A time deposit is a bank product that put deposit of money to be on holding period so the depositor can only get the money after that period without penalty. If, for instance, you want to check out the money in a term deposit, you will be charged a penalty for withdrawing it prior to the maturity date. In term deposit, the longer the holding period, the higher the interest and so the profit from it. In US, a time deposit is called certificate of deposit or CD.
If you have an ample amount of excess money, say, , 000 it is advisable to invest it in time deposit or certificate of deposit rather than on normal savings account.
Keep in mind the money deposited in a time deposit or term deposit cannot be withdrawn before the maturity date on the other hand you can get your money on a savings account any moment you want.
There is a certain charge or penalty you must pay whenever you like to withdraw your money in time deposit prior the maturity date ends.
Therefore, it is advisable to finish the holding period before withdrawing money from term deposit except you desperately needed the money.
If you are thinking to put some of your money in term deposit, make sure that you have still adequate money in your bank account to cover for unexpected needs. The excess money can be deposited to term deposit for higher profit.
One advantage of investing money in time deposit or CD is that it earns higher interest rate than regular bank account.
If you put your money in time deposit, it is insured by the bank and the government up to P500,000 in the Philippines. In the US, certificate of deposit is also insured by FDIC or NCUA.
You can choose where to invest your money, in savings account or term deposit. Bear in mind that money in term deposit earns bigger interest with lock-in period while money on savings account gives low interest with high liquidity.
In order to apply a time deposit account, you should visit the bank of your choice or you can apply in the Internet. One bank that gives good interest rates in the Philippines for term deposit is BPI.
Monday, April 30, 2012
Sunday, April 29, 2012
Keep Septic Trucks Safe With Tire Pressure Monitoring
Safety is a topic that everyone who drives on the road must observe, especially when driving powerful heavy-duty utility vehicles like a septic truck. Keeping up with regular maintenance is essential to ensure that these trucks that are driven on public roads and to work sites are as safe as possible. Routine monitoring of tire pressure is one of th important maintenance points that needs careful attention; incorrect pressure is not only unsafe, it is inefficient as well. To avoid mishaps and create a work environment that is as cost-effective as possible, it is recommended that important safety checks are performed on these massive extraction vehicles on a daily basis, including the monitoring of the vehicle's tire pressure before setting out for all daily work activity.
The Importance of Proper Inflation
Regardless of the size or type of the vehicle, having properly inflated tires is vital to its operation; it is even more so the case with industrial trucks and heavier vehicles like septic trucks. Many of these extraction machines currently on the road are being driven on under-inflated tires which can create a serious safety hazard. When this is allowed to occur, excess wear on the treads and side-walls of the wheels is created when the vehicle is driven. If this problem persists, it increases the chance of premature failure, which can be catastrophic when being driven on the road. The heavier a vehicle, the greater the wear will be on the wheels and the greater the chances of a serious accident occurring if a failure is experienced. This is why it is critical that tire pressure be checked frequently, even if it seems like a tedious job no matter how unimportant it may seem.
The Value of Proper Pressure
Another major factor when using tires that are not correctly inflated is that the cost required to operate the vehicle is increased. Because of unnecessary, added wear on the treads and side-walls, wheels need to be replaced much sooner than would have otherwise been necessary, which is quite an expense when dealing with septic trucks. Additionally, because under-inflated tires increase the amount of surface area that is in contact with the road, a vehicle's fuel efficiency is directly affected. With more of the wheel on the ground, engines must work harder to keep the vehicle moving, which in turn increases fuel consumption as well as exhaust and emissions that are dispelled into the air. It has been estimated that fleet trucks use as much as 2 percent more fuel because of poorly inflated tires; when paired with a more frequent need to replace damaged wheels, costs can really add up by the end of a year.
Tire Pressure Monitoring Systems
One of the best ways to be sure that the inflation level of tires for fleet trucks is optimal enough to operate with maximum efficiency is with a wireless pressure monitoring system. The monitoring units sit inside the truck cab where drivers can monitor all pressure areas and be alerted if the pressure goes down in any one of them. By mounting a remote pressure sensor on each tire valve stem, pressure information is transmitted to the monitor at all times, making it easier to ensure that septic trucks and other similar fleet equipment are being operated with safely inflated tires.
When septic trucks or other heavy vehicles are being operated, there is so much to be gained by investing in wireless pressure monitoring systems. Besides the obvious safety measures, the monetary savings alone should make it well worth the initial expense to install this extremely helpful technology. The cost savings in reduced fuel and tire costs plus the increased driving safety make this a combination that is well, priceless!
The Importance of Proper Inflation
Regardless of the size or type of the vehicle, having properly inflated tires is vital to its operation; it is even more so the case with industrial trucks and heavier vehicles like septic trucks. Many of these extraction machines currently on the road are being driven on under-inflated tires which can create a serious safety hazard. When this is allowed to occur, excess wear on the treads and side-walls of the wheels is created when the vehicle is driven. If this problem persists, it increases the chance of premature failure, which can be catastrophic when being driven on the road. The heavier a vehicle, the greater the wear will be on the wheels and the greater the chances of a serious accident occurring if a failure is experienced. This is why it is critical that tire pressure be checked frequently, even if it seems like a tedious job no matter how unimportant it may seem.
The Value of Proper Pressure
Another major factor when using tires that are not correctly inflated is that the cost required to operate the vehicle is increased. Because of unnecessary, added wear on the treads and side-walls, wheels need to be replaced much sooner than would have otherwise been necessary, which is quite an expense when dealing with septic trucks. Additionally, because under-inflated tires increase the amount of surface area that is in contact with the road, a vehicle's fuel efficiency is directly affected. With more of the wheel on the ground, engines must work harder to keep the vehicle moving, which in turn increases fuel consumption as well as exhaust and emissions that are dispelled into the air. It has been estimated that fleet trucks use as much as 2 percent more fuel because of poorly inflated tires; when paired with a more frequent need to replace damaged wheels, costs can really add up by the end of a year.
Tire Pressure Monitoring Systems
One of the best ways to be sure that the inflation level of tires for fleet trucks is optimal enough to operate with maximum efficiency is with a wireless pressure monitoring system. The monitoring units sit inside the truck cab where drivers can monitor all pressure areas and be alerted if the pressure goes down in any one of them. By mounting a remote pressure sensor on each tire valve stem, pressure information is transmitted to the monitor at all times, making it easier to ensure that septic trucks and other similar fleet equipment are being operated with safely inflated tires.
When septic trucks or other heavy vehicles are being operated, there is so much to be gained by investing in wireless pressure monitoring systems. Besides the obvious safety measures, the monetary savings alone should make it well worth the initial expense to install this extremely helpful technology. The cost savings in reduced fuel and tire costs plus the increased driving safety make this a combination that is well, priceless!
Friday, April 27, 2012
Cash Advance Loan No Credit Check: Credit For All Your Fiscal Urgencies
A difficult monetary situation arises anytime it befalls very difficult to handle such situations as we are not prepared for it. But now you have a great option in front of you that is the cash advance payday loans
Cash advances loan no credit check are offered at an amount for which the repayment should be made on time. The word advance refers to the fact that the lenders are providing the borrowers with advance cash that is before the month comes to an end where their next pay cheque is due.
However, the money is used to fulfil small wants of those folks who cannot live during the rest of the month if they do not ask for monetary help. The rate of interest is high in nature which proves to be a drawback for the borrower. Some beneficial features cash advance payday loans do not permit any credit checks thereby giving home owners, tenants and even bad credit holders the chance to approach the respective lender and ask for cash.
The lender will not verify their eligibility until they are pleased that their repaying commitment is strong and they receive a good amount of salary. There is no trace of any paper work or faxing that is included in processing of the loan.
The eligibility criteria involve to be followed when the borrower fits in the various norms. He/she can avail this credit faster. The borrower can mange all his expenses with the help of this credit.
The online way is the best option for all those who are in need of instant cash loan. The borrower has to just fill in an online appliance and the credit gets sanctioned when the appliance is verified by the lender.
Cash advances loan no credit check are offered at an amount for which the repayment should be made on time. The word advance refers to the fact that the lenders are providing the borrowers with advance cash that is before the month comes to an end where their next pay cheque is due.
However, the money is used to fulfil small wants of those folks who cannot live during the rest of the month if they do not ask for monetary help. The rate of interest is high in nature which proves to be a drawback for the borrower. Some beneficial features cash advance payday loans do not permit any credit checks thereby giving home owners, tenants and even bad credit holders the chance to approach the respective lender and ask for cash.
The lender will not verify their eligibility until they are pleased that their repaying commitment is strong and they receive a good amount of salary. There is no trace of any paper work or faxing that is included in processing of the loan.
The eligibility criteria involve to be followed when the borrower fits in the various norms. He/she can avail this credit faster. The borrower can mange all his expenses with the help of this credit.
The online way is the best option for all those who are in need of instant cash loan. The borrower has to just fill in an online appliance and the credit gets sanctioned when the appliance is verified by the lender.
Thursday, April 26, 2012
Find Elegance in Your Personal Checks
Designer stuff is something that is in vogue today. I guess people in the United States are very lucky because other than designer clothes and shoes the state has to offer personalized designer checks. The difference here being the real designer is actually YOU.
Checks a safe way of drawing money from the bank has become more colorful thanks to the personal checks. These designer checks are becoming increasingly famous because they can easily be used for identification and also spread warmth and add a personal touch.
Designer checks come in many novel designs that vary according to the taste of various individuals. They can have designs of animals, cartoon characters, your favorite hobbies or sports person or even a picture of yourself.
There are also inspirational backgrounds for these checks like a environmental background and a nice message like a quote from the bible. This will lighten everyone's spirit when they see it. You can also show how patriotic you are through these checks. The designer checks come in blue white and red and also some inspirational lines which help to bring out the patriotism in you and also to spread the spirit to others.
These personal checks have various themes environmental themes, cartoon themes like Winnie the pooh, Barbie doll themes or just some nice pattern with different geometrical designs.
Personal checks allow the user to be carefree about the security of his account as it is very difficult to forge these checks because they have a microprint border behind the check which is visible on magnifying and also these checks have a water seal mark that is difficult to copy. The bank identifies each user with his own design of personal checks.
These checks can be ordered from a local financial organization or a bank. However here you are not free to explore your creativity. There are a few templates you have to choose from. A better option would be order checks online. You are free to create your own design. Before you order the checks online confirm with your bank if the online service provider is a legitimate source of designer checks. Routing numbers of the bank and your account number is essential when you are ordering checks online. Make sure that on delivery of the checks you are aware of the security feature of each check.
These checks can be a good gift for a family member. A nice picture of them or maybe of their favorite pet and a nice personalized message will be nice. The best parts about these checks are that they don't really cost much. Its just as good as re-ordering for a new check book.
So go ahead and add that personal touch to your checks. Signing a check could never get any better. A pleasant sight to look at against the plain blank white checks which where a laborious job to sign. Make your check unique. Happy and safe banking is here to stay with the personal checks.
Checks a safe way of drawing money from the bank has become more colorful thanks to the personal checks. These designer checks are becoming increasingly famous because they can easily be used for identification and also spread warmth and add a personal touch.
Designer checks come in many novel designs that vary according to the taste of various individuals. They can have designs of animals, cartoon characters, your favorite hobbies or sports person or even a picture of yourself.
There are also inspirational backgrounds for these checks like a environmental background and a nice message like a quote from the bible. This will lighten everyone's spirit when they see it. You can also show how patriotic you are through these checks. The designer checks come in blue white and red and also some inspirational lines which help to bring out the patriotism in you and also to spread the spirit to others.
These personal checks have various themes environmental themes, cartoon themes like Winnie the pooh, Barbie doll themes or just some nice pattern with different geometrical designs.
Personal checks allow the user to be carefree about the security of his account as it is very difficult to forge these checks because they have a microprint border behind the check which is visible on magnifying and also these checks have a water seal mark that is difficult to copy. The bank identifies each user with his own design of personal checks.
These checks can be ordered from a local financial organization or a bank. However here you are not free to explore your creativity. There are a few templates you have to choose from. A better option would be order checks online. You are free to create your own design. Before you order the checks online confirm with your bank if the online service provider is a legitimate source of designer checks. Routing numbers of the bank and your account number is essential when you are ordering checks online. Make sure that on delivery of the checks you are aware of the security feature of each check.
These checks can be a good gift for a family member. A nice picture of them or maybe of their favorite pet and a nice personalized message will be nice. The best parts about these checks are that they don't really cost much. Its just as good as re-ordering for a new check book.
So go ahead and add that personal touch to your checks. Signing a check could never get any better. A pleasant sight to look at against the plain blank white checks which where a laborious job to sign. Make your check unique. Happy and safe banking is here to stay with the personal checks.
Wednesday, April 25, 2012
Bridging Loans
If you have ever been stuck in between the purchase of your new home and the sale of your old home, understanding bridging loans would have been helpful. Nothing is worse than paying two mortgages when it is unexpected. Thankfully, bridge loans have been created by lenders to help address this challenging situation.
Bridging loans are temporary term loans that help to bridge this gap between the closing of the present home and the closing of the new home. Despite this not being a common scenario, under a few occasions there is a longer time frame than was initially anticipated. The bridge loan helps the property owner to cover their simultaneous mortgage costs, with the proceeds from the bridge loan being also used towards the down payment on the new property once closing occurs.
The Bridge Loan Process
As with any home mortgage, the buyers must go through underwriting to become approved for a bridge loan. Every lender will often have their own approval procedure that must be followed in order for the owner to be approved for the bridge loan. And, these qualifications are often more lenient than traditional home lenders when it comes to debt to income ratios, meaning that these ratios can often be higher than with traditional lending.
The rationale of different requirements associated with the bridging loans is that they are temporary and generally created to assist a property owner in moving from their current property into their new property. And, the proceeds from the bridge loan are almost always applied to the new home loan in the event that they are not used during the transition period before to closing on the new home.
Benefits of Bridge Loans
There are a number of benefits to the property buyer of bridge loans, including:
It allows the property owner to put their property onto the market quickly and often with less restrictions than if they didn't have the additional financial cushion.
A lot of bridge loans don't require monthly loan or mortgage payments, providing some financial relief to the current property owner.
The loan can give the property owner some flexibility with contingencies on their home sale, allowing them to turn away offers that are not favourable without financial fear of paying two mortgages in the event that their new property closes as anticipated.
Disadvantages of Bridge Loans
While there are multiple advantages to using a bridge loan when selling or buying properties, including:
The costs associated with bridge loans are typically more than traditional home loans and even home equity loans.
Some property owners may not qualify for a bridge loan due to the lending qualifications
Even though the bridge loan helps the property owner in covering mortgage costs during the transition process between properties, they must still pay for both loans and the interest that is accruing on the bridge loan.
Bridging loans are temporary term loans that help to bridge this gap between the closing of the present home and the closing of the new home. Despite this not being a common scenario, under a few occasions there is a longer time frame than was initially anticipated. The bridge loan helps the property owner to cover their simultaneous mortgage costs, with the proceeds from the bridge loan being also used towards the down payment on the new property once closing occurs.
The Bridge Loan Process
As with any home mortgage, the buyers must go through underwriting to become approved for a bridge loan. Every lender will often have their own approval procedure that must be followed in order for the owner to be approved for the bridge loan. And, these qualifications are often more lenient than traditional home lenders when it comes to debt to income ratios, meaning that these ratios can often be higher than with traditional lending.
The rationale of different requirements associated with the bridging loans is that they are temporary and generally created to assist a property owner in moving from their current property into their new property. And, the proceeds from the bridge loan are almost always applied to the new home loan in the event that they are not used during the transition period before to closing on the new home.
Benefits of Bridge Loans
There are a number of benefits to the property buyer of bridge loans, including:
It allows the property owner to put their property onto the market quickly and often with less restrictions than if they didn't have the additional financial cushion.
A lot of bridge loans don't require monthly loan or mortgage payments, providing some financial relief to the current property owner.
The loan can give the property owner some flexibility with contingencies on their home sale, allowing them to turn away offers that are not favourable without financial fear of paying two mortgages in the event that their new property closes as anticipated.
Disadvantages of Bridge Loans
While there are multiple advantages to using a bridge loan when selling or buying properties, including:
The costs associated with bridge loans are typically more than traditional home loans and even home equity loans.
Some property owners may not qualify for a bridge loan due to the lending qualifications
Even though the bridge loan helps the property owner in covering mortgage costs during the transition process between properties, they must still pay for both loans and the interest that is accruing on the bridge loan.
Monday, April 23, 2012
Personal Loans
Life is full of uncertainties. You never know what lurks in the next corner you take. And, therefore, we need to equip ourselves better with things that prove to be quite useful. Money is one such requirement and the solution to most of our problems. But it is not possible for us to carry ready cash and put it forth in a snap of fingers.
This is where personal loans come handy. Studies show that people in the UK prefer to take personal loans for every big or small requirement. People here apply for loans for various purposes, whether it is for emergency situations of grave importance like medical requirements, unemployment loans, or it is for something like home improvement or cosmetic surgery.
Personal loans are of two kinds: Secured and Unsecured. Secured loans, as is suggested in the name, require some sort of security from the borrower. Usually, lenders in the UK accept property such as land or house as security. This security is collateral against which the lender would lend the money. And it is this security which provides the lender a sense of security, an assurance that the borrower would pay back the loaned amount, else the collateral would be seized by the lender.
In case of unsecured loans, there is no requirement of any security as such. The lender does provide the money to the borrowers based on his financial history and his past dealings. However, the rate of interest is higher, and the terms and conditions more rigid in case of unsecured personal loans in comparison to secured loans. This difference arises due to the absence of security, which leads to lack of sense of assurance for the lender.
When you apply for personal loans, you can go for either secured loans or unsecured loans; however, you have to make sure that for secured loans, you need to have a property whose equity is worth the amount you wish to borrow. And in case of unsecured loans, you have to meet the requirements set by your lender.
This is where personal loans come handy. Studies show that people in the UK prefer to take personal loans for every big or small requirement. People here apply for loans for various purposes, whether it is for emergency situations of grave importance like medical requirements, unemployment loans, or it is for something like home improvement or cosmetic surgery.
Personal loans are of two kinds: Secured and Unsecured. Secured loans, as is suggested in the name, require some sort of security from the borrower. Usually, lenders in the UK accept property such as land or house as security. This security is collateral against which the lender would lend the money. And it is this security which provides the lender a sense of security, an assurance that the borrower would pay back the loaned amount, else the collateral would be seized by the lender.
In case of unsecured loans, there is no requirement of any security as such. The lender does provide the money to the borrowers based on his financial history and his past dealings. However, the rate of interest is higher, and the terms and conditions more rigid in case of unsecured personal loans in comparison to secured loans. This difference arises due to the absence of security, which leads to lack of sense of assurance for the lender.
When you apply for personal loans, you can go for either secured loans or unsecured loans; however, you have to make sure that for secured loans, you need to have a property whose equity is worth the amount you wish to borrow. And in case of unsecured loans, you have to meet the requirements set by your lender.
Sunday, April 22, 2012
Claiming Newport Beach Boat Slips In Newport Beach Harbor
Newport Beach Harbor has some of the most expensive real estate in California, if not most of the world. It is certainly one of the most popular places for small yachts, with over 9,000 berthed here, but despite its wealth and popularity it is still a quiet, relaxed place with a friendly feel to it.Anyone with a small yacht around here will know how difficult it can be to find any suitable Newport Beach boat slips. Space is scarce and even slips with the most basic facilities are expensive, so it is important that any owner knows what they want before deciding on which slip to use.
Location is one of the main considerations. Seven islands make up the Newport Beach Harbor area, and all have advantages and disadvantages. Some are more expensive than others, some are less convenient to get to. If you are a frequent sailor then you might want a location close by and easy to get in and out of, while someone who only uses their boat once a year may choose a cheaper but less convenient slip.
The facilities available at each Newport Beach boat slip also need to be considered carefully. Every yacht owner has different needs in this regard, and it is important to find as close a match as possible. There is no point either paying for services that will not be used, or in renting a cheaper berth that does not have the facilities that are needed.
Some of the marinas offer managed services for yachts, and the best of the marinas allow these services to be tailored according to need. The companies based here have everything that any yacht owner could possibly need, and the owners are free to choose which of the facilities and services they use. One owner will want to have their yacht maintained for them, for example, while another will wish to do all the work themselves. Some will want to crew their boats themselves, while others will hire a captain or crew.Whatever your boating needs are, you can be sure that someone in Newport Beach Harbor will be able to meet them. If you can't find it here, the chances are you won't find it anywhere.
Location is one of the main considerations. Seven islands make up the Newport Beach Harbor area, and all have advantages and disadvantages. Some are more expensive than others, some are less convenient to get to. If you are a frequent sailor then you might want a location close by and easy to get in and out of, while someone who only uses their boat once a year may choose a cheaper but less convenient slip.
The facilities available at each Newport Beach boat slip also need to be considered carefully. Every yacht owner has different needs in this regard, and it is important to find as close a match as possible. There is no point either paying for services that will not be used, or in renting a cheaper berth that does not have the facilities that are needed.
Some of the marinas offer managed services for yachts, and the best of the marinas allow these services to be tailored according to need. The companies based here have everything that any yacht owner could possibly need, and the owners are free to choose which of the facilities and services they use. One owner will want to have their yacht maintained for them, for example, while another will wish to do all the work themselves. Some will want to crew their boats themselves, while others will hire a captain or crew.Whatever your boating needs are, you can be sure that someone in Newport Beach Harbor will be able to meet them. If you can't find it here, the chances are you won't find it anywhere.
Saturday, April 21, 2012
Is Lenders Mortgage Insurance required when Home Refinancing?
Questions frequently asked, are "Do I need Mortgage Insurance when Refinancing a Home?" and "What is Mortgage Insurance?"
In this article I will make clear Lenders Mortgage Insurance, when it is required and the benefits when Home Refinancing.
The function of Lenders Mortgage Insurance (LMI) is to protect the mortgage lender from incurring a loss of funds in the event of a borrower defaulting on their loan , ending in foreclosure and a ensuing mortgagee sale. If the proceeds from the mortgagee sale are not enough to pay back the mortgage in full, LMI will meet the loss for the home loan lender.
LMI shouldn't be confused with Mortgage Protection Insurance (MPI), which protects a borrower against their incapacity to repay their loan in the event of an unforeseen circumstance like unemployment, illness or death. MPI covers payment of your loan instalments and/or your loan balance. CPI insurance is not mandatory and is solely the decision of the borrower. The premium for CPI is paid annually and usually varies based on the size of the mortgage.
Why is Lenders Mortgage Insurance required?
Lenders including Banks, Building Societies, Credit Unions and non-bank lenders, either use money from deposits held in savings accounts and term deposits, or borrow cash to provide home loans to borrowers for home refinancing, purchasing, construction or equity purposes. By using other peoples' money to fund home loans, the lenders initiate an obligation to repay that cash to the suppliers of the money while at the same time taking on the risk that they may not get all or some of the funds back that they loan.
Even though they hold real estate property as security for the mortgage, the value of the property may decline due to market forces, contagion or damage to the improvements, concluding in the security not having adequate value to cover the amount of the home loan. To cover their obligations to the suppliers of the home loan funds, the lending institutions take out LMI to cover any possible shortfall.
Do I benefit from Lenders Mortgage Insurance?
Before LMI was available, lenders required borrowers to have a deposit of no less than 20% when buying a home or equity of 20% when refinancing a home to minimise the risk of lending and protect them against possible loss in the event of foreclosure. Nowadays with the ability to pass on the risk of loss to an insurance company through LMI, lending institutions are prepared to agree to a lower deposit for purchases and less equity for home refinancing.
Also, if lenders did not use LMI to relieve lending losses, then those losses would need to be recouped from the profits of other mortgages, in effect increasing home loan interest rates. To stay away from this, lenders opt to effect LMI and have the insurance company take on the risk and bear any loss. By lending institutions using LMI, the advantage to borrowers is that they are able to buy a home using a lesser deposit or refinance a property with a reduced amount of equity and/or receive lower interest rates than they would otherwise be able to do with no LMI.
In this article I will make clear Lenders Mortgage Insurance, when it is required and the benefits when Home Refinancing.
The function of Lenders Mortgage Insurance (LMI) is to protect the mortgage lender from incurring a loss of funds in the event of a borrower defaulting on their loan , ending in foreclosure and a ensuing mortgagee sale. If the proceeds from the mortgagee sale are not enough to pay back the mortgage in full, LMI will meet the loss for the home loan lender.
LMI shouldn't be confused with Mortgage Protection Insurance (MPI), which protects a borrower against their incapacity to repay their loan in the event of an unforeseen circumstance like unemployment, illness or death. MPI covers payment of your loan instalments and/or your loan balance. CPI insurance is not mandatory and is solely the decision of the borrower. The premium for CPI is paid annually and usually varies based on the size of the mortgage.
Why is Lenders Mortgage Insurance required?
Lenders including Banks, Building Societies, Credit Unions and non-bank lenders, either use money from deposits held in savings accounts and term deposits, or borrow cash to provide home loans to borrowers for home refinancing, purchasing, construction or equity purposes. By using other peoples' money to fund home loans, the lenders initiate an obligation to repay that cash to the suppliers of the money while at the same time taking on the risk that they may not get all or some of the funds back that they loan.
Even though they hold real estate property as security for the mortgage, the value of the property may decline due to market forces, contagion or damage to the improvements, concluding in the security not having adequate value to cover the amount of the home loan. To cover their obligations to the suppliers of the home loan funds, the lending institutions take out LMI to cover any possible shortfall.
Do I benefit from Lenders Mortgage Insurance?
Before LMI was available, lenders required borrowers to have a deposit of no less than 20% when buying a home or equity of 20% when refinancing a home to minimise the risk of lending and protect them against possible loss in the event of foreclosure. Nowadays with the ability to pass on the risk of loss to an insurance company through LMI, lending institutions are prepared to agree to a lower deposit for purchases and less equity for home refinancing.
Also, if lenders did not use LMI to relieve lending losses, then those losses would need to be recouped from the profits of other mortgages, in effect increasing home loan interest rates. To stay away from this, lenders opt to effect LMI and have the insurance company take on the risk and bear any loss. By lending institutions using LMI, the advantage to borrowers is that they are able to buy a home using a lesser deposit or refinance a property with a reduced amount of equity and/or receive lower interest rates than they would otherwise be able to do with no LMI.
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