is natural, that many-fielded financial sector is formed only under the equal conditions of competition, as there is reason-resulted, reverse-influencing relation. Mentioned relation between many-fielded financial sector and competition is expressed by that it helps creation of advantage regime for the investment activity being in the position of an embryo and its further development.

Briefly about state regulation of the investment process. According to the many-fielded principle of the financial market, the state must work out such a system of regulating investment activity, which guarantees “peaceful” coexistence of various financial institutions notwithstanding their size and specialization. Banks of every category must “act” in their marketing “sphere”, while regulation of banks of different levels from the state is stated according to the rules of regulation. Privately, to our mind, it is important to point out and regulate activity spheres of those banks, which use a capital of governmental organs. Under the conditions of many-fielded system of a financial market competition carries “fair” character and this is why such system is much firmer. Privately, in case of many-fielded system, under the conditions of concrete fight, while financing concrete state programs by forming a system of specialized state banks usage of state resources is possible more effectively. In this case objective usage of lobbing of state resources from the side of commercial banks is not allowed. For example, in Germany realization of state projects of ecological, agrarian, building and other fields are provided by specialized commercial banks. There are specialized credits in the banking system of other developed countries (Japan, Italy, France and so on) too. Such practice significantly reduces danger of incorrect usage of state resources under the conditions of competition fight.

One of the most important factors, which degrade effective development of real sector of the economy, is the irrelevance of the needed financial capital for the regional services. Basic volume of financial resources from the enterprises is accumulated in the center. Such situation is in a way justified for the state, but it is absolutely insoluble in relation with the private companies.

According to the various estimations, regional banks control not more, than 20-30% of inflow of financial resources of the regional enterprise, and this seriously degrades development of the local banks and enterprises. Thus, for solving problems about lack of resources for crediting real sector of a small economics of regional banks, question related with it, must be discussed in relation with outflow of financial resources from the region. Solving of these problems by administrative activities is impossible, processing of appropriate economical activities is needed. We mean the condition, that together with the growth of the share of local budgetary tax income, it is important to define responsibilities of the budgets of municipal creations in the development of regional economics. Thus, financial federalism is that necessary condition, which guarantees, from one side, formation of balanced market of financial service, and, from nother, further development of the investment activities on the basis of appropriate legislative base.

What does a financial federalism bring to the financial market? Creation of equal conditions for the competition under the conditions of financial federalism will naturally lead us to the formation of many-fielded system of the financial market. Such process also gives rise to the creation of thick financial centers on the basis of the existed and newly formed banks. Thus, development of regional banks within the bounds of the conception of banking industry development, gives rise to the growth of financial potential o regional economics. At the modern stage conditions of development of bank branch sphere are being widened more and more. Today banks mostly provide sources of basic financial capital inflow in the way of “region-center”, after transition to the real federalism many-fielded banks transform into the banks providing sources for financial capital outflow among the regions.

It also must be mentioned, that it is important to grow the importance of banking business, which must be expressed by forming town and country credit relations, mutual crediting and insurance societies, and loan-constructing associations. All these must be foreseen in Georgia in the process of banking system development and, accordingly, an adequate logistic must be prepared for advantage conditions for development of small and middle banking businesses, because formation of effective financial system in the regional scale is absolutely impossible. Therewith, if we take into account the fact, that the investment portfolio in the structure of joint assets of Georgian commercial banks did not overcome 1% for the first of January of 1999, and 4% for the first of January of 2005, this speaks for the tendencies of growing portfolio investments.

Attraction of foreign investments. Globalization and internationalization of the world’s industrial relations gives rise to the growth of the role of foreign investments, as financing investment activities.

Essence and types of foreign investments. Foreign investments are hose capital resources, which are taken out of one country and invest abroad in this or that industrial activity, for the purpose of making industrial profit or receiving percents. Foreign investments may be realized in various forms. While analyzing this form we can use distinguished methods of approach for classification of the investments, which men their separation from each-other according to the objects, purposes, terms of investments, forms of property on the investment resources, risks and other signs. Herewith, the necessity of specific of foreign investments defines statement of number of classification features for the investments of this type.

For example, foreign investments may be state, private and combined according to the property forms on the investment resources.

State investments are those resources of state budget, which are directed abroad by decision of the government or inter governmental organizations. These resources may have the face of state resources, credits, grants ot support.

Private (nongovernmental) investments are resources of private investors placed into those objects, which are placed out of the bounds of given country.

They call combined investments joint placement abroad of the resources of the private investors and the government.

According to the character of usage, foreign investments may be industrial and loan.

Industrial investments are direct or indirect ones placed into the business of this or that type for taking some rights for making profit of dividend kind. Loan investments are related with the distribution of resources under the loan condition, for the purpose of receiving percent.

While analyzing foreign investments, apportioning of straight, portfolio and other investments is of a great importance. Movement of foreign investments according to the international currency funds and methodology of the countries’ taxation balances are reflected in this section.

Briefly about legislative situation of the foreign investments in Georgia.  As shown in the chapters above, “investments” conceptually express long-term placement of the capital of solid quantity for the purpose of making profit. According to the Georgian low “about support and guarantees of the investment activities” investment is considered to be the valuable of every property and intellectual kind or the right, which is invested for the purpose of making possible profit and is used in the industrial activities provided on the Georgian territory. It may lean upon as inner (inside country), so outer (foreign) sources.

Here a great attention is paid to the investment surrounding (climate), which means real conditions existed in the country for the investments. It defines intensive attraction or declining foreign capital for the long-term investments. I.e. according to the concrete condition, investment surrounding may be as advantage, so in advantage, which is foreseen by every investor before making concrete step. Fundamental analyzing of the investment climate existed in the country and foreseeing risk factors are the basic goal f every investor.

Thus, it is definitely difficult to say, is present situation in Georgia good or bad. It would be more correct if we say that there are as advantage (stimulating), so preventing conditions in the country.

Foreign investments in Georgia are prevented by constitution, by the low “about support and guarantees of the investment activities” and by two-side agreement about investment encouragement and protection. Today Georgia has signed agreements with more then 23 countries about mutual support and protection and with 111 countries – about avoiding two-side taxation.

Legislative foundations and guarantees of their protection of realization of local and foreign investments in Georgia are defined by the low about guarantees and support of the investment activities, according to which foreign and local investors use equal rights. Privately, while realization of investment and industrial activities rights and guarantees of the foreign investors must not be less then those of the local juridical and physical persons.

According to the same low, physical and juridical person, also international organization, which provide investments in Georgia are considered to be the subject of the investment activity.

It must be mentioned, that after paying taxation and compulsory payments, a foreign investor gains right for unreduced repatriation abroad of the profit received from investments and other cash resources, and this may reduced only on the basis of the low – according to the court decision in case of bankrupting, crime or not fulfillment of civil obligations. Herewith, foreign investor has right to take abroad the property being under his/her property.

Georgian low “about supporting and guarantees of the investment activity”. Positive and negative sides. Georgian low “about supporting and guarantees of the investment activity” foresees as preventing and reductions in the sphere of providing investments, also the guarantee of protecting them, which means untouchable character of the investments and compensation in case of taking away investments within the bounds of the mentioned low. The compensation, which is given to the investor in case of taking investments off him/her, must conform to the real market value of the taken investments for that moment, when the taken off takes place. The compensation must be granted without any hamper and it must concern that loss of the investor from the moment of taking off till paying of the compensation mount.

It must be mentioned, that a new legislative act, which somehow worsens conditions of investments stated by this low, isn’t spread on already realized investments, ten years after its setting. In such case the investor realizes his/her activity according to the actual low until the new one is put down to the action.

A quarrel between foreign investor and state organ, if the method of its decision is not defined by dual agreement, is solved at Georgian court or in the international center of the investment quarrel. In the case, if the quarrel is not discussed in the international center of investment quarrel, the foreign investors have right to apply for the additional institute of the center or any other international arbitrageur organ, which is founded according to the rules set by the arbitrageur and international agreements of the commission of international trade low of the United Nations. Arbitrageur court of international trade palate in Georgia functions from December 11, in 2000.

According to the statistical showing, the most attractive sectors for the foreign investors were production of oil and gas, energetic, telecommunications and food industry according to the statistic showings during last years. Among largest investors there are such companies as Frontera Resources Corporation (USA), which has invested more then 30 million US dollars into Georgian oil production; Metromedia international – 40 million US dollars of investments in telecommunication; Pernod Ricard (France) – with the investments in alcohol production; AES (USA) – investments in distribution and generation of electro power.

By comparing showings we learn, that according to the hydro energetic potential, Georgia significantly overcomes such countries rich in the so-called “White Coal”, as France, Italy, Spain, Sweden, Romania and others. Though practically, less then 15% of real possibilities are used, and this gives large perspectives to the foreign investments in Georgia.

The fact is to be mentioned, that the foreign companies are interested in the process of privatization of state property, which is one of the most important part of the realized economical reform in Georgia. The fact, that foreign capital is invested in more then 100 Georgian companies proves this.

For influxing foreign capital into Georgia a positive surrounding is created by the existence of advantage conditions for development of such reduced fields, as oil production, black and colored metallurgy, separate kinds of mechanical engineering, mountain chemical industry, bottling of fresh and mineral water, production of building and decorating materials, tea, wine, fruit, citrus, wool, tobacco, industry of their refining and others.

Though foreign companies provide capital investments into these fields, for example, in agrarian and food industries, but it is provided in a very little quantity.

Factors of disadvantage surrounding in Georgia. Among those factors, which give rise to the disadvantage climate for influxing foreign investments in Georgia following are to be mentioned:

· Political strain and not quite seldom facts of lobbing business with unacceptable methods by the representatives of executive and legislative government, this takes away the basis of healthy competition as in common, so among the investors;

· Violation of the territorial integrity of the country, ethno conflicts, Not controlling of Abkhazia and South Alania (Smachablo), difficulties with protecting state boards, which spreads widely the door to contraband and prevents growth of risk factors of  influxing of as native, so foreign investments;

· From the beginning of 90s of last year, analogue to the countries of post soviet space, sharp economical, financial, energetic, food, ecological and other crises developed in Georgia for not ordinal conditions, gave rise to the backwardness of our country’s economy for some decimals. It would be enough to say, that a level of whole European product consisted only 36.8% in 1999, compared with 1991. This was the lowest showing in whole post Soviet space. Such destroying of economical functioning, evidently, reduces requests on foreign investments and significantly restricted their influxing;

For the purpose of statement of the level of spreading negative occasions mentioned above and processing appropriate recommendations World Bank and European bank of reconstruction and development provided joint research, where they learned 22 countries having transitional economics. According to these researches they made a conclusion, that a showing of “state obedience” (of corrupting, taking into hands) in these countries consists average 21%. It must be mentioned, that same showing consists 24% in Georgia. What about average level of administrative corruption, it reaches up to 3%, while in Georgia – 4.3%.Iit is natural, that created situation fears foreign investors and prevents influxing of their capital in a large quantity in our countries.

According to the experience of last years, giving state guarantees to the foreign investments is more difficult. Though, if it were easy to achieve, it would not be enough for the foundation, as Georgian state doesn’t stand on the firm positions, for making n investor sure in stability of the country. For comparing let’s discuss investment surrounding of Czech Republic, privately, that part, according to which investment logistic of the country foresees from April 1998 such scheme of advantages, which concerns taxation, custom and those of definite regions, also, grants for creation working places and so on . According to the mentioned analyze following is cleared out, that equal priorities in using advantages are given as to the foreign investors, so to the local ones. At the same time, if we pay attention to the showing of inflow of straight foreign investments into Czech Republic by years, we’ll see, that after the quantity of straight foreign investments had been reduced in 1997 (1300 billion USD) relatively to 1996 (1428 billion USD), in 1998 it was doubled and consisted 2720 billion USD, and in 1999 equaled to 5108 billion USD. One of the stimulating factors of the mentioned progress must be considered involving a system of advantages activated in Czech Republic from 1998.

Unfortunately, there is not a firm system of foreign investments and insurance yet in Georgia, which would significantly help the process of making investment surrounding healthy and inflow of a large amount of investments from abroad.

Factors preventing development of the country economy – significantly wide scales of shadow economics and corruption, so-called distribution of influence spheres by clans, setting of a barrier in this or that spheres of business especially prevent, from one side, development of local business and, from another – influxing of large-scale international investments.

How to use international legislative norms in the Georgian investment activities. Thus, a lot of problems (complex of problems) are formed in the process of attracting and using of foreign investments, and they are regulated by legislative norms.

Whole logistic regulating foreign investments may be grouped in the following way:

1.  special norms;

2.  total civil norms;

3.  norms of international agreement.

To special logistic in the first place belong special logistic and its following acts of quite large quantity.

Civil logistic regulates and conditions relations of foreign capital and enterprises participating with numerous counteragents. We mean various kinds of agreements, questions of representation, researching questions and so on. Thus, civil logistic is used in the case, when regulation of the activities of foreign investors is not provided with the special one, for its tight direction.

Norms of international agreements is the part of the country’s legislative system. International agreement gains special importance during international economical relations. Activation of the mentioned norm is basically spread on attracting and usage of foreign investments; following legislative acts belong to this sphere:

1. International dual agreement of mutual protection and encouragement of the investments. Dual agreements of foreign investments are discussed in this sphere as additional guarantees of the norms foreseen in national lows. Capital exporting countries and their investors consider that protection of foreign investment is more effectively solved in the way of inter-protection and encouragement of investments.

2.  International two-sided agreement for avoiding double taxation. Such agreement usually defines sources of income – profit and property, which is taxed in the country without any reduction. It is being set, which incomes (profit) and property may be taxed in the country – with some reductions and what source of incomes may be set free from taxations;

3. Many-sided conventions. From those international conventions, which regulate relations related with the investments, two are important – Seoul Convention about stating many-sided agencies of protecting investment guaranties (1985) and Washington Convention about solving quarrels (1965).

Involving of many-sided system of investment guarantees was outrun by creation and development of state system of insuring capital export in the developed countries.

Before making decision about placement of sources by the foreign investor, one of the important conditions is – guarantees of security and protection of capital investments in that country, where investments are inflown, the state takes obligations – to guarantee protecting of foreign property, guarantee of rights and interests of the foreign investor, guarantee privacy of realization of investment activity of the country territory. Thus, under the conditions of strict competition, state forms as much liberal regime for foreign investors as possible.

What difficulties are there in Georgia from the point of attracting foreign investments? Difficulties of definite kind are expressed today in the developing countries and, accordingly, in Georgia in the affair of attracting foreign capital and its effective usage. We my name following reasons for this:

· Regulation of the activities of foreign investors is getting difficult with the absence of stabile legislative base;

· Worsening of material position of the most part of the country population gives rise o the growth of social tension;

· There still are criminal and corruption in some sectors of industrial activities;

· Inappropriate level of infrastructure development; also of transport, communications, system of telecommunication, hotel services, roads and so on;

· High level of unsteadiness of total politics, privately, instability of logistic and court system;

· Absence of joint state investment policy in the business of attracting foreign investments;

Herewith, notwithstanding the difficulties named above, the country owns great potential, what may be the subject for interesting foreign investors. Privately:

· Rich and comparatively cheap resort and tourist resources;

· A large inner undeveloped market;

· Richest reserves of mineral and curing waters;

· Comparatively cheap qualified labor  force;

· Quite high staff of marketing development, which can master new technologies of production successfully and fast;

· Absence of serious competition by Georgian producers;

· Current process of privatization and possibilities of foreign investors in it;

· Possibility for making high profit very fast.

Thus, we can make a conclusion that, compared with the countries of Western Europe, notwithstanding large economical backwardness, Georgia can develop total investment activity comparatively faster, with the help of correct and effective usage of native and foreign investments.

Lamara Qoqiauri

Real member of the Academy of Economical Sciences of Georgia and New-York Academy of Science, Doctor of Economics, Professor

How To Owner Finance Your Home

You’ve seen the real estate ads in the classifieds section of the newspaper: “Owner Financing Available” or “Owner Will Carry”. An owner financed real estate transaction enables the buyer of the property to make payments directly to the seller.

This allows the buyer to purchase the real estate without having to apply for a mortgage from a bank or financial institution. The seller also has the option of selling the loan to an investor for cash.

Of course, there are lots of variables that work into a price offer including type of property, location, age of house, equity, is the buyer making the monthly payments, etc. These are just some of the things an investor likes to see. Investors buy all sorts of real estate notes and deeds of trust. Every house is different, every loan is different and every deal is different. Use the above list to make the loan more attractive to an investor.

ADVANTAGES OF OWNER FINANCING THE SALE

Sell Your Property For Your Desired Asking Price
A buyer may be perfectly happy to pay market value (and maybe more) for a house that requires a smaller down payment and that a bank won\’t help them finance.

Charge a Higher Interest Rate Than a Bank Would Give
By charging a higher interest rate than a bank (say 7.5 – 8.5%) you are, in effect, increasing the overall sales price of the property, and making the note more attractive for an investor.

Faster Sell
You can sell a home with owner financing a lot quicker than with bank financing and there can be tax advantages in spreading the buyer’s payments out over time (talk with an accountant about that).

Great Monthly Cash Flow Investment
Many owners simply like the idea that they can receive a monthly income and a high interest rate from a property even after they have sold it – and no longer have to worry about repairing leaky roofs or replacing dead water heaters.

Sell The Note To An Investor
A seller who owner financed the deal also has the option of selling that note to an investor for cash either right after closing or after waiting a number of months or years (give me a call or email and I can get you more information about selling your note).

DISADVANTAGES OF OWNER FINANCING THE SALE

Cash At Sale = Small Down Payment
Seller receives only a small or even no down payment.

Buyer Won’t Pay
The seller takes the risk that the buyer will not make payments and will have to be foreclosed on. (Forte Properties uses a loan sevicing company to act as an intermediary when selling Owner Financed homes in Austin Texas.)

Due-On-Sale Clause
If I owner finance my house won’t I activate the Due-On-Sale Clause in my mortgage and if I’m only getting a small down payment and monthly installments how will I pay the bank loan back?

The Due-on-Sale Clause is a provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home. It is probably the most talked about, feared and misunderstood topic in real estate.

You can also do a simultaneous closing, where a few days after the close of the house with the buyer you receive a check for the note from an investor.

If you’re going to owner finance your home and you know you want to sell the note this is a great way of doing it because the investor is there for the whole process and you don\’t have to start over again 6 months later with another appraisal, inspection, credit check, etc.

REAL ESTATE PROFESSIONALS – Providing owner financing could mean the difference in having your client sell their house quickly or having it sit on the market for months, years or not selling it at all.

Asking a seller to offer owner financing to buy their home can be a tricky proposition. Sellers often reject the suggestion of owner financing because nobody has explained the benefits or proposed owner financing as a way to sell the home. Most sellers’ knowledge is limited to traditional bank mortgages.

http://www.GreatHomesTexas.com – Austin Owner Finance Specialists

Selling a house or other Austin, TX real estate with owner financing may be unfamiliar territory for many, but anyone who plans to sell property against the current background of tough lending conditions may want to brush up on the basics.

Understanding the concept of owner financing is easy: the seller assumes the role of a bank and finances the buyer’s purchase.

The decision to provide owner financing, however, can be much more difficult; although providing owner financing could mean the difference in being able to sell a house, it could also mean a great amount of risk for the seller if the buyer eventually defaults on the loan.

As the U.S. struggles with a sluggish real estate market, owner financing presents a way for buyers and sellers to close deals that might not be possible with conventional financing.

There are some deals that just simply cannot get done (with conventional lending) because the credit markets are too tough for a particular buyer to qualify or because the type of transaction is perceived to be too risky.
There could also be a situation in which a buyer may not have sufficient capital for a down payment. Partial owner financing, in that case, can help fill in the gaps in closing a deal.

In addition, the benefits of owner financing can appeal to sellers who are trying to unload property. Closing a deal on a house, for example, may take considerably less time with owner financing than with conventional financing. While a conventional lender will scrutinize the collateral property to determine the level of risk, a seller who is already familiar with their property can form his or her own risk assessment relatively quickly.

Owner financing may also be an attractive choice for investment, potentially offering high rates of return. A seller can negotiate an interest rate that the buyer will pay them that is more favorable than would be available for other sorts of investments.

Furthermore, seller financing can provide some tax benefits by spreading out a large gain over time (check with your accountant or CPA).

If the seller structures the loan as an installment sale, there can be certain tax advantages to the seller as well in terms of the timing of recognition on the capital gain. The seller would need to discuss the details with a tax advisor.
Seller financing can be used to pay for a property either in full or in part. The terms of a full loan look similar to those of a conventional loan; however, a seller has a great deal of freedom in setting the terms, such as the interest rate and the duration of the payment period.

For instance, a seller might wish to provide owner financing as a short-term arrangement of five years, after which the borrower is expected to refinance the loan, presumably with conventional financing.

While sellers can be more flexible than banks in considering prospective buyers, they should nevertheless think like a bank when reviewing potential buyers. Examining documents and reports such as tax paperwork, proof of employment and credit history is prudent in determining a buyer’s ability to pay off the loan.

A seller who provides owner financing will need to get the mortgage recorded in accordance with the specific execution and acknowledgement requirements of the State of Texas. Sellers should also work with a title insurance company to perform a title search and purchase title insurance to secure the right priority for the mortgage.

A title insurance company can also serve as a good resource for understanding how much it will cost to record the mortgage. In Texas, the cost to record a mortgage or deed of trust is minimal, consisting of a basic administrative fee added to an amount that varies according to the number of pages.
Generally, the overall cost to seller finance will depend on how many documents are involved and how sophisticated those documents need to be. The size of the property and the intensity of due diligence procedures factor into these costs.

If it’s a simple scenario, such as a small little residential deal, it might be under a thousand bucks. If you provide seller financing for a sophisticated apartment building or strip center it can be multiple thousands of dollars. If you’re in the Austin, TX area, Forte Properties is your #1 choice for owner financed home transactions.

Documentation is perhaps the least of a seller’s worries. For most sellers, the initial decision to provide owner financing can be the most significant hurdle they encounter.

Documentation-that’s not a big deal. It’s done all the time, there are a lot of good lawyers that do it. It’s deciding to do it, and deciding on how to manage the risks inherent in providing owner financing when you’re a casual seller-that’s the biggest difficulty. Again, if you are interested in owner financing whether you are a home buyer or seller, Forte Properties in Austin, TX can help you every step of the way.

In most cases, sellers prefer to have cash instead of a promise by the buyer to pay them later. In addition, sellers who consider owner financing need to understand the risk that the buyer might not pay you in whole or in part, or might have financial distress situation arise down the road, where after a year or two the payment stream to you is disrupted by their financial distress.
Because sellers do not have the same resources as conventional lenders, financing a buyer can be even more intimidating. While banks can absorb the risk of nonpayment by spreading it across their entire loan portfolios, an individual seller isn’t typically able to do that. Furthermore, it’s more difficult for a seller to choose the best loan terms in accordance with the perceived risk/return.

There’s no science to that because you’re not a conventional lender. Because of the serious risks involved with seller financing, sellers should do their homework ahead of time and decide whether it is an option within their level of risk tolerance. Preferably, a seller should make this decision early in the process of selling a property, well before any offer is on the table.
You need to decide that up front so that you can package your materials in contemplation of what you’re willing to do relative to seller financing.
Lawyers who are familiar with financing and financial documents can be critical resources in the time preceding and immediately after making the decision to offer owner financing. A lawyer can help a seller understand the ramifications of owner financing and design the appropriate paperwork.

Sellers just need to be prepared for what happens if the deal goes south. Sellers can then adjust the language and terms in their loan documents accordingly, such as setting a higher interest rate that’s reflective of the higher risk, or requiring personal guarantees and other forms of credit enhancements.

As the popularity of owner financing has increased, the Texas Association of Realtors has witnessed an increase in the use of its promulgated “Seller Financing Addendum”. If you are considering a Austin, TX purchase involving owner financing (either as a buyer or seller), you should consult Forte Properties. They have a team of real estate professionals in various facets of the real estate market and are very familiar with the Seller Financing Addendum and all other documents required when buying or selling homes with owner financing.

When you’re buying a new car it is important to obtain the financing you need to be successful. Many of us wait until we talk with a car dealership to find that financing, but there are two ways you can actually get proper financing for your new vehicle. This article is going to discuss both ways as well as give you a few tips.

First you can obtain car financing from a bank either through the car dealership or you can already have your car financing in place before you ever get the vehicle. What you are really looking for with car financing is the best place you can possibly find to get the car financing. This means you are taking into consideration who owns the loan as well as the interest rate you are going to be paying. Many of us don’t think about it, but a stable bank is very important with the recent credit crunch we have been under even with car financing. You will even find that many of the banks are becoming harder for certain types of car financing because they are suffering now from to many unpaid debts of their customers.

So first make sure you research the bank thoroughly before signing. Then you can determine which banks are going to give you the best deal. Often times you will find that there are two or three banks who will offer you a loan, and one of those banks is going to have the better car loan deal by way of the interest payment. The interest payment is based on your risk that the bank sees. In other words how likely are you to default on the loan? This risk will be calculated and you will need to decide if the bank actually gave you a fair deal. If you are worried about the interest payment check around to some of the other banks for their current interest payments.

There are a few different kinds of loans that you can obtain through a direct loan rather than going through a car dealership. For instance you can get a loan that will actually before a mortgage, a consolidation loan, or other type of general loan to help you pay for other things besides the car. This type of loan may benefit you if there are things you need in your life. Of course it is often best to get a car loan for the interest rate and to make sure the payments are something you can handle.

You are also going to get this type of car loan if you are going through with a private sale over a car dealership. Some times car dealerships have great loans, and other times the loan or bank actually has a vested interest in the car dealership making the cost higher than this private type of loan. Researching your options is going to be the best way to confirm whether the offer has been the best or if the company is indeed trying to make a little more money off of you.

Although recent discussions using the colorful terms “Dead Banks Walking” and “Zombie Banks” contain some humor and have entertainment value, there is also a more serious and practical aspect. For most business finance funding situations, it is not likely to be in the best interest of prudent business owners to be involved with a bank which can be accurately described as a zombie bank or dead bank walking. The impact for commercial financing can be extensive because the descriptions increasingly appear to apply to a significant number of banks. If they are dealing with a dead bank walking, it should be helpful for commercial borrowers to discover their practical options for eliminating zombie banks from their working capital loan review process. For any business owner currently needing a commercial loan or working capital financing, the concept of “Dead Banks Walking” is likely to be an essential part of their decision. With a similar reference point of banks which have already gone broke, this description has been used by several sources recently. This critical but apparently accurate assessment is largely derived from a straightforward net worth approach. Such an analysis recognizes that many banks have substantial assets which are either worthless or at least worth well below the values reflected on their books, with the resulting real current value being less than the current debts of many banks. Based on the evaluation of many observers who have realistically reviewed current asset values, most of the largest banks in the United States been shown to be worth even less than Lehman Brothers (which is already in bankruptcy). Many banks have compounded their public relations nightmare by demonstrating very little common sense in how they make commercial loans and spend money. If a bank is already worthless, it certainly calls into question how businesses and commercial borrowers will benefit by the government throwing money at these “zombie banks” in the first place. The failure of most banks to increase their commercial lending to business owners after receiving government bailout funds has fueled the controversy involving bank survival. Banks who have received bailout funds appear to be determined to hoard the money in order to preserve their own solvency rather than providing commercial finance funding to commercial borrowers. This raises several questions. The emerging consensus is that giving otherwise bankrupt companies (the dead banks walking) more cash does little more than cover the internal operating expenses for the zombie banks. First, should we really believe that a bank should be “saved” simply because it is so large? There appears to be a growing majority of the public which would suggest that these banks have already lost too much good faith to ever recover in response to some arguments that the largest banks cannot be taken over even if they are already insolvent. Second, is there a better way to solve the problem than giving insolvent banks more money? George Soros and others have recently described in detail how other banking systems have successfully handled mortgage financing. Even though residential and commercial real estate loans are thought to be at the heart of the current crisis, there is no real effort underway to revise this approach. Third, how long will it take the government to solve the problem and can business owners afford to wait? Although waiting a few weeks or even several months might be viable for a practical solution which results in needed commercial loans, the current logjam impacting business finance funding shows little evidence of subsiding that quickly. Prudent commercial borrowers should seek alternative sources for essential working capital financing such as business cash advances. In case it is not obvious from the discussion above, dead banks walking and zombie banks can be avoided when seeking new commercial financing.

Homeowners have woken up to the fact that an excellent way to perk up their lifestyles as well as their bank accounts is home financing. Take finances for renovating your home and increase your home value. In due course of time, your neighbors will be surprised to see the new you!

For those who are not into the nitty-gritty of financial matters, here are some basics of home financing known by millions of Americans.

Kinds Of Home Financing

Usually, loans for home financing are categorized as secured and unsecured. The latter is a loan, which has a fixed frame of payment. The secured loan also has the same feature with the difference that if you are unable to pay within the fixed time, the lender has the right to seize your asset and sell it in order to raise funds for paying off the loan.

With remodeling and home improvements projects, the asset is used as security is usually your home itself. There is a separate document for pledging your asset. It is called a deed of trust or mortgage. Do you know that you can pledge the same asset for more than one loan? In this case, the loans are unambiguously ranked in priority. This explains all the fuss about first and second mortgages.

Why do people take secured loans?

1)To obtain a lower rate of interest

2)To borrow more cash in home financing

3)To mitigate taxes

Loan Qualifications

The first step is to discuss with your lenders about YOUR options. It is a tendency of the lenders to focus on THEIR options. Hence, it’s a good idea to begin with a reputable mortgage broker, as he or she may give you a range of loans. Besides this, your lender may pre-qualify you for more than one loan. They are well-versed with the lending rules; hence, it’s better to have them by your side.

Remember, lenders of home financing are interested in your

1)Income

2)Credit record

3)Property value

4)Debts

What Are “Points”?

Many loans have something called points. They are nothing but a fee for taking the loan. Points are denoted as the percentage of loan amount. One point= one percent. Points help the lender pay for the expenses incurred in arranging for the loan and to make a profit as well.

Kinds Of Interest Rates

The loan in which the interest rate remains unchanged throughout the loan period is called fixed rate loan. There are loans in which the interest rate may either rise or dip in accordance with market rate such as prime rate. The variable rate is always two percentage points more than the existing prime rate.

Choosing Your Lender

There are three sources that can help you in home financing:

1)Mortgage brokers

2)Specialized lenders

3)Banks

Mortgage brokers are usually associated with regional and national banks, insurance companies, specialized lenders, and even the affluent class. Their diverse association is their specialty. It means you can obtain a broad spectrum of home financing options from them.

Specialized lenders specialize in a single or a couple of loan types. Their specialty is their deep knowledge about the loans they deal with. They are experienced enough to offer you extremely competitive rates for home financing.

Banks work if you have a good rapport with the lender and he or she agrees to give you a broad range of home financing options.

So, start preparing for making your home a dream place with home financing!

In some cases, reconstructive plastic surgery may be covered by the patient’s medical insurance. Getting a cosmetic plastic surgery however may be a procedure that you have to finance yourself using a loan.

Now, there are already several options for people who can’t afford a cosmetic surgery. Before we look into those options, let’s take a look at what else you should know about financing plastic surgery.

Don’t Go for Bargains

You may be tempted to pick a surgeon who asks for less if you do not have clear options for financing plastic surgery. This is however, the worst possible mistake you could ever make. Plastic surgery costs are usually steeper if the surgeon who will conduct the procedure is already seasoned and an undisputed expert. An expensive doctor however is also more likely to be a safer option and eventually a more cost effective one. Cheap doctors may also have cheap services that may result in more financing plastic surgery problems because you would have to pay for corrective surgery on a botched up work.

Costs and Plans Vary

The extent of work to be performed, the type of procedure and the region you belong to are also some of the other factors that affect the cost of plastic surgery. Doctors and clinics will also therefore have different payments schemes or offers for financing plastic surgery. You would have to discuss this aspect as extensively as the procedure itself. Be warned that there may also be hidden costs or miscellaneous fees that you may not have asked about and may not be included in offers for financing plastic surgery.

No Plan Scheme

Some clinics and plastic surgeons don’t allow financing plastic surgery or will not allow you to present loan or installment plans. Some patients may not immediately realize it but such a policy may be as much for the patient’s advantage as it is theirs. This is because such a strict policy will ensure that a patient can truly afford the procedure and its corresponding after surgery costs.

Some clinics will even ask for a complete payment before a procedure to secure patient assurance. This may be potentially dangerous though especially if accidents happen.

Finance Companies and Banks

Now, there are already several finance companies and banks that provide options for financing the procedure. Individuals can now fill up forms for approval to cover cosmetic plastic surgery. Most companies will tell you that they have affordable and flexible rates but the truth is that applying for a loan may be a little more difficult than imagined especially in banks.

Plastic surgery loans are actually unsecured by collateral. This means that a bank or company may have to meticulously investigate your credit history and report to find out if you are capable of paying. Even if you do pass an application for financing plastic surgery, some companies may have higher interest rates than others simply because it is their only security if you are suddenly unable to pay.