Saturday, May 28, 2016

Loans :Tips to Get Approved for a Home Mortgage Loan

Some people don’t know the first thing about getting a mortgage loan. They hear reports of dropping interest rates and lower home prices and hastily decide to jump into home ownership. But the process of getting a home loan differs from getting a car loan or renting an apartment, and applicants who don’t recognize these key differences are often disappointed when a lender denies their mortgage loan application.

Educating yourself is key, and there are a number of ways to avoid this heartache and disappointment when applying for a mortgage loan.
Home Loans : Monei Matters

Getting Your Mortgage Loan Approved

Buying a house is already stressful, and being ill-prepared heightens the anxiety. Why put yourself through this? Learn how to think like a lender and educate yourself on the best ways to get your mortgage loan approved:

1. Know Your Credit Score

It literally takes a few minutes to pull your credit report and order your credit score. But surprisingly, some future home buyers never review their scores and credit history before submitting a home loan application, assuming that their scores are high enough to qualify. And many never consider the possibility of identity theft. However, a low credit score and credit fraud can stop a mortgage application dead in its tracks.

Credit scores and credit activity have a major impact on mortgage approvals. According to the MONEI MATTERS, a large percentage of lenders require a minimum credit score of 680 (620 for FHA mortgage loans) – and if your score falls below 680, lenders can deny your request for a conventional mortgage loan.

In addition to higher credit score requirements, several missed payments, frequent lateness, and other derogatory credit information can stop mortgage approvals. Pay your bills on time, lower your debts, and stay on top of your credit report. Cleaning up your credit history beforehand and fixing errors on your credit report are key to keeping up a good credit score.
Loans: Monei Matters

2. Save Your Cash

Requirements for getting a mortgage loan often change, and if you are considering applying for a home loan in the near future, be ready to cough up the cash. Walking into a lender’s office with zero cash is a quick way to get your home loan application rejected. Mortgage lenders are cautious: Whereas they once approved zero-down mortgage loans, they now require a down payment.

Down payment minimums vary and depend on various factors, such as the type of loan and the lender. Each lender establishes its own criteria for down payments, but on average, you’ll need at least a 15% down payment. Aim for a higher down payment if you have the means. A 40% down payment not only knocks down your mortgage balance, it also alleviates private mortgage insurance or PMI. Lenders attach this extra insurance to properties without 40% equity, and paying PMI increases the monthly mortgage payment. Get rid of PMI payments and you can enjoy lower, more affordable mortgage payments.

However, down payments aren’t the only expense you must worry about. Getting a mortgage also involves closing costs, home inspections, home appraisals, title searches, credit report fees, application fees, and other expenses. Closing costs are roughly 3% to 5% of the mortgage balance – paid to your lender before you can seal the deal.

3. Stay at Your Job

I know someone who quit working seven days before she and her husband were to close on their mortgage loan. I have no idea why, and unfortunately, it didn’t turn out well for them. They weren’t able to close on their new home and they lost out on a great deal.

Sticking with your employer while going through the home buying process is crucial. Any changes to your employment or income status can stop or greatly delay the mortgage process.

Lenders approve your home loan based on the information provided in your application. Taking a lower-paying job or quitting your job to become self-employed throws a wrench in the plans, and lenders must reevaluate your finances to see if you still qualify for the loan.

4. Pay Down Debt and Avoid New Debt

You don’t need a zero balance on your credit cards to qualify for a mortgage loan. However, the less you owe your creditors, the better. Your debts determine if you can get a mortgage, as well as how much you can acquire from a lender. Lenders evaluate your debt-to-income ratio before approving the mortgage. If you have a high debt ratio because you’re carrying a lot of credit card debt , the lender can turn down your request or offer a lower mortgage. This is because your entire monthly debt payments — including the mortgage – shouldn’t exceed 36% of your gross monthly income. However, paying down your consumer debt before completing an application lowers your debt-to-income ratio and can help you acquire a better mortgage rate.

But even if you’re approved for a mortgage with consumer debt, it’s important to avoid new debt while going through the mortgage process. Lenders re-check your credit before closing, and if your credit report reveals additional or new debts, this can stop the mortgage closing.

As a rule, avoid any major purchases until after you’ve closed on the mortgage loan. This can include financing a new car, purchasing home appliances with your credit card, or cosigning someone’s loan.
Home Loans : Monei Matters
5. Get Pre-Approved for a Mortgage

Getting pre-approved for a mortgage loan before looking at houses is emotionally and financially responsible. On one hand, you know what you can spend before bidding on properties. And on the other hand, you avoid falling in love with a house that you can’t afford.

The pre-approval process is fairly simple: Contact a mortgage lender, submit your financial and personal information, and wait for a response. Pre-approvals include everything from how much you can afford, to the interest rate you’ll pay on the loan. The lender prints a pre-approval letter for your records, and funds are available as soon as a seller accepts your bid. Though it’s not always that simple, it can be.

6. Know What You Can Afford

We at MONEI MATTERS know from professional experience that lenders do pre-approve applicants for more than they can afford. After receiving a pre-approval letter from our lender, we may wonder whether they had read the right tax returns. We appreciated the lender’s generosity, but ultimately we must decide on a home that fit comfortably within our budget.

Don’t let lenders dictate how much you should spend on a mortgage loan. Lenders determine pre-approval amounts based on your income and credit report, and they don’t factor in how much you spend on daycare, insurance, groceries, or fuel. Rather than purchase a more expensive house because the lender says you can, be smart and keep your housing expense within your means.
Home Loans : Monei Matters
Final Word

If you don’t meet the qualifications for a mortgage loan, don’t get discouraged. Instead, let it be motivation to improve your credit and finances. Many people have risen above credit problems, bankruptcy, foreclosure, and repossession specifically in order to purchase their first house. Just be sure to implement a realistic plan and stick to it.

How long did it take you to realize your dream of home ownership? If you’re currently working toward this goal, what steps have you taken?
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Friday, May 13, 2016

Working Capital Loans / OD Limits

Working Capital
Working Capital Loans
Woking Capital Limits (Cash Credits) / OD Limits :-  Advances by Indian Banks, generally take the following three forms, i.e., cash credits, overdrafts and Loans. A cash credit is an arrangement by which a banker allows his customer to borrow money upto a certain limit against the values of his stocks and book debts for his day to day requirements. This is the most favourite mode of borrowing by large commercial and industrial concerns in India, on account of the advantage that a customer need not borrow at once, the whole of the amount he is likely to require, but can draw such amounts as and when required. He can put back any surplus amount which he may find with him for the time being. The banker granting cash credit and overdraft facilities has to estimate the amount of his customers requirements, and in case the actual drawings fall much below his estimate, he may lose interest on the funds remaining ideal...

Overdrafts:-  When a customer  requires temporary accommodations, he may be allowed to overdraw his current account, usually against collateral securities. From the customer's point of view, this arrangement like the cash credit is advantageous as he is required to pay, interest on the amount actually used by him. The essential difference between a cash credit and an overdraft is, that the latter is supposed to be a form of bank credit to be made use of occasionally; whereas the former is used for long terms by commercial and industrial concerns during regular business. In practice, however, this distinction is not always observed and some banks set up regular limits for overdrafts also.
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Saturday, May 7, 2016

NPA ( Non Performing Assets)

NPA (Non- Performing Assets)

An asset, including a leased asset, becomes non-performing when it ceases to generate income for the bank. A "non performing asset"(NPA) is a loan or an advance where:
  1. The interest / or instalment of principal remain overdue for a period of more than 90 days in respect of a term loan.
  2. The account remains "out of order" for a period of more then 90 days as indicated below, in respect of an overdraft / cash credit.
  3. The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted.
  4. The installments of principal or interest thereon remains overdue for two crop seasons for short duration crops.
  5. The installments of principal or interest thereon remains overdue for one crop seasons for long duration crops.
  6. The amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitisation transaction undertaken in terms of guidelines on securitisation dated Feb 1, 2006.
  7. In respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a derivative contract, if these remains unpaid for a period of 90 days from the specified due date for payments.

In case of interest payments, banks should, classify an account as NPA only if the interest due and charged during any quarter is not serviced fully within 90 days from the end of the quarter. 

 For more informations on this subject or if you wish to get concrete solutions against NPA problems, please visit or email us at .

Friday, April 6, 2012

Against Life Insurance Loan

Against Life Insurance LoanAdvance against Life Insurance PoliciesIf a survey is conducted on the common forms of investments made by salaried people across all the cross- sections of the society, life insurance policies will perhaps top the list. One of the important reasons for the popularity of life insurance policies is the Income Tax exemption available on the premium paid on such policies. Besides being a financial instrument to cover the life risk of policy holders, life insurance policies also play an important role as an investment made during one’s entire working life. It is, therefore, not surprising that bank customers offer life insurance policies as collateral securities, be it a proposal for retail credit or a big ticket finance. Collateralization of loans by way of assignment of life insurance policies have, of late, become more important in view of the surge in home finance, where the financial institution insists on an insurance on the life of the borrower, duly assigned in its favour, Also, in financing ventures where the role of a particular person is important for the very survival of the venture as well as the safety of the bank loan, life insurance policies have emerged as a key security instrument. The importance of loans against the security of life insurance policy has acquired a new dimension.

Wednesday, April 20, 2011


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Saturday, July 11, 2009

Thursday, July 2, 2009

Reverse Mortgage

Reverse Mortgage
Reverse Mortgage is an innovative loan instrument in the making, especially designed for the elders. Reverse mortgage is a way to borrow against one’s house to create a regular stream of retirement income while continuing to live in that house. Reverse Mortgage is still in a nascent form in India. Though, in U.S.A and other European Countries, the instrument is already quite popular, In the following sections, we explain the concept of reverse mortgage, the factors responsible for its popularity, how it works and the steps required to be initiated by the authorities to introduce the instrument in India.


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Tuesday, June 23, 2009

Advance against fixed deposit

Advance against fixed deposits
Nature of fixed deposits at the hands of banks
When banks mobilize fixed deposits from their customers, in effect, banks borrow money from them. The relationship between the bank and the depositor is, therefore, that of a debtor and a creditor. By accepting the deposit, the bank agrees to repay the loan due to the depositor on the due date i.e. on its maturity. It is very important to note that the legal relationship between the banker and the depositor is not that of a trustee and a beneficiary.
The Indian Trusts Act defines a ‘Trust’ as an obligation annexed to the ownership of the property, and arising out of a confidence reposed by the owner i.e. ‘author of the trust’ for the benefit of somebody called the ‘beneficiary’. If the legal position of the bank is that of a trustee (as an acceptor of the deposit), the very legal validity of the practice of providing credit against fixed deposit by banks may become doubtful. This is because, no trustee can use the trust property for his own benefit, and in case of an advance against fixed deposit, banks need to exercise the right of appropriating the proceeds of the fixed deposit, in case the loan remains unpaid. A bank plays the role of a trustee when it takes the responsibility of collecting the proceeds and remitting the same to the rightful beneficiary. The role of trustee does not come to play when the bank uses the money on maturity to the depositor.