The growing global economic crisis has made our financial planning go for a toss. The main question in front of us today is what should be our savings? Should we save first or pay off debts first? To find the answers to these questions lets analyze the situation logically:-

• Suppose you have a rolling credit card debt of $1000 and you have the same amount as surplus. So what should be done whether to put the money in your savings account which will provide you with just 4% return after a year which amounts to 40 dollars? Or you can use this money for faster paying off your credit card debt which amounts to almost 190-200 dollars as usually credit card companies charge you 19-20% annually. In this scenario the faster paying of debt resulted in a saving of 150 dollars, so the choice is easier to make. Therefore the first thumb rule to remember is that you should always concentrate on quicker payments of high interest loans on debts which will ultimately lead to a substantial annual savings

• Another simple arithmetic, which will help you in making a beneficial choice: The saving which you place in bank is used by bank to provide loans to people at higher rates of interest. Simple fact the rate of interest you earn on savings is was below the rate you pay while borrowing money. Hence a wise decision would be to pay for the borrowed amount rather then putting the money in your savings account

There can be an exception to the above mentioned scenarios. The idle situation for you will be to pay off higher interest debt faster but if your savings can generate more interest or if you have taken a loan which is virtually interest free then investing in savings would be a better option. After paying the high interest debts your main focus should be on:

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These days abusive practices conducted within the mortgage lending vertical have increased drastically along with the hefty growth of the subprime market. Listed below are seven common predatory practices that more and more home owners are realizing they too were treated unfairly and unlawfully.

1. Inclusion of excessive fees into loans.
2. Unrealistic and higher than warranted Interest Rates.
3. Ignoring the borrowers true ability to pay.
4. Loan to Value Issues.
5. Prepayment Penalties (most common in subprime loans).
6. Negative Amortization Loans.
7. Unfair Balloon Payments.

Inclusion of excessive fees into loans. Borrowers whose loans fall into the predatory lending category often have huge fees financed into the loan by digging into the equity of the property with future additional interest to come. The bank average to originate loans is 1%-2% and routinely those who are victim of predatory lending have fees in excess of 8%.

Unrealistic and higher than warranted Interest Rates. It makes sense that subprime lenders “should” charge a higher than normal rate because of the bigger credit risk that coincides with borrowers whose credit is anything other than excellent. However, as the subprime market exploded so did the number of borrowers who were unnecessarily slotted into a subprime loan. Higher interest rates means more money for the lending bank. Borrowers with perfect credit are regularly charged interest rates 3 to 6 points higher than the market rates; with some subprime lenders, there simply is no lower rate, no matter how good the credit.

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Commercial Mortgage Loans are different from the residential’s one. In a commercial mortgage plan a commercial property is used for financing.

A residential property used as a commercial venture requires a commercial mortgage loan for financing.

Points to Remember

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