The Benefits Between Short Term Loans and Long Term Loans

There are many times when you may want to purchase something but you don’t necessarily have enough money on hand to buy it. Even if you do have enough money in savings, you may not be willing to deplete your savings in order to purchase it. That is one of the reasons why people may consider getting a loan and paying for the items that they desired over time. This can be done for almost anything, including purchasing smaller items in your local area, automobiles and even homes. It can also be done on jewelry, especially when you are purchasing a diamond ring for your significant other.

If you’re going to take out a loan for jewelry or for any other reason, it’s always a good idea for you to consider the difference between short-term and long-term loans. Each of them will have advantages and disadvantages that you will need to weigh against each other before making your final decision. Keep in mind, regardless of whether you are paying for a short-term loan or if you are paying for one for the long term, it will be necessary for you to be able to meet that financial obligation.

The first thing that you should do is to weigh the bottom line. If you are taking a long-term loan, you’re going to have lower monthly payments, but you’re also going to be paying more over the course of time. That is because in many cases, loan interest rates are going to compound daily. If you take out a short-term loan, your monthly payments may be higher but you’re going to end up spending much less money in the long term. If you are somebody that lives from paycheck to paycheck, you may find that it’s easier to pay the lower price on a long-term loan and make extra payments when possible.

You should also consider the interest rate that will be applied to such loans. In many cases, there is going to be a difference in the interest rate, depending on whether you take out the loan for the long-term, or if it is going to be a short-term. This will also make a difference in the total amount of money that you spend over the course of time.

Finally, you should consider the reason why you are taking a loan out in the first place. If you are taking out a larger loan for a home or perhaps even for a home equity loan, a longer-term loan is usually going to be the way to go. If you’re going to be taking out a loan for an engagement ring or some other piece of jewelry, you would not typically want to pay for that over a long period of time. That can make a difference in the type of loan that you are getting, not only because you will be spending more or less in the long-term, but because you will be paying out a monthly payment over a different amount of time.

Mortgage Loan Closing Costs for Refinance Loans and Home Purchase

If you are going to obtain a mortgage loan, for whatever purpose (home purchase or refinance) you are going to pay closing costs…period. Let me clarify regarding a purchase of a home…the seller may pay some or even all the closing costs in a transaction, but it essentially works out to just lowering the purchase price of the home and reduces or eliminates the need for the buyer to come up with the cash or finance the closing costs.

While many mortgage lenders, brokers, bankers, advisors, or whoever may tell you that you can get a zero closing cost loan, the fact is, they simply don’t exist. One way or another you are going to pay/incurr closing costs.

That said, there are many ways to pay those closing costs:

On a purchase, the seller may agree to pay some or all of the closing costs which reduces your cash outlay for closing costs
In most cases, you may opt to take a higher interest rate in order to reduce or eliminate closing costs
You can pay the closing costs in cash, at the closing table, eliminating the need to pay finance charges on the closing costs
You can normally opt to have the closing costs included or rolled into the loan itself, reducing your cash outlay at closing
The above list does not cover all the possible options, however, it covers the basic options. The other options will simply be some variation of those listed above.

Estimating the closing costs
Items that are part of, or considered closing costs include:

Loan origination fee
Lenders fee – if using a mortgage broker
Credit report fee
Appraisal Fee
Processing Fee
Wire transfer Fee
Underwriting Fee
Survey
Title insurance
Closing or Escrow fee
Filing Fees
Attorney Fees
Pest inspection
Recording and/or transfer fees
Document Preparation
Notary Fee
Mailing or courier
Those are the major items that can be included as closing costs. Some are required, some are not. Some may be negotiable, others are not. Some will vary from lender to lender, lender to broker, broker to broker, or title company to title company, others will not.

Some items that are NOT considered closing costs, but need to be taken into consideration when trying to estimate any cash out of pocket or you loan size, include the followng:

Pre-paid interest
Mortgage Insurance Premium
Hazard insurance (homeowners insurance premiums
Reserves for payment of future property taxes, homeowners insurance, and mortgage insurance premiums
Flood insurance premiums
Property taxes that are due at the time of closing
Important Facts
Title insurance is regulated by the state insurance commission, varies from state to state, and is not negotiable
Flood insurance, if required (this is determined by the location of the propety, if it is in a flood zone) is not negotiable as to whether or not you need it, however, premiums are determined by whoever you choose as an insurance provider
The fees which are charged by the title company you close with include, but are not limited to; recording fees, fed-ex or mailing fees, closing or escrow fees, document preparation, and attorney fees (where required), do vary from title company to title company.
You have the right to choose the title company you close with – however, in a purchase transaction, in most cases, the seller has already established or set up preliminary escrow with a title company. That does not mean you can’t demand that it be changed. Just keep in mind that the seller may not be willing to change the title company and your sales contract may/should state where the closing will take place. That still does not mean that you can’t choose to change it, just expect some resistance
In most cases, an appraisal is required – the only exceptions to this are normally small home equity lines of credit and/or very low Loan to Value loans. In either case, the lender will make the final determination if an appraisal is required
It is a requirement that you be given a Good Faith Estimate of settlement charges within 3 days of applying for a mortgage loan – if you don’t get one, automatically, make sure you ask for one
You may only be charged the exact cost for the credit report and the appraisal
This article is simply trying to explain what closing costs are along with some specific facts about some general closing costs. It is just intended to give you an idea of what may be included as closing costs so you have a basic idea as to what to expect.

I would always suggest that you do some shopping around before deciding on a lender or broker to handle your mortgage transaction.

Obviously, the best source of good information is from friends and/or family members regarding someone or a company that they have used in the past. A referral to a good company or individual from someone you know and trust is normally the best place to start.

Ok, back to closing costs. It is imperative that when you are comparing costs from one company to another that you have all the facts and information straight from all companies that you are comparing. The Good Faith Estimate, in what you will normally utilize to compare costs. You simply need to make sure you are comparing “apples to apples”.

Choice Of Law In Syndicated Loans And Bonds

Any relationship between two entities, either persons or institutions, cannot be established except in accordance with some set of rules. These rules may be unenforceable norms or customs of a group or society, or some explicit laws having a binding and enforceable authority. A contract is a formal structure of a relationship between two or more parties, binding them together into a contractual relationship; and imposing upon them certain obligations and granting them certain rights over each other. In case of any problem with these obligations or rights, law of the land would come into action. But if the contracting parties belong to different lands, then there would arise a question as to law of which land should come into force. If the contracting parties have no earlier consensus over this issue, then it is more likely that the problem would remain unresolved; and one or more parties would suffer the loss. Hence, the need to decide at the time of making contract, as to which law would be followed.

CHOICE OF LAW IN SYNDICATED LOANS AND BONDS:

Similar is the case of the financial contract. ‘Every legal issue under a financial contract must be determined in accordance with a system of law. An aspect of a contract cannot exist in a legal vacuum.’(1) Syndicated loans and bonds are mostly international in their character. They usually involve borrowers and lenders from various countries; and ‘the greater the number of countries involved the greater the number of municipal systems of law which have to be considered.’(2) As there is not single set of International laws that could effectively govern the syndicated loans and bonds, it is necessary for the parties to these contracts to choose an agreed system of law.

A syndicated loan agreement normally is contracted between the highly sophisticated institutions like banks, corporations, state corporations, and even the sovereign states themselves. It involves a number of systems of law (even a single bank operating internationally can be subject to different systems of law)(3). The international bond issues, too, involve issuers and investment banks from different countries. In some respects, international bonds (Eurobonds) are even more ‘international’ than the syndicated loans, as they are sold to the public at large, and the individuals and other entities buy and sell them in numerous jurisdictions. During this course of business a number of transactions involving numerous legal documents take place. With these transactions rights and liabilities shift from one entity to another very frequently. When it happens in different systems of law, it creates ambiguity about which law should apply in which case. This ambiguity makes the business vulnerable to unpredictable situations. Eventually the whole business market suffers serious damage.

“In order to reduce such uncertainty to a minimum, an attempt is made in practice to apply one system of law to the transaction and to exclude as far as possible the applicability of other systems of law with which the transaction may have some connection. This is generally sought to be achieved in practice by a ‘choice of law’ clause which subjects to one governing system of law _ ‘the proper law’ _ the validity, enforceability and interpretation of the contractual and other legal documents which constitute the transaction.”(4)

The practicality provides the opportunity to the lender to have preference in ‘choice of law’, as in case of a dispute, it is his money that would need to be recovered. In case of the Euro bonds, where an investment bank helps in selling securities(5), the situation becomes different, as the lenders appear on scene after the bond is issued under certain terms including the matter of choice of law. In any case, while exercising the choice, it is preferred that such system is chosen that is familiar to the parties, so that the tendency of using certain type of financial transactions needs not to be changed. Further, the dealing with legal as well as business issues could be convenient. It is also important that the system chosen is greatly mature and the relevant jurisdiction enjoys good reputation for its impartiality. Political stability in that specific jurisdiction and convenience of language are also important factors in choosing a certain system of law(6). The incident of freezing of foreign currency accounts following imposition of emergency after the atomic tests in 1998(7), the stock market suffered such a huge loss that it took years to recover. In such a situation no serious financial activity can grow without fear of the unseen. While the enforcing forum is not less important a factor; the most significant factor of having the choice of law clause is the “insulation of the loan contract from legal changes in the borrower’s country.”(8)

While outlining the contract some of the essential documents would be prepared; for example, in case of a bond issue, the subscription agreement, the trust deed, the agreement between managers, the selling group agreement and the bond instruments themselves, and in case of the syndicated loan, the loan agreement. All of these legal documents would require validity, enforceability and when needed interpretation.(9) This could only be done under an agreed system of law.