VA Mortgage Loans – 100% Financing

VA loans are often made without any down payment at all, and frequently offer lower interest rates than ordinarily available with other kinds of loans. Aside from the veteran’s certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan. And if the lender is approved for automatic processing, as more and more lenders are now, a buyer’s loan can be processed and closed by the lender without waiting for VA’s approval of the credit application.Additionally, if the lender is approved under VA’s Lender Appraisal Processing Program (LAPP), the lender may review the appraisal completed by a VA-assigned appraiser and close the loan on the basis of that review. The LAPP process can further speed the time to loan closing.

VA will analyze a borrower’s past credit performance in determining the loan for approval. A borrower who has made timely payments for the last 12 months serves as a guide and demonstrates their willingness to repay future credit obligations. On the opposite side, a borrower who reflects continuous slow payments, judgments and delinquent accounts is not a good candidate for loan approval.

Below is a list of items concerning the borrower’s credit:

LATE MORTGAGE PAYMENTS
In circumstances not involving bankruptcy, satisfactory credit is generally considered to be reestablished after the veteran, or veteran and spouse, have made satisfactory payments for 12 months after the date of the last derogatory credit item(s). When the underwriter analyzes the borrowers credit; it is the overall pattern of credit behavior that must be reviewed, rather than isolated cases of slow payments. A period of financial difficulty does not disqualify the borrower if a good payment pattern has been maintained since then. Account balances reduced to judgment by a court must either be paid in full or subject to a repayment plan with a history of timely payments.

NO CREDIT HISTORY
In the area of credit, the lack of an established credit history should not be a deterrent to loan approval. As provided in the credit standards, a satisfactory payment history on items such as rent, utilities, phone bills, etc., may be used to establish a satisfactory credit history.

CHAPTER 7 BANKRUPTCY
The VA guidelines state that a minimum of two years must elapse since the discharge date of the borrower and / or spouse’s Chapter 7 bankruptcy, not the filing date. A full explanation of the bankruptcy will be required. The borrower must also have re-established good credit, qualify financially and have good job stability.

CHAPTER 13 BANKRUPTCY
The VA guidelines state that they will consider a borrower still paying on a Chapter 13 Bankruptcy if the payments to the court have been satisfactorily made and verified for a period of one year. In addition, the court trustee will need to give written approval to proceed. A full explanation of the bankruptcy will be required. The borrower must also have re-established good credit, qualify financially and have good job stability.

COLLECTIONS, JUDGMENTS AND FEDERAL DEBTS
The VA guidelines state that if a collection is minor in nature, it usually does not need to be paid off as a condition for loan approval. Judgments must be paid in full prior to closing. A borrower is not eligible for the loan if they are delinquent on any federal debt. This can include tax liens, student loans, etc. Payment arrangements that would bring the borrower up to date may be considered for loan approval.

FORECLOSURE
A borrower whose previous residence or other real property was foreclosed on or given a deed-in-lieu of foreclosure within the previous two years since the disposition date is generally not eligible for a VA insured mortgage. If the foreclosure was on a VA loan, the applicant may not have full entitlement available for the new loan.

CONSUMER CREDIT COUNSELING PLAN
If a veteran, or veteran and spouse, have prior adverse credit and are participating in a Consumer Credit Counseling Plan, they may be determined to be a satisfactory credit risk if they demonstrate 12 months’ satisfactory payments and the counseling agency approves the new credit

How To Get And Finance A Franchise Purchase In Canada

The decision to both get a franchise opportunity and then finance a franchise purchase are of course intertwined. Is picking the right franchise more important than financing the new business venture? – we’re not sure – probably equally as important – but let’s look at some solid tips and info on franchise financing in Canada, how it works, and how that choice or pick you just made can be translated into a successful entrepreneurial career.

There is a whole industry known as ‘ franchise consultants ‘ that have the skills and ability to help you assess which type of business best suits yourself. If you talk to these people it always comes down to matching your basic personality to your business strengths and interests. Your ability to match those against a solid business opportunity in the franchise industry will ultimately be your success.

We’re the first ones to agree that when you pick a franchise that matches your skills and overall financial capacity your chances of profit and success greatly improve.

So, you have made you finance decision, now how do you get and finance a franchise purchase. In Canada there is one major program our clients use to qualify for franchise financing – it’s a loan program called the CSBF / BIL program, which is the way in which the majority of franchises are financed in Canada. Utilizing this program properly will guide you ultimately to a well financed business that should allow you to meet your personal and business goals.

Your ability to get a franchise purchase closed successfully requires you meet the requirements of your franchisor, i.e. your new business partner so to speak, as well as the lender. You need to understand your initial costs, which are often a combination of soft costs and hard costs. In our experience you will have greater challenge financing the soft costs; they include the franchise fee, and other misc items that are not tangible assets.

The BIL/CSBF program we mentioned covers assets such as fixtures, equipment and also leaseholds. Your ability to finance leaseholds under a franchise loan is very important, as these items are typically not able to be financed under conventional means.

Money. Yours and the lenders. By that we are referring to your ability to put a reasonable down payment, or what the lender calls ‘ equity ‘ into your transaction. And, you’re right. We already know your next questions, because it’s been asked a thousand times: ‘ How much do I have to put into the business to get and finance a franchise purchase properly ‘. Answer: It depends, but a typical franchise investment should be in the 30 -40% per cent range to allow you to have the right combination of both debt ( i.e. borrowed funds) and equity – which is your cushion that allows you to maintain proper leverage around how much debt the business can manage.

One mistake many new franchisees make is that they finance the business from an opening purchase perspective, and aren’t focusing on ongoing working capital needs, which is in our opinion just as important.

In summary, use you own skills or that of a consultant to match your strengths and experience and personality to a franchise that will work for your from a personal and financial goal perspective. Speak to an experienced, credible and successful Canadian business financing advisor on how to best structure the finances around your purchase. Utilize the BIL/CSBF program to the maximum that you can, as it provides solid terms, minimal guarantees, and great rates and flexibility.

Student Loans and the Federal Family Education Loan Program

Established by an Act of Congress in 1965 and begun in 1966, the Federal Family Education Loan Program (FFELP) is a partnership program between the federal government and private lenders and an umbrella program which includes Stafford loans, student PLUS loans and Perkins loans. Since it started more than half a trillion dollars have been disbursed through this program.

Funds for the program are provided by a network of independent banks, credit unions and other financial institutions and lenders are generally happy to make money available in what would normally be considered a high risk area of lending because loans are to a large degree (although not totally) underwritten by the federal government. In about five percent of cases private guarantors do become involved with defaulted loans and are able to make application to the federal government for at least partial reimbursement.

The vast majority of funds are used for subsidized and unsubsidized Stafford loans. In the case of subsidized loans the federal government pays the interest on loans while students are attending full-time courses (and for up to six months after graduation), while in the case of unsubsidized loans students are responsible for paying the interest due on their loans. Interest is not however normally paid on unsubsidized loans while a student is attending full-time education (and again for up to six months after graduation) but is added to the loan.

The other program with attracts major funding is the student PLUS loans program which is designed to allow parents to take out loans on behalf of their children. This program was extended in 2006 and is now also available to professional and graduate students. The student PLUS loans program is becoming an increasingly important part of college funding these days.

Applications to the Federal Family Education Loan Program are normally made using a Free Application for Student Aid (FAFSA) application form which is submitted to the loans officer at the college for which the student has been accepted. Applications are then examined and loans granted on the basis of the information provided and the availability of funds for disbursement.

Loans are normally disbursed at least twice each year (depending upon the academic timetable followed by the college) and it is common for the bulk of each loan to be paid directly to the college to cover tuition and other fees, with the balance then being paid over to the student or parent, less fees.