The Role of a Finance Broker

Whatever your reasons for needing a loan, it almost always a good idea to hire the services of a finance broker. All things considered, a finance broker makes the processes for loan application easier and less tedious. The basic role of finance brokers is to obtain for a client a suitable lender and lending solution. First a broker takes on the task of evaluating the client’s requirements and conditions. The broker needs to understand why the client requires a loan, if it is for personal use or for business funding. From this standpoint the broker will find the most suitable and matching type of loan for the client.

Their role may seem to be done in just three easy steps. However, if the entire responsibilities of finance brokers are be studied more closely, the three steps will nevertheless multiply into numerous detailed actions.

Once a finance broker is appointed by a client to act as the mediator, the broker should first and foremost inform the lender or credit provider that it is working for the benefits of a client, that a client has hired its services in order to obtain a loan or financial product. This may either be done formally through writing when deemed necessary.

As an entity entrusted by the client, the finance broker should perform a responsible and competent performance of its duties. Aside from competence and responsibility, the finance broker should also execute all its actions in an honest and upright manner. Every step and procedure must be done carefully and skillfully. The broker also has an obligation to the credit provider which includes prevention of interest conflict and maintain discretion of the lender’s information and lending processes. The broker also needs to comply with the lender’s policies. All records complying to the law governing the financial lending must be kept by the broker.

In order to find the most suitable type of loan for the client, the broker needs to properly assess and evaluate if the borrower or the client can indeed repay the loan and meet monthly loan obligations. If deemed possible the broker will hold interviews to guarantee the client’s financial ability.

A broker’s role entails those processes concerning applications and contracts of loans. As an intermediary, it is the broker’s role to provide the lender with all the loan’s required documents and information. The information mostly provided are personal or business identity of the borrower, financial position and ability and credit history of the borrower. The financial broker must provide the client with copies of correspondences about approvals, finance offers, contracts and other related and important documentation.

Should there be any variations in the client’s requirements, it is the duty of the broker to relay and convey this to the credit provider. If there are variations in the requirements of the lender, the finance broker should also make this known to the client or borrower.

They must also double check of the client’s requirements are indeed met by the lender’s credit facility. This is to ensure that the best interest of the client who has hired the broker in the first place.

Factors and Variables Influencing Mortgage Finance

Properties are secured under mortgage to oblige the borrower to make a predetermined succession of loan payments. A borrower can obtain mortgage finance to from a financial institution like banks. Components like loan size, loan maturity, interest rate and loan payment method differs significantly from one creditor to another.

Mortgaged properties levy restrictions on the use or disposal of the property like selling the property before closing outstanding debt payment. In countries where the demand for home ownership is colossal, robust domestic markets have developed. Economies of USA and UK heavily depend on mortgage finance.

In the USA, borrowers obtain the mortgage finance by submitting a Loan application in conjunction with documents related to borrower’s credit or financial history to the bank underwriter. Alternatively, borrower’s can submit the same documents to a mortgage broker, who then assess the information and provides the borrower with best possible options of financing the mortgaged property. Often, unsuspected borrowers fall prey to unscrupulous money- lenders or brokers en-cash on the borrower’s plight and work the situation to their advantage, while eliminating the mortgage responsibility on the property and force the property owners into foreclosures.

Lenders take into account key factors that influence their decisions regarding lending to a borrower. These factors include credit report, outstanding credit, credit card accounts, down payment, income, interest rates, available funds and debt to income ratio. In addition, supply & demand, interest rates, demographics and economic growth relatively influence the mortgage industry.

Mortgage loans are available to borrowers at Fixed and Adjustable interest rates.

Regardless of national interest rate change, fixed interest rates remain unchanged. Used as part of an introductory offer, usually they are replaced by higher fixed rate or variable rates upon successful completion of six months of the loan duration. The alternative to change a fixed interest rate is through refinancing – getting a lower fixed rate or variable rate on the new loan agreement. Fixed interest rate provides a security against elevating national rates, borrowers are an advantage of paying a comparatively lower are, if locked for a lower fixed rate than the current national rate. It makes budgeting easier, if succession of loan payments is unequivocal. However, the disadvantage lies when the national rates have pulled down, borrowers end up paying a higher interest on their mortgage loan.

Variable rates in contrast fluctuate in response to changes in national rates. It is directly proportional to the national rates, hence when national rates pick up; variable rates increase and when they decline so do the variable rates. It’s the most common type of interest rate used for small loans and credit cards. With variable rates prediction of lump sum payment is difficult, it could increase up to several times than the payment that could have been made in matter of few months. However, monthly payments remain fixed and the final payment may be a different amount due to the fluctuating interest that has been accrued over the loan.

Fixed and variable interest rates are popular when dealing with mortgage finance, though there are other types of loans like balloon loans and government backed loans that offer both types of interest as well.

Harmonizing Your Love and Money

“The greatest weakness of most humans is their hesitancy to tell others how much they love them while they’re still alive.”- Unknown

February is Special – It is Heart month! And the two big events celebrated this month are the Heart Ball and Valentine’s Day both are valuable expressions of Love

Valentine’s Day honor its patron the Italian priest Saint Valentine and is celebrated by exchanging tokens of affection. As you exchange candies,flowers or whatever is your heart’s way of expressing this feeling don’t forget to help those who were unfortunate to have started out with a broken heart, the kids for whom the Heart Ball hosted by the Sir Victor Sassoon Heart Foundation is their biggest fund raiser.

So this month be sure and use these opportunities to affect the life of your love ones and those around you in very special ways!

And although you may be madly in Love and planning on having an exciting time with the one you love this Valentine’s Day, you must admit that there are very few combinations more perplexing than love and Money. In fact, the only more perplexing combination is expecting two persons from different social, religious, professional and economical backgrounds to come together and create a successful marriage.

Even you had your doubt and didn’t think the couple at the last wedding you attended stood a chance at creating a successful life together.

Let’s look at the combination, it usually goes like this- she is a professional; he is not – But that’s love! While he is spending all the money he can get his hands on, she is stretching her dollar so that she can do and save as much as she can.

This coupled with the fact that whiles your bodies may experience intimacy, your goals and money usually don’t. You feel that even in marriage your money is still single and nobody’s business but yours. Not a good recipe for success.

That’s why money or should I say the lack of money is among the leading contributors to divorce and it is little wonder, because financial decisions so often are charged with emotions that goes well beyond the money.

Unlike days gone by when the husband work and the wife kept the home, finances have become even more stressful and when you’re starting out with different perspectives on spending and saving it can only lead to trouble.

But even if you’ve been married for a while and experiencing love issues because of your money issues, don’t despair -there is hope! And as my Valentine gift to you, here are three suggestions to help you get a grip on your money and love.

Talk About It

The key is to start by talking about it. I know it is difficult to get men to talk about finances but men you’ve got to talk. You have to talk openly and honestly. Most times the problem is that persons are not talking about the real issues but pointing finger and placing blame. So move away from the blame game and start addressing the real issues. Yes there will be difference but use these as the starting point for developing a plan for your financial future as a couple. One thing is certain it will get you thinking about your future.

Plan for It

Once you’re talking, then you can take the next step- plan your financial future together. Life will not simply happen. It will only happen to the extent that you have planned it. By planning, you will be able to address any lifestyle differences and decide on how you will adjust to compensate for these. “Taking Control of Your Money”workbook is an excellent planning tool.

If you are in debts, then plan how you will pay off those debts. If you’re not saving enough then put a plan in place to increase your savings. If you’re not earning enough then plan to develop yourself so that you can earn more. Maybe you want your own home then plan how you will make it happen. So go ahead share your dreams and put your goals for your financial security in writing.

During your planning you should talk about:

  1. Having adequate Life insurance coverage and any existing policies
  2. All other insurances e.g. Auto, Home & Disability
  3. Medical or health concerns
  4. Income and other employee benefits including group insurance or pension plans
  5. Wills or Trusts preparation
  6. Investment currently owned e.g. real estate, stock & bonds
  7. Outstanding loans and credit facilities including credit cards
  8. Current bank and savings accounts

When you’re done, you should have a complete and accurate listing of all your income, debts, assets and real property. This is not the time to keep secrets, as this information is what you’ll need to plot the way forward.

Live It

Once you’ve done your planning its time to work. But don’t forget it’s also time to live. Don’t spend your time and energy worrying but rather start enjoying your life now. Don’t wait until you accomplish your dreams to begin living, live now. You’ve only got one life so don’t let it pass you by. Be sure to enjoy each moment of each day because it’s all you have.

So go ahead and inject some financial reality into your romantic dreams. If you talk about it, plan for it and live it you’ll be able to avoid and simplify the perplexing issues that come with love and money. Money can’t buy happiness but it sure helps you enjoy the life you want!

“No matter what, no one will improve your circumstances for you. You’ve got to do it for yourself.”- A Wise man

Copyright © 2009 – Glenn S. Ferguson