Archives for May, 2007

interest rate

Refinance Now!

It is impossible to time the market. You never know when the market has peaked or bottomed out. However, there are always tell-tell signs that they are approaching. One of these signs is when experts approach a consensus view and amateurs ignore it. Citing short-term market behavior contrary to the experts’ views, they opine that the experts are still using yesterday’s models and don’t understand today’s markets. For example, take a look at the dollar. Has the dollar bottomed out? Experts think so. Take a look at this report by Bank Igud. Why do they think this? In the US, the interest is up, in Israel the interest is down, it makes more sense to exchange shekels for dollars and to enjoy the better...
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exchange rates

Dollar Link Q & A

I’ve had quite a few questions from people with dollar-linked mortgages lately. I’ll try to tackle the hardest one right now. The most common question is why have mortgage payments increased while the dollar has weakened, isn’t it supposed to be the other way around? The dollar linked loan is a double-edged sword. The principal is linked to the dollar. To demonstrate what this means. Let’s look at an illustrative example. Say you took out a mortgage loan with a dollar linked plan. Say you took out a ₪500,000 mortgage with 0% interest and a twenty year amortization period. If the loan weren’t linked to the dollar, you would owe 250,000 ₪ after ten years. However, when you took out the mortgage the dollar...
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interest rate

Income is King

I have had a lot of client questions recently about how Israeli banks review a potential borrower’s ability to repay a loan. There are a few underlying parameters that determine if the bank will place a certain loan or not. Amongst them, is the borrower’s debt-to-income ratio. The banks want to see income that justifies a loan request. In general, the ratios range from 25% to 33% of documented income. The individual bank branches will have some degree of flexibility on this, and it is one more reason why engaging the services of a qualified mortgage professional is so important. The good news is that, typically, the banks don’t want your whole life’s history. If things are going well for you now, you will...
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credit

Credit Reporting

If you have been googling about mortgages in English, you have more than likely come across lots of information about credit. The gathering of credit information is standard practice in most English speaking countries. Is it done here? It is important to differentiate between credit history and a credit report or a credit score. You’ve seen ads offering to tell you what your credit score is. In the States, there are three credit agencies that gather information about every purchase you have ever made. If you missed a credit card payment 10 years ago, they know about it. If you have an unpaid parking ticket in another state, they know about it. All of these things will appear on your credit report and lower...
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