Wednesday , 21 June 2017
Lending and its three C’s

Lending and its three C’s

Real estate is a good place to make your investment, even if it means availing a loan for its purchase. It might be a loan in the present but for the future it certainly is a very lucrative investment. The rising popularity of real estate as an option for investment is due to the fact that there will never be a decline in the demand for real estate and hence there will be no depreciation in its value.

So what then is the way to acquire a real estate when you do not have enough funds to finance it? The answer is real estate loans. A loan is nothing but borrowing an amount of money from a lender, who charges a particular rate of interest along with the principal amount when you return it. And since this loan is related to real estate it is known as a real estate loan.

Generally it is a bank or a financial institution that makes these loans available to the general public, however, it is also possible that companies that are privately held and managed like the Equity Bank in Minnesota, under the chairmanship of Steve Liefschultz, give out these loans and advices regarding them too.

Getting a loan may seem a very easy task but the person or company lending the money needs to first verify into the details of the applying candidate, with particular emphasis on their credit history. Surely you too would like to know the person you are about to lend money, so that you do not have to end up in a pool of loss. This is what finally culminates into the three C’s of lending – Credit rating, Collateral and Capacity to repay.

This analysis of the borrowers based on the three C’s was started after the lenders faced heavy losses because of the non-payment of the borrowers. This was begun as a preventive measure to make sure that the borrowers had the capability of repaying the borrowed money and its interest on time and correctly. This method erupted because of the ill effects of the sub-prime mortgages.

The situation of economic decline in the United States was because of the non-paying borrowers to a great extent. This is why the various lenders had to adopt stringent measures of self regulation. The situation had become so bad that some homeowners had to be forced to go through a procedure of foreclosure. It could be said that this economic scenario became a learning lesson for all the financial institutions.

The Equity Bank too which is a privately held and managed financing company in Minnesota thus has very strict rules pertaining to the analysis of an eligible borrower. This company is being managed by chairman and CEO Steve Liefschultz. He in fact, is responsible for being able to ingeniously and rather efficiently work out several successful transactions. He has years of experiences and is hence able to give excellent suggestions and advice to his clients regarding their queries of real estate loans.

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