Equity Finance

all about equity finance

Archive for September, 2009

Home Equity Loan Sources

Sep 21

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A key to finding the right loan is to consider all available sources. The emergence of home equity programs has enlarged the field of lenders. Likely lenders are among the following:

Banks.

Commercial banks are attracted to home equity lines as a way to sell other bank services, such as savings accounts and credit cards. Banks have been some of the most aggressive marketers of home equity loans, offering low closing costs, special initial interest rates, and no annual fees.

Consumer Finance Companies.

In their book “Barron’s Finance & Investment Handbook,” John Downes and Jordan Goodman stated that these finance companies also known as small loan or direct loan companies lend money to individuals under the small loan laws of the individual U.S. states”. These firms have long experience in making second mortgages on homes. They have also been aggressive home equity loan makers in an effort to keep borrowers who want to retain tax-deductible interest.

Savings and Loan Associations.

The S&Ls have moved into home equity more cautiously. However, these loans are natural extension of their first mortgage business.

Mortgage Bankers.

W. Frazier Bell in his book “How to Get Best Home loan,” explained that mortgage bankers work closely with the secondary market, using its guidelines and selling the resulting loans or securities backed by the loans. As equity loans become more acceptable to investors and other purchasers of mortgage loans, mortgage bankers can be expected to offer more programs.

Credit Unions.

These organizations should provide equity loans for the same reasons as consumer finance companies.
Securities Brokerage Firms. Stockbrokers are more than just securities salespeople. Many of the major companies offer their own line or sell programs offered by the large investment houses.

Nontraditional Lenders.

A major university provides student loans backed by home equity. Some home improvements dealers also offer equity financing for these products and services.

Online Lenders.

“These are usually mortgage brokers who operate over the internet,” says Robert Erwin, author of the book “Tips and Traps When Mortgage Hunting”. Many mortgage banking companies have an Internet presence, as well as their bricks-and -mortar offices, while others operate through Web sites only. Though the latter are not chartered banks, they do have to comply with all federal lending laws.

With home loans, you often do not have to search out sources. If you own a home and have a good credit rating, the lenders will seek you out.


By: Olimpio Zapanta

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Business Finance – Shares and Equity

Sep 20

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The term equity finance refers to share capital that is invested into a business for the medium to long term in return for a share of the ownership and in many cases an element of control over the running of the business. There are two main forms of equity finance available to businesses. These are business angels and venture capitalists. Equity finance is fast becoming one of the most popular ways of gaining start up finance for businesses.

Equity finance is the perfect example of true risk capital. This is because there is no guarantee that your investor will ever get there money back. Unlike lenders equity finance investors don’t normally have the rights to interest or to be repaid at a particular date. The way in which equity investors regain the money that they have invested into a company is through taking a share of the business and a percentage of the profit. It is because of this high risk involved in equity finance that if your business can not support growth rates of at least 20% you may not be able to attract equity funding. Equity investors are more likely to invest in someone they feel they can trust with a clear business plan and strategy.

As a business you need a clear business plan and strategy regardless of what type of business start up finance you are hoping to attract. You need a comprehensive business plan with a detailed marketing plan and your financial forecast. Your business plan needs to address issues such as how much funding you are going to need and how much control you are hoping to retain over your business. You also need to clearly state what you are using your business start up finance for as well as if your plans are realistic and if your venture is appropriate for outside funding. Whilst you are completing your business plan you also need to consider what potential investors may be concerned about. Without all of this; plus much more no potential investor will go near your business, planning is key if you are hoping to secure external funding.

If you are hoping to gain the financial help of an equity investor there are several questions that you need to keep in mind such as are you prepared to give up some of the shares within your business as well as part of the control over your business? Investors will expect to have some say in the way in which your business is run so you should be prepared for this. You also need to be confident in your business and the products and services that your business has to offer, one way in which you can do this is by identifying what your businesses unique selling point is. As well as this you also need to have the necessary industry skills and experience to drive your business.

For more information about what equity finance can do for your business get in touch with a business angel or venture capitalist today and they will advise you on what to do next.


By: Helen Cox

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Home Equity Lines Of Credit Are Sometimes Not The Answer

Sep 19

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It is true that homeowners often have the upper hand when it comes to obtaining finance. Sometimes, not even a good credit score and a good credit history is needed to get a loan with fairly good terms, specially if you are using your home as a security for this loan. Nearly any type of finance is available for homeowners, the terms will depend on the applicant’s credit rating, but it will still finance available for those seeking it. The tricky part will usually be choosing the appropriate loan according to your particular situation.

If you are needing funding I am sure you must be having a hard time deciding on what type of loan is best for you. Doing research on all of the available loan options can be very tiring and can take up a lot of time, specially if you do not have a clear idea of what you want yet, but it will be extremely worth it. Choosing the correct loan type will be the first step towards a successful loan process which will hopefully not only improve your credit but also provide you with the money you are in need of.

Here is some crucial information on a particular loan type you should look into: the home equity line of credit. Read on!

Home Equity Lines Of Credit: The Basics

Being a homeowner, you might be very familiar with the term “equity” and with what it entails. If not, I will highly recommend you do a thorough research on this topic before reading this article, or any other article for that matter. But specially before you apply for finance.

Going what to what concerns us, I will briefly explain the basics on home equity lines of credit. This type of loan offers borrowers the great terms of a home equity loan plus the flexibility of a revolving credit account. The borrower will be able to withdraw as much money as he needs without going over the established limit and once he repays it, he will be able to withdraw money again. Someone taking out this type of loan will be able to put the borrowed money to any use as there are no known restrictions related to this topic.

Usual terms on equity lines of credit vary depending on each particular lender and on the credit situation of each borrower, but they are usually very favorable. The interest rate the consumer pays on this loan depends exclusively on the withdrawn amount and it is generally tax deductible, this feature poses a major advantage over other loan types.

When Not To Resort To Equity Lines Of Credit

As fantastic as this financial product might be, sometimes it is just not the answer to your prayers. There are some particular situations which could best be resolved by other means.

* Consolidate credit card debt: if you are thinking of using the money you withdraw from your HELOC for this purpose, you had better think twice. It might be possible for you to transfer the balance on your existing credit card to a 0% interest rate card and thus obtain more benefits.

* Second mortgage: as the interest rate on a HELOC might fluctuate, you will benefit more from a regular loan which will protect you against such situations.

* Shopping: this is definitely a bad idea. Even though this financial product works more or less like a credit card, it will be wiser to use your credit card to purchase objects as your home is not on the line.


By: Sarah Dinkins

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