Mortgage Home Loans In Houston Texas For Home Buyers

Lois Malone Realty – Mortgage Center

Can Your Afford a Mortgage?

Whether you’re a first-time buyer looking for the perfect starter house, or a seasoned pro trading up to your waterfront dream home, you are probably asking the same questions: Can I afford this? And is this the right move at the right time?

Of course, you can use a mortgage calculator and ask the experts — lenders, agents, and mom — but the reality is that you are the only one who truly knows whether you can afford to buy right now. And, painful as it is, what you need to start with is a detailed expense breakdown. Analyze what you spend — at least get a full month’s snapshot. You’ll see where you may have wiggle room in your budget and what you can afford for housing. (Be sure to count all those little incidental expenses like dry cleaning and yes, those mid-afternoon Starbucks lattes count in the budget, too!)

Sample Budget

This sample budget belongs to a single, 35-year-old woman making $68,000 per year, renting a two-bedroom apartment. Her monthly pre-tax income is $5,667.

Monthly expenses:
Rent $1,600
Car payment $225
Credit card payments $200
Car insurance $75
Groceries $400
Health insurance/renters insurance $208
Electricity $40
Natural gas $70
Cell phone $49
Home phone + Internet access $72
Cable TV $50
Gas, dining, clothes, dry cleaning, gifts, other expenses $800
Memberships (gym, professional, etc.) $100
Water/sewer/garbage $0
Property tax/homeowners insurance/condo fees $0
Alarm company $0
Lawn $0
Total $3,889

The sample budget may not look like your expense snapshot, but by adding and subtracting your personal budget items with an eye toward true monthly out-of-pocket totals, you get a pretty good picture. Now, add in all of the expenses where the zeros are as well as the increased cost of your monthly mortgage payment (formerly rent). Maintenance costs like condo fees, utilities, the leaky bathroom sink that defies a simple trip to Home Depot to fix, property taxes, closing costs, and furniture for your new home all add to the bottom line.

Debt-to-Income Ratios

If you figure out that you can afford your projected budget, chances are you’ll qualify for a mortgage in your range. Lenders will determine how much loan you can afford by using something called your debt-to-income ratio, which is the ratio of a borrower’s total debt as a percentage of their total gross income. Basically, they will look at what’s left in your budget after your monthly bills are paid. These include credit card payments, car payments, child support, etc.

Housing ratio (or “front-end ratio”): Lenders want your total mortgage debt (called PITI — an acronym for Principal, Interest, Taxes, and Insurance) and condo fees to be no more than 30 percent of your gross monthly income; 28 percent is standard.

Overall debt ratio (or “back-end ratio”): These are revolving monthly payments, such as credit card, car lease, or loan payments, student loans, child support, alimony, monthly utilities. (They do not include those lattes, but you might want to plug in your lifestyle expenses for your own sake.) The ratio should not be more than 36 percent.

Debt-to-income ratio standards differ from lender to lender, and vary based on your loan program, but most lenders will give more weight to your credit history as a factor in determining your particular situation. Here is a typical ratio for a first-time buyer:

Monthly gross household income: $5,700
Mortgage debt ratio: 28% $1,596.0
Expenses and overall debt: 36% $2,052.0

The mortgage debt of $1,596 is right in line with the current monthly rent payment in the example above. As long as the monthly debt obligations and household expenses are no higher than $2,000-2,300, this borrower should have no problem qualifying.

If your credit is stellar, you will be rewarded. Lenders may stretch these ratios to 38/45, allowing you to purchase more home and take advantage of more lending programs. And if you are a first-time home-buyer applying for an FHA or VA loan, you may also be able to qualify with a higher back-end ratio — up to 41 percent of your monthly gross income — and get approved for these federally-insured loans.
How It Works

So, back to the question: How much home can I afford?

Keeping in mind the variables on debt-to-income ratios and the many lending programs available, here is a sample breakdown for a mid-range home.

Monthly gross household income (pre-tax): $7,000
Mortgage debt ratio 28% $1,960
Home price $350,000
20% down payment $70,000
Mortgage $280,000
Interest rate on 30-year mortgage 6.33%
Mortgage payment (principle and interest) $1,739

Here is an example of a lower price-range home, purchased with the same loan terms and interest rate:

Monthly gross household income (pre-tax): $3,600
Mortgage debt ratio 28% $1,008
Home price $150,000
Mortgage payment (principle and interest) $1,739
10% down payment $15,000
Mortgage $135,000
Interest rate on 30-year mortgage 6.33%
Mortgage payment (P&I) $838
And the Other Costs…

In addition to the monthly mortgage payment, remember to factor in the added costs of home purchase and ownership. Since this buyer above did not put 20 percent down, he will need to add mortgage insurance, also known as PMI, to his monthly payment. PMI protects lenders against losses that can occur when a borrower defaults on a loan, and is required for borrowers with a down payment of less than 20 percent of the purchase price. Buyers also incur closing costs of 2.5 to 3 percent of the total loan amount. This covers the cost of title searches, appraisals, legal fees, etc.

So what’s left to apply to the down payment? Using the example above, our first-time buyer has $15,000 for the down payment on a $150,000 home, and the closing costs may come to $4,500. The mortgage total just increased to $139,500. Over the 30-year loan period, this brings the mortgage payment to approximately $866 per month. If your head is not already spinning, now tack on mortgage insurance (fees vary based on the loan), homeowners’ taxes and condo fees (if applicable), bringing the total monthly payment to approximately $1,038. The good news is this is still well in the range of the acceptable debt ratio.

Keep Some Money in Reserve

Many buyers invest every red cent they have into their new purchase, but it’s a good idea to keep some emergency cash, or “leaky faucet money,” aside in the event of emergency repairs or a job loss. So don’t completely raid your savings; with home ownership, expect the unexpected.

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Easy Ways To Build Corporte Credit

Building corporate credit takes time to build and energy. Even by aggressively implementing credit-building strategies, it takes six months to two years of credit building and good payments to develop a solid credit foundation. Good business credit means properly growing and nurturing your business and personal credit. Expect that early on in your business, you will frequently be asked for a personal guarantee for credit lines. The personal credit of the majority owners and officers of a business are often taken into account when a lender makes a business credit decision. Weak personal credit will not stop you from building business credit, but it will slow the development. If you have meager personal credit, think about taking on a partner as an owner (member or shareholder) in your business that has good credit. This will allow you to start the corporate credit business process while restoring your personal credit.

When you start to build credit for your business, remember that all of the strategies that you used to build personal credit can also be used to build your business credit. Particularly effective is the three banks, three loans, three months strategy. Make sure that the loans are put into the names of your company and use your Federal Employee Identification Number (“FEIN”). The bigger the bank the better the chances of building the business credit files of your corporation.

Like your personal credit, business credit is also evaluated using the Five C’s of credit. But how do you develop a credit history for a company that just came into existence? This article will hopefully give you a step-by-step approach to establishing and growing credit for your business.

Don’t take it personal just know that you will have to use outrageous ways to build corporate credit. It will take a little longer, with a bit more complications, to build your business credit if you have poor personal credit but it will be well worth your time if you can keep the two separate anyway. When building credit you will often be asked for a personal guarantee. If you have good personal credit, as you can imagine, it makes this process much easier. Although be aware that personally guaranteeing a business loan or credit line will affect your personal FICO score and credit ratios and will jepordize your personal assets in the event you default on the loan. The first step in building business credit is to create a business. There are many different types of credit that are available to businesses that are not offered to individuals or sole proprietors or general partnerships. Choose a business structure that is appropriate for your business. Once you have created a business and received an FEIN, time is on your side. You can do nothing and the business grows more credit worthy every day. This is because a large number of businesses fail in the first couple of years. Therefore, just being around in a year or two will “season” your corporation, resulting in a perception of strength and value.

This is why I try to create a couple of corporations and have them in the wings for when I need them. These are called “bookshelf corporations” because their entire corporate existence is a binder of documents that sits on your bookshelf. When I need to create a new company, I just pull one of these off of the shelf and change the name if necessary. Bang! I have a company that has been around for a year, and by its very nature is a better credit risk for lenders. Before you purchase a bookshelf company from someone else, you will want to see a few things in place. First the company should have all the annual reports and statements filed. The corporate formalities should have been followed. The corporation should have a FEIN, generally about the same age as the business. There should be no negative credit history attached to the business, and no business liens. You should get an indemnification agreement with the seller, in the event of a lawsuit that developed prior to the transfer of ownership. Ideally, the company should also have a bank account with a similar aged history, preferably with a healthy average daily balance.

Although you could do nothing and increase business credibility, to develop a business credit history you will need a few more pieces of the puzzle. You will also need a bank account. When building business credit, the length of time you have had a bank account and the average daily balance is very important. Most creditors want to see a bank account reference that is at least six months old. You’ll need to prepare your business credit package. This is an assembly of all the financial documents and support materials you will need for when you apply for business credit. You can send this entire business credit package in to a lender with your application for credit whenever possible. You will want to create bound packages of the following information:

– Cover letter in company letterhead including company name, mailing address, physical address if different, business phone number as listed in 411, fax number, the contact information of a person with the authority to make decisions, email address and company website.

– Banking information including DUNS number, tax ID, bank address, account numbers, length of time accounts open, average daily balance, and last 3 months bank statements.

– Business credit references. At least three references, preferably reference letters, with contact information. These are trade references from open credit accounts with other companies that you do business with, usually suppliers.

– Business and owner character references. These are two additional references to show the character of your business. Customer testimonials are ideal for this purpose.

– Company financial statements. Current net worth statements and profit & loss or cashflow statements for the current quarter and the last two years of your business.

– Future financials. Cashflow projections and estimates on the schedule of business for your company, as well as growth projections.

– Tax returns for the last couple of years.

– Some companies will want to see a formal business plan or audited financial statement. Now it’s time to start applying for business credit.

Review the 3- banks 3-loans 3-months strategy that I wrote about in a previous article on building credit. This method works great for business credit. Make sure that the bank you are using for this strategy reports to Dun & Bradstreet, so that you can obtain a Paydex score at the right level (more about this in the next chapter). Without a Paydex, it will be nearly impossible for you to obtain a credit card without a personal guarantee.

The next place to look is to business-oriented credit cards, like those offered by Shell, Nebs, Office Max, Fedex Store and Staples. A lot of the time business services places like these will offer small business lines of credit without the need for a personal guarantee. When applying to stores such as these, pay close attention to who the finance company is on the application. Many credit card imprints will use the same finance company. Be sure not to inundate them with requests for many cards at one time. One a week is a good practice.

Once you get a card from one finance company, use the credit for a few months and pay early. After six months of so, apply for another imprint card which uses the same finance company to improve your chances of acceptance. One good source of a business credit card is the Sams Club Discover Card. When you open a Sams Club membership, you can apply for an instant approval Discover for business. You will need to have decent business credit to be approved for this card with out a personal guarantee. However, it’s a great way to get a quick credit line.

Conoco, Staples or Home Depot are also good choices for places to go. If you are making a purchase of gas stations or supplies stores, you can usually get a small line of business credit with that purchase. Gas companies are good sources of early business credit because most of the time their applications that don’t ask for a social security number which helps you avoid personal guarantees.

If your business is like most, the first C of credit that you will focus on is building capital. The number one reason that businesses fail is under capitalization. Thus the way you build your business capital is very significant. All undersized businesses require some capital to get started. Depending on the business, you may only need the capital for a small period of time to widen your inventory or pay salaries. Other businesses may require facilities and equipment purchases along with some operating capital to cover business expenses until sales and revenues can support the business.

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How To Get The Best Johnson City Tennessee Home Loans

Did you know that there is a better way to find the most affordable Johnson City Tennessee home loans? For anyone who has spent countless hours driving from one mortgage broker to the next in search of the best deals and the best rates, this is welcome news. Let’s fact it, who has time these days to spend traveling busy highways? Not many of us. Yet, for those individuals and families who are looking to purchase that dream house, the work has to be done. Thankfully, there is a much easier, faster, and more efficient method of finding the right broker. It’s called the Internet.

But first, some terminology. There is a difference between a mortgage lender and a mortgage broker. A mortgage lender is the agency that actually lends you the money. In many cases, this is a bank. A mortgage broker, on the other hand, is an agency that looks for the best deals, the best rates, and the best programs and options you are qualified for. They then present these various items to you so you can study them and make the best decision concerning the Johnson City Tennessee home loans that best suit your individual needs.

For many people, working with a mortgage broker is the best way to go. The broker will do the homework for you, saving you an enormous amount of time and energy. They do the legwork so you don’t have to. Another benefit to working with a mortgage broker is that they can often present you with resources that you could not get on your own. Because it is their daily bread and butter to keep up with the various Johnson City Tennessee home loans programs that are being offered, they have access to many more agencies that you will have on your own. What this means to you is savings! Why pay more in monthly mortgage payments when you do not have to?

By allowing a mortgage broker to find the best deals and best rates available, you allow yourself to save money each and every month that the loan is in effect. Over the course of time this can mean substantial savings to you in real dollars that you get to keep at the end of each month.

Perhaps the second most important benefit that a mortgage broker offers is that they are there to answer your questions. In many ways they offer a more personalized experienced, which can be very important for new buyers who may not understand all of the details involved in the buying process. Brokers who have been in business for awhile already understand the concerns that you may have and can explain the process to you. When you look for a broker to help you with the various Johnson City Tennessee home loans available, make sure you work with one who is accessible.

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Locating The Best Clarksville Tennessee Home Loans

How do you find the very best Clarksville Tennessee home loans without spending hours if not days on the task? The answer is easy if you know how to do some quick online research.

For the first time buyer, and for others as well, finding that perfect house is just the beginning of the process. Most people require financing, and that begins a whole new set of tasks. In general, you have two choices: You can approach a lender directly, such as a bank, or you can work through a mortgage broker who will assist you in finding the best Clarksville Tennessee home loans currently available. For many people, using a mortgage broker is the way to go because it allows you to review many options rather than the one or two that a bank may offer.

Some people may be apprehensive about working with a mortgage broker. The very name, mortgage broker, sounds legalistic and, frankly, expensive, but do not let the name fool you. The truth is, a mortgage broker can be incredibly helpful when you are looking for the best Clarksville Tennessee home loans programs because they can help you through the entire process, which is something many banks would prefer not to do. As well, a mortgage broker can show you many different plans and options which, again, banks are not in the business of doing. Brokers search for the best deals and have access to many more options and programs than banks normally do. All of this can make a huge difference in your ability to secure the best rates and payment plans. For many buyers it can actually mean the difference between getting financing and not getting financing, which, of course, means the difference between getting that house of your dreams and not getting it.

Mortgage brokers are also very good at explaining the process to you when you have questions. Let’s face it, purchasing a house is one of the largest investments that you will ever make, and you need to know exactly what you doing during each step of the purchasing process. The only way you will have that knowledge is to ask questions and get reliable and honest answers in return. Mortgage brokers, the better ones anyway, know this about the process and they are there to assist you with those questions as they come up.

Aside from honest answers to your questions, you also want a broker who will shop for the best rates for your various Clarksville Tennessee home loans options. Again, a direct lender will often offer one rate and that’s it. By using a mortgage broker you can often select the best rates on the market. This can mean huge savings to you during the life of the loan, and is one of the most important and useful benefits of working through a mortgage broker.

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Cash Advance Credit Cards: You Should Know About These Costs

In any case you have to pay back again the cash advance organization the complete amount.

There are numerous on the web internet sites which also provide income progress loans. The only difficulty is that nearly all the on the web lenders supply services to a checking account. It is simple to send the volume through wire transfer to your account. Sending a examine for the on-line utilized personal loan or any other medium can be susceptible. As you may possibly not be able to obtain the examine, so this can be a result in of dispute. So the risk-free way to get money advance with no lender accounts is to go to payday progress business in particular person and get your check out or cash by hand.

Receiving money advance with no financial institution account can be at occasions difficult. Companies generally favor to transfer the funds directly to your account. This ensures them that you will repay the funds as the mortgage will straight be paid again from your checking account. With no bank accounts there is no promise that you will repay the bank loan to business or not. So the businesses could attach hefty costs with the bank loan quantity. In this kind of case it is better to preserve the bank loan for shorter time period and very clear it back shortly as you find an alternate supply of funds. In spite of every thing money progress with no financial institution account is genuinely beneficial, specially when there is no other arrangement of money to fix your financial requirements.

Whilst funds progress credit cards enable you to use part of your credit history line to withdraw cash, there are a amount of expenses and fine print problems that must be viewed as just before proceeding with a income progress. Acquiring a money advance from your credit score card is easier than at any time. Nevertheless, a single need to be mindful of the expenditures associated with getting a cash progress ahead of inserting their credit rating card into an ATM. Even though there are a constrained amounted of credit rating cards that offer you % cash improvements for one yr, most charge significantly higher curiosity charges on money improvements than they do on normal purchases.

1st off, there is a ninety nine% likelihood of getting billed a funds advance payment. Of the over 70 credit score cards covered on Credit score Card Depot, I could not locate a one card that charged much less than a 2.nine% income advance charge. Some cards even impose a $ten minimum payment. That indicates the cash progress rate can be five-ten% if you are only taking $a hundred or $200. Getting out considerably less than $300, as a result, can be pricey.

Now, until you just take advantage of a % desire money progress provide, you will also be charged a increased desire price on the income you just take out. For example, a extremely common credit card with a variable eleven.24% fascination rate on purchases costs 23.49% on cash improvements. This is not the exception, but the rule. No matter of your credit rating, you will very likely be charged 23% or increased on your cash progress balance.

There’s yet another sticky issue listed here.

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Healthcare Philanthropy Trends- Useful Information For Philanthropy Definition Nonprofits

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Increase Mortgage And Mortgage Refinancing Sales With Credit Repair For Your Customers; 6 Easy Steps

While the subprime debacle is responsible to a great degree for the current downturn in the economy, the ongoing malaise in the housing market is not completely due to people not wanting or fearing to buy homes; it is due to a large part by poor credit scores keeping people from getting a mortgage or a mortgage refinancing deal.

To make matters worse, with the horrifying increase in foreclosures across the country, the mortgage, and mortgage refinancing problem for mortgage brokers is just going to grow.

When an individual’s credit score goes down, so does their choices for mortgages and mortgage refinancing options. To compound the matter, hundreds of “credit repair” services are popping up that are quite often at best undependable.

Good credit is an absolute must for a loan originator to be able to put through most reasonable mortgage and mortgage refinancing deals, and with the problem not going away anytime soon, it behooves the loan originator the help their clients with ideas for the credit repair process of improving their credit scores.

This type of credit repair advice is the way that a mortgage broker can turn a potential client into the “real deal” and close their mortgage or mortgage refinancing deal. Also, if done properly, more often than not, the process can take place in a relatively short time span.

Step 1

Realize that rebuilding an individual’s credit score is an ongoing process and requires thoughtful preparation to successfully rebuild his or her credit to an acceptable level to obtain a well structured mortgage or mortgage refinancing product.

For this reason be sure that as your client starts a credit rebuilding program, that whatever your client decides that they can budget and implement, they need to make sure that it is something that they can stick with and that their payment structure is such that they never fail to pay their obligations on or before the dates that they are due. Caution your client not to structure a program with monthly payments that they cannot comfortably make, because being late on any payments will further reduce their credit score and may make a new mortgage or mortgage refinancing of their home impossible.

If there are extenuating circumstances such as divorce, insist that they review their credit program with their attorney before agreeing to anything.

Step 2

If your client’s credit card companies have not reported or have understated their credit limits on their credit cards, it can hurt their credit score. For this reason, have your client determine if their credit card companies are understating their credit limits on their cards. Often credit limits are reported as lower than they actually are and frequently may not be reported whatsoever.

While we are on the subject of credit cards, make sure that your client has a minimum of three credit cards or other sort of revolving credit. Many people mistakenly believe that if they have credit cards it actually hurts their credit score and because of this, they cancel some or all of their cards. This can actually damage their credits score and hurt their chances of getting a new mortgage or doing any type of mortgage refinancing program.

Furthermore, if they do not have any credit cards, have them obtain at least three. If they have trouble with getting typical cards like Visa, Master Card, Amex etc, tell them to try a local department store, or a Home Depot or Lowes. Quite often these types of stores are more lenient in granting revolving charge accounts.

Step 3

Make sure that your client reduces any outstanding credit card balances to under 30% of their credit limit on each of the individual cards. Some people mistakenly think that the 30% figure is based on their overall revolving credit card balance, but this is false. A single card over the 30% balance can nullify the benefit of the effort of having the revolving credit cards in the first place.

If your client has one card over the limit and several others under the limit, if they are limited on cash and cannot pay down the high card, have them see it they can transfer some of the higher card’s balance to the lower cards. Have them check first before doing this to see if this type of transfer creates a higher interest rate or any other adverse effects on their credit.

Thus, if an individual has 3 credit cards with a total of $12,000 credit, but two of them have a $2,000 limit and the other has an $8,000 limit, make sure that they keep the $2,000 limit cards under $600 each and the $8,000 card to under $2,400.

Implementing this simple process will cause credit scores to rise, along with the possibility of obtaining that desired mortgage or mortgage refinancing program.

Step 4

When helping your client to raise their credit scores, make it a point to frequently pull their credit reports for them to determine their status as well as any errors on their reports.

Errors are so common on credit reports that over 75% of all credit reports have a minimum of one or more mistakes on them. Just by their being diligent and carefully insuring that any incorrect reporting information is removed, their credit score will quite often go up incredibly. This is certainly one of the easiest and most effective things that your client can do immediately to improve their score dramatically along with the possibility of them obtaining a new mortgage or mortgage refinancing of their existing mortgage.

Step 5

If your client’s credit has been damaged to the point of having been sent to a collection agency, they probably will not want to immediately pay off the credit card debt. As incredible as it may seem, this situation can actually be more harmful than having credit card debt sent to a collection agency on their credit record.

When one of your clients have been sent to a credit collection agency, the effect on their credit is low after about two years and is virtually wiped out after four years.

Insure that your client receives a written promise from the collection agency for a “letter of deletion” before they do anything toward satisfying the old credit card debt, because without a letter of deletion, they may hurt their credit problem more than help it. Stress to your client that they should not pay anything on the bill until they receive in writing the agreement for the letter of deletion from the collection agency.

Most people trying to improve their credit to obtain a mortgage or mortgage refinancing on their home think that they need to pay off everything as quickly as possible, but this is one case that paying before you obtain the proper documents protecting your situation can actually seriously hurt your credit. People have in reality completely paid off a debt or negotiated a settlement to learn to their dismay that they now have no leverage to get the collection agency to send the letter of deletion.

Step 6

Finally, if your client does not make paid installments on a car or a boat, have them take out some sort of installment loan with someone like Best Buy or Sears on some needed appliance or with Staples or Office Depot for some business equipment. Credit bureaus look carefully not only at the fact that you have credit, but also the blend of the types of credit that you have. Having just credit cards only is not as advantageous as having credit cards and some sort of installment payment loan.

The only thing that I will caution you with here is to be careful of the interest rates on any new installment loan that you may obtain. Some of these rates can be “out of the roof” and create undo stress on the monthly budget.

Also, unlike the credit cards which you should keep in perpetuity, obviously, revolving credit comes to some point at which the loan is satisfied and the monthly payment ceases. Tell your client that this is not a “license to spend”, but if they are wanting to increase their credit score, they should not pay cash for larger ticket items, but instead, put a large cash down payment on the item and obtain an installment loan to finance the remaining balance. This type of arrangement can frequently reduce the interest on the loan as well.

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Five Warning Signs Your Business Needs A Tune-Up

No business owner intends to fail. But after the initial glow of self-employment fades away, many owners unknowingly limit their future opportunities and burden their own credit by doing business and thinking small. Incredibly, many business owners overlook the opportunity to build financial credibility and open doors for expansion by failing to look at specific signs that their business needs a tune-up.


Starting a new business often means putting in your own money to Jump Start the business. Initial out-of-pocket capital expenses might include a business license, signs and advertising, business cards, initial inventory, and business equipment. While this might be the quickest way to get underway in the ‘Start-Up’ phase of your enterprise, it quickly becomes a financial burden when your business needs to expand beyond being just a ‘Mom & Pop’ operation.


It’s often the case that when you need to lease a copy machine, storage facility, automotive vehicle, office or business equipment, the source looks to you to personally ‘guarantee’ the transaction. That means you personally must sign and stand behind the cost. If the business cannot meet the obligation, you’re expected by the source to carry the burden yourself. That means the full extent of your savings, home equity, investments and everything else you have an ownership interest in is at risk.

When a personal guaranty is involved, lenders or business vendors normally collect personal financial information before making a decision about the transaction. They want information such as your personal balance sheet, personal income statement and a personal credit profile in order to make a decision about the loan. The higher your debt to personal income ratio, the more of a strain is being put on your personal credit. Many investors step up and sign personal guarantees because they feel they have no other choice. Yet if you use personal credit too often, it can actually hurt your personal credit score.


If you are doing business in your own name as an unincorporated Sole Proprietor with no corporation or limited liability company, then you are at very high risk of personal liability. That is because legally, you and the business are one-and-the-same.

Establishing your ‘business entity’ is the first step to reducing your risk. Today, the national trend in company formation is that more LLCs are being formed throughout the USA each year than corporations. That wasn’t always the case, but today with IRS adoption of its check-the-box regulations, as well as with the asset protection and privacy now available in states like Nevada, limited liability companies have become very popular for their flexibility, privacy, protection and simplicity of operation.

Operating your business through a Company gives you better credibility in the marketplace and it’s much easier to obtain business credit. Additionally, by operating as a Company, you’ll have more business deductions available to you than if you’re operating as a Sole Proprietor.


One of the reasons so many business enterprises fail is that they don’t have a realistic and specifically written Business Plan with sufficient detail in each category. While a business plan is no guarantee of success, it certainly helps you to move what’s ‘possible’ in your business future to the ‘probable’ category. I won’t say that business owners are lazy when it comes to drafting a business plan – just intimidated by the effort it takes to ‘do it right.’ It means defining your business, laying out the market for your service or product as it exists today, understanding the competitive environment, assessing your strengths and areas needing improvements, and developing a marketing plan and loan proposal that you can take to the bank or other lender with confidence.

Most business owners sum up their unwritten business plan this way: work hard, make as much money as you can, then do it again next year and hope for the best. By contrast, the businesses enterprises that enjoy long-term financial success see a business plan as a dynamic inter-active living document that gets reviewed and updated on a regular basis.


When a business is started, regardless of what your personal credit score is today, it’s entirely possible to build an entirely business credit. With a systematic approach, you can work to build a positive business credit score that is not tied to your personal credit and spending habits. That way, as your business needs cashflow to expand, pursue a major marketing initiative or respond to any other business need, the money is available.

The line of credit your business can have is enhanced by certain factors that help to build business financial credibility in the marketplace. For example, operating your business through a company helps to separate the individual ‘you’ from the business enterprises as a separate ‘person’ in the eyes of both the law and the financial world. Also by developing trade references and opening business lines of credit with vendors such as office depot, etc. you can begin the process.

Your personal credit profile is tied to your personal social security number. The consumer credit reporting agencies keep files that are separate from those kept by a business credit reporting agency. A business can and should develop its own credit profile, but remember that to be successful it must be done differently than the way you developed a personal or ‘consumer’ credit profile.

First of all, you have to be organized. Second, you must be persistent and patient. Third, you must monitor progress by staying in touch with your credit-granting vendors. For example, if you buy office equipment and supplies at Office Depot for your business, rather than use your personal credit card, open an account in the name of your business and ask for a line of credit. Even if you can afford to pay the full amount when it becomes due, make your payments on time and over a 90 to 120 day period. Then be sure to ask the vendor (in this example, Office Depot) to report not under your personal name but under the name of the business. Explain you are trying to build company credit for your business.

It’s important to understand the business credit bureaus. First of all, Dun and Bradstreet is by far the biggest player with the most experience and influence. Today it has registered with it about 70 million businesses enterprises. Its closest competitor is Experian Business, which has about 14 million businesses registered. Business Credit USA, Client Checker, Equifax Business, and FD Insight round out the field and these should be considered as well.

Each of these agencies has employees who stay on the phone and internet all day long to ‘verify’ your submitted business information whether submitted by you or by a third party. If questionable entries arise in the course of their verification process, this will ‘red flag’ your business and result in a less-favorable business credit rating.

You should also know that personal consume credit scores and your business or company credit scores are based on two separate and distinct scales. On the one hand, your personal score (which is rated from a low of 300 to a high of 850) is linked to your own individual social security number as a filing and designation identifier. On the other hand, corporate or company business credit is identified with your company’s IRS-issued taxpayer identification number (also called an EIN or ‘employer identification number). This type of score runs from a lower corporate credit score of zero to a high of 100. For financial credibility, a business credit score of 75 or higher is considered to be an excellent score.

It’s often the case that business owners will put the ‘cart before the horse’ and will unwittingly register with the business credit bureaus in advance of really being ready. Doing so before you have all your ‘ducks lined up’ is a sure fire way to be ‘red-flagged’ and denied a strong credit rating.

You might be frustrated in the beginning at pace of obtaining business credit. However it’s usually the case that you might begin the wrong way and mistakes in the beginning result in ‘red flags’ being raised in the verification process of the credit reporting agency.

In preparing for a registration with the major business credit reporting agencies, you’ll want to first be able to prove up a history of on-time payment with vendors (i.e. office depot, equipment suppliers, commercial landlords, etc.) that will report your business credit history not in your personal name but rather in the name of your business. My longstanding advice to new and experienced business owners alike is that it would be wise to wait on registering with any of the business credit bureaus until you first seriously consider the use of a professional business credit coach.

Some coaching in advance with third-party pre-registration verification may just be the ticket to achieving a higher business credit score. Plus you can learn from the mistakes made by others ahead of you. This can save you time and money.

As I speak at workshops and business conferences around the county, I often get stopped in the hallway afterward and asked for information and referrals to quality business credit coaches. I’m happy to oblige even though I don’t personally practice in that particular area. It’s related to the business enterprises and investment holdings of my business, tax and asset protection clients and I have done my own due diligence on quality providers.

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Settlement Loans, Attorneys, Brokers And Champagne

You may be asking yourself what in the world do settlement loans, attorneys, brokers, and champagne have to do with one another. That’s a good question.

While attempting to determine what kind of article to write for you this week, I read and researched several articles that were published on Ezine Articles, videos distributed through YouTube, etc. Frankly, most of these articles and videos, to include many of my own, are “dry-as-toast.”

Then I realized that most of the individuals writing the articles and posting videos have absolutely no experience in the litigation funding Industry. However, as both an attorney and a licensed health care provider, providing related-services for more than 20 years, I have a great deal of real-world experience that I can share with you.

The title of this article is selected from an actual case that was brought to my attention for review. In fact, I was asked to represent the healthcare provider in pursuing its claim against the plaintiff involved. Many times individuals wonder, “Why in the world am I unable to obtain either a lawsuit loan or a settlement loan?” Unfortunately, these individuals frequently don’t even bother to fairly evaluate the nature of their claim.

The title of this article was chosen from a case in which a plaintiff filed suit for injuries sustained when he supposedly fell out of a tree due to a defective safety-harness. He subsequently sought to obtain a lawsuit loan. The individual successfully sued Home Depot for an allegedly “faulty product.” The plaintiff was also pursuing a Product Liability claim against the manufacturer of the safety-harness.

However, it was discovered that this individual was arrested within a few weeks of sustaining injuries to his head, neck, and upper back, for which this individual sought and obtained chiropractic care. However, it appears as though the injuries were not sustained from a fall out of a tree due to a faulty safety-harness. How do I know this?

You see, the individual was arrested shortly after this purported fall from a tree. What was the reason for which individual was arrested? The individual was arrested for having attempted to rob a liquor store.

The proprietor of the liquor store, once he realized the perpetrator was attempting to rob him, pulled a champagne bottle off the rack and struck the would-be robber repeatedly in the head and shoulders with a champagne bottle.

The would-be robber fled from the scene, leaving behind a gun, bloodied ski-mask, gloves, etc. It would appear that the would-be robber did not realize that the DNA-evidence left behind would link this individual directly to the attempted robbery.

Needless to say, this individual, although he pursued a third-party claim against, among others, Home Depot, the manufacturer of the safety-harness, et al., was unsuccessful in obtaining litigation funding to assist him throughout the process of his litigation.

Remember, individuals pursuing lawsuit loans, legal settlement loans, settlement loans, and other forms of litigation funding must first have a bona fide claim. This simply means that the individual must have a legitimate claim against the party being sued!

Individuals involved in funding such claims often have a great deal of experience in reviewing such matters, even though many of those individuals who offer funding in this Industry lack that experience. Therefore, expect your claim to be scrutinized carefully. Remember, these claims are non-recourse (i.e., if you lose the underlying case you pay absolutely nothing).

While it is true that lawsuit loans, settlement loans, legal settlement loans, and other forms of litigation funding may prove to be extremely helpful to those individuals who present legitimate claims, they are certainly not likely to be of any benefit to those individuals who attempt to perpetrate fraud on the court.

Therefore, unless you have a legitimate claim to pursue, you’re discouraged from pursuing litigation funding to assist you throughout the course of that litigation.

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Getting a Home Improvement Loan: What Your Bank Needs

The popularity of stores like Home Depot and Lowe’s show how many homeowners are jumping on the home improvement bandwagon. Maybe you’re thinking of redoing part of your house as well. Perhaps you want the kitchen of your dreams or an extra bathroom. You know you’ll have to take out a loan to finance the project, but if you’re just in the beginning stages of the planning, you may not know exactly how to go about it. Whether you’re refinancing or taking out a home-equity loan, here’s some information on what your bank needs:

As with any loan, your bank will want to review your financial history before approving you for a home-equity loan. While different banks will have different loan criteria, there are a few things you can expect each institution to require:

-Your address and how long you’ve lived there

-Your employment history and current employer

-Your annual income and assets

-Your total debt and monthly obligations

For home-equity loans, the bank will also need information on your house such as its age and current property value. Save time by bringing the current tax assessment for your property with you. For smaller loans (usually $2000 or less), this may be enough information to indicate the home’s market value to the bank’s satisfaction. However, for larger loans, banks will require professional appraisals. Home appraisals typically cost $200-$300.

Above, I mentioned that banks want to know your total debt and monthly obligations. Specifically, they want to know your debt-to-income ratio. If your debt is greater than 30%-40% of your monthly income, the bank may be unwilling to offer a loan out of fear that you will not be able to make payments.

To further protect their assets, the bank will require a copy of your credit history to make sure you’re not a bad risk. A few months before you decide to take out a home-equity loan, it’s a good idea to get a copy of your credit report and check it for errors. Contact the credit bureau and correct any errors ahead of time. This will save time later and help you get the right loan for your home improvement needs.

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