Housing Finance – A Revolution In The Market

The housing finance in India is growing at a fast pace. The home loans or housing finance is a huge industry in itself. A lot many people are trusting home loans in India to purchase property. This is the best and affordable way of realizing your dream of buying your own home. These finance options are open for all salaried individuals, self-employed individuals, partnerships, and even NRIs. The home loan can be availed for various purposes like loan for building a house, purchasing a piece of land, buying an existing house or apartment, and renovating a house.

The home loan can be availed for all kinds of properties like residential, commercial, and industrial. The loans for industrial and commercial property are of huge size and are normally taken by organizations. People also take home loan for the purpose of investment in property rather than for their own use. These properties are later on sold in the market at good profit.

Apart from a normal housing loan one can also get home equity loan, a unique concept wherein the borrower can mortgage his existing property to avail loan that can be used for any kind of purpose as desired by the buyer. Generally, people avail home equity loan facility for the purpose of marriage, education, or to meet medical expenses. The maximum loan amount that banks normally offer is about 60% to 65% of the market value of the property. The home equity loan is generally provided on difference amount of the actual market value of the property and the amount the customer already owes to the bank. At one time this concept of borrowing was not much known but today it has become quite popular as the funds can be put in use as per the wish of the customer.

The housing finance companies follow a very strict process while providing loans to the customers. The loans are disbursed in line with the credit policies of the bank and financial institution. As part of their process, banks verify the credit history of the borrower to ensure safety of the funds. It is important to check whether the customer is a defaulter with some other financial organization or if he has misused any of the banking products.

The housing finance sector is being promoted in a big way in India. The banks and financial institutions are offering home loans at attractive terms. Even people find it advantageous to purchase property by availing home loan as they get tax benefits and easy repayment options. This is the best way to buy a property especially if you belong to service class. The banks and housing finance companies are also being professionally managed. They are always ready to assist the customers regarding queries related to the prevailing rate on interest, the various tenures available for repayment, conditions or the eligibility criteria for various categories of customers, the documentation required etc. It will not be wrong to say that housing finance in India has caused a revolution in the market and has motivated purchase of properties.

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How to Stop Going Broke and Start Building Wealth

Most people work 6 days a week and 10 to 12 hours a day, so they can pay for their house that they hardly live in it, paying monthly car payment, so they use the car to drive to work, pay their furniture that they bought using easy monthly financing, and pay the gasoline to fill up their cars’ fuel tank to go to work again, so they can earn money to pay all the bills. The cycle continues until they reach the retirement age and they realize that they don’t have enough money for their retirement.

They may look affluent and rich, but they are only renting a life style. Most of these people, they are only 2 to 3 months away from being homeless and having their luxury cars and houses repossessed if they ever lose their income from their job.

A friend of mine, she and her husband have to work 50 to 60 hours/week Monday to Sunday, so they can pay for their town house mortgage. Every time my wife and I visit her at the restaurant where she works, she told us that she and her husband are tired, and they don’t have time to spend with each other, because they work from Monday to Sunday. When they decided to buy their town house, the mortgage broker forgot to mention about the CCNR fee, and other fees that comes from owning the town house. Their mortgage is around $2700 plus the CCNR fee, electricity, phone, and other expenses. They can easily spend over $3500/month! I felt really bad one day when I saw her getting sick, but she had to go to work on Sunday, because if she didn’t go to work, she was afraid that she wouldn’t have enough money to pay for the house monthly payment. What made the story worse, her husband lost his job! I won’t into details.

Why do a lot of people drive a luxury car that they can’t afford yet? It doesn’t make sense to pay $200 to $1500 a month to pay for a luxury car that we use to go to our work place, and use the income from the work place to pay the bank, so we can keep the car! Also, don’t forget about the monthly interest that the bank charges.

I met a young lady in her early twenty who told me that she didn’t use finance to buy her car but she leases her car! She thought the best way to own a car is to lease it, so I asked her, what would happen to her car if she didn’t pay the monthly lease. She said, the car company would take the car back! At that moment she realized that she doesn’t really own the car. She was just renting it from the lease car company. She had to work hard to earn some money to pay her car monthly lease. If she bought the car cash, she wouldn’t have to work so hard to keep her car.

We have to stop thinking about how much monthly payment we can afford. It is not smart to finance something that loses values and depreciates. If you haven’t read the book, Millionaire Next Door, you may want to buy and read it. The book Millionaire Next Door, the author says that most American millionaires drive 3 to 5 year old car that they pay cash for it. They use their money to invest to their wealth accumulation investments, instead using their money to pay the bank’s interest charge!

When you buy a car on finance, you are like renting the car! What happened if you don’t pay a house or an apartment rent? You will get evicted; your landlord will kick you out of the apartment. It’s the same with buying a car by using credit, if you can’t pay for the monthly payment, the bank will evict you from owning the car.

Before I learned the danger of owning a car through easy monthly financing and payment, I decided to buy myself a Lincoln Navigator through the car dealer financing Labor Day special! It was one of the biggest mistakes of my life, because I agreed to pay $10,000 down payment and $265/month for the SUV. Before long I realized that the cost of the gasoline was around $400 to $600/month. That’s before the gas price went up to $3.00/gallon. So when we added the car monthly payment plus the gas price, we easily spent $700 to $8000/month just to keep the SUV running.

Since we were so broke, we had to learn how to write a financial statement report to see where our money went! After we created a financial statement report, it was like an X-RAY to our financial problem, we could see where the problem was and where our money went, the money went to the monthly payment and maintenance of the SUV!

The credit unions that lend me the money charges $100 at least every time I made a payment. I asked the lady who worked there why they had to charge $100 for each car payment I made; she told me that they were collecting the interest for the loan up front! So every time I paid $265/month for the SUV, they took $100 for the interest and the $165 toward the principal of the loan.

It was hard to sleep at night when I had to think about the cost of owning the SUV; I was scared that our SUV would be repossessed by the credit unions if I failed to pay the monthly payments. Within 9 months, we decided to sell the SUV and it was a relief.

I saw an advertisement on a car magazine, the owner of 2005 Porsche Boxster Sport advertised his 2005 Porsche for $10,000 and then it said; please take over the car payment of $750/month! My wife and I said “Wow, $750/month!” We thought paying $265/month for our Lincoln Navigator was pretty bad.

Today we drive a Chrysler 300M car that we paid cash for it! It’s not as big as the SUV, but we feel good driving it, because we own the car, and no bank will repossess the car if they don’t make the monthly payment. In fact, since we paid for it cash, we don’t have monthly payment! We can use the $265 that we used to pay the bank for the SUV for our investment account.

In December 2005, I decided to buy John Cummuta’s series, Turning Debt into Wealth for my own Christmas present. I love what John Cummuta said about the new car smell, if we like the new car smell, they sell it in a spray can and you can spray it inside your car if you just want to smell the new car scent. I have not met John Cummuta personally, but he has become my great financial intelligent and literacy mentor and I am thankful that I found his audio series, because John Cummuta has taught me a lot about not to go into debt and taught me a lot on how to build wealth.

Every time my emotion goes crazy about buying a new car or buying something on credit, I will listen to his CDs series over and over again as a reminder of the danger of getting into debt. Another thing that I learned from him is, when you don’t feel good or depressed, and you are tempted to buy things on credit to make yourself feel good, you can go ahead take a hot shower or bath, so you will feel better. If you haven’t had the chance to listen to John Cummuta’s audio series, I encourage you to invest your money to buy it. John will give you a great revelation about the danger of getting into debt, teach you how to get out of it and start building your financial future.

One of the costliest things in our life is being ignorant and remains ignorant for the rest of our life is dangerous.

If you are serious about improving your financial life, you must take a serious step and action to achieve it. A journey of thousand miles begins with one step. If you don’t make the first step today, you won’t go anywhere near your goal and dream.

So how can you avoid of going broke?

1. If you can’t afford to buy a luxury car, don’t buy it! I know that the credit industry will try to seduce you into getting the 0 down payments and easy monthly payment. When you see that advertised at a car dealership, I suggest that you run away and don’t even think of getting into debt to buy a car. So how can you buy a car then? One of the nicest places to buy cars cash is a public auction. They have a great auction place in Los Angeles; you can buy a car for $2000 or less cash! Save your money, and then when you have enough cash to buy one, buy it cash. Why do you want to buy your car cash? You will have a better bargaining position, you can bargain for the car you want.

2. If you can’t afford to buy a very expensive house, buy the one that is on your affordability range. Forcing yourself to get into a $500,000 or $700,000 house before you can afford it, is like setting yourself up for a long term financial disaster. Also don’t buy a house if you are not planning to stay in the area long enough. I love my mortgage broker; he would go with me into details about getting a mortgage. He would talk about I could afford and he wouldn’t give me a mortgage just because he wanted to make a commission out of it. He went through my financial statement and he helped me to make a wise decision whether it was a good time for me to buy a house, or to buy an investment property.

3. Increase your financial knowledge and literacy. Department of Motor Vehicle will not issue a driver license to drivers who are not ready to drive and have not taken the driving tests. I know some people will drive illegally and get themselves into a lot of troubles. You don’t just get into a car and start driving well in one day. Most people have to go through a learning process before they can drive a car. The DMV wants people to learn about the traffic signs, how to merge, and to park because they don’t want you to get into troubles when you drive your car. One of the biggest mistakes people ever make is; they never invest their time to learn how to be smart financially and how to invest their time and money.

Earl Nightingale said that it is foolish when we expect great things in our life for nothing. When you want to become good in something, you must be willing to learn and to study the subject that you want to be good at. When you want to go to a doctor, you have to make sure your doctor has gone though a lot of trainings and have a lot of experience from the medical school. When you understand the danger of getting into debt, you don’t want to go into it any longer, although some people will ignore the warning like a lot of people know that smoking is bad for their health, but many people are still smoking today knowing that their habit will risk their life.

4. Learn to respect your money. Yes, you must learn to respect your money. You work hard to earn it, and you must protect and respect it. I am not saying that you have to be stingy, I encourage you to start being generous, because being generous is very rewarding. From our experience, my wife and I always get back what I give to charities, sometimes even more through business clients and our business. To respect your money means that you won’t waste your money on things on things that you don’t even need. Sometimes it is hard to resist buying things when they are on sales, but if you don’t need it, don’t buy it. There will be another day and there will be another deal out there, so refrain yourself from going on shopping rampage during sales days at the mall. If you can make your own coffee, make it yourself, instead of buying it from a coffee shop for $5 a cup! If you spend $5 a cup, in ten days, you will spend $50. Spending $50 on coffee is a little bit too much in 10 days. My wife and I love going to eat at sushi places; we used to go eat sushi and spent $40 to $60/week. We realized that in a month, we would spend over $240 on sushi, so we decided to go there once a month. Anything you don’t respect will flee away from your life, so learn to respect your money.

5. Keep in track all your expenses and incomes. I decided to buy a PALM PDA, so I can keep in track all my expenses and incomes. I can compare the money that is coming in and the money that is going out. I can see how much money I have and how much money I owe. If you have $100 to $300 in invest, invest your money you buy a PDA, because A PDA is a great tool to keep your financial record, just make sure you add password to it, so no body else can get into your financial report. A friend of mine told me that she was in debt, and when I asked her, how deep she was in debt, she said “A lot!” “How is a lot?” I replied. She answered “A lot, and I don’t know.” I told her that she must find out how much money she owes the bank before she can work on paying her debt. You can not hit a target that doesn’t exist. You must have a target to aim and have the target written out. John Cummuta includes a debt elimination program booklet in his audio series that has helped me a lot, because of his teaching, today we don’t have any more debt!

Everything starts in our mind. We have to change the way we think about money. Instead of thinking about going into debt, we must start thinking about how to build wealth and how to make our money works for us instead of against us.

I keep telling people in invest in their mind over and over again, because if you stop and think about it right now, most of your wealth and everything you have today is the result of what’s in your mind. Your ability to perform at your current job or business is determined by how your mind thinks. Let say, you have a massive head injury and tomorrow and because of your head injury you can not speak or write anymore. Since you can’t speak and write anymore, you won’t be able to keep your current job or to run your business. So please never ever take the gift of your brain and mind for granted! Your mind and brain can bring you’re a vast amount of fortune and even make you a millionaire if you use it to think! So start thinking my friend, think today and use your mind to think!

I hope this article has helped you understand why going into bad debts is dangerous. Many people go into bad debts without realizing that they are risking their financial future when they buy things today by using credit. I also hope that this article has helped you to think right.

I wish you the best in your life today and write me today at [email protected], I would love to hear your success stories. God bless you in your journey toward financial wisdom and May the Lord richly bless you!

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