An Introspect and Retrospect of Global Home Loans and Finance

Residential properties are investments. Lenders provide the financing whether the case be the homeowner living in it or renting it out. Financing for these properties depend on the lender. The borrower then decides whether he can access the cheapest form that is made available to him.

Global home loans and financing establishments aren’t banks. Like any fiscal industry, they look closely at numbers. The way global home loans and finances review applications is by looking at the borrower’s businesses.

There is an assurance that every applicant will be treated with respect. Just like in a credit card application, global home loans and financing establishments are not allowed to discriminate any applicant.

Each applicant is appreciated and respected. By their approaching the global home loans and financing establishment, the industry is strengthened in a fiscal manner. Each transaction is an opportunity therefore there is the promise to provide the applicants with the urgency and services that they deserve.

These establishments will help you reduce your document loans. It will also assist you clear your borrower’s slates if you had credit problems before.

Borrowers applying for a huge amount of loan are also assisted. Also, those borrowing for construction purposes are prioritized. It is not just for home equitly loans or equity lines of credit.

The good thing about this is that most global home loans offer zero down and 100 percent financing. This helps home buyers to get their dream homes. Their offers are mostly interest only and home refinancing plus loan plans are made available for their clientele.

If the applicant is refinancing a mobile home, global home loans can also assist them. Any home loan program that has no or little down payment can be made available to purchasers who have little or no down payment. Those who have bad credit need not worry because they will also be assisted.

Now these financial institutions comprise the global financial system. These also act internationally, meaning they expand further than their national or regional counterparts.

The financing under these global home institutions are closely checked by the International Monetary Fund, as well as the Bank for International Settlements. In a way, this is a business of global financing, therefore national agencies, government departments, finance ministries, central banks and private institutions are somehow involved.

When talking about how these global home loans and finance started, it must be noted that its history is different from that of the history of money as well as economic history.

It all started in Europe where banks and financiers started a fiscal business that will not only benefit their own institution but also that of their partners. The milestones from this revolutionary idea led to the creation of reputable exchange banks such as The Royal Exchange and the Amsterdam Stock Exchange.

Later on, more notorious international institutions such as the International Monetary Fund, the World Bank and the World Trade Organization were established. All three play a big part in global home loan and financing because they are integral to the financial system.

The International Monetary Fun records all international payments. It also serves as the lender whenever problems occur.

The goal of World Bank is to give funding and take credit risks in return for favorable terms towards fiscal development in not only developed countries but to the developing countries as well.

Finally, the World Trade Organization is the mediator whenever negotiations and trade disputes go awry.

In the long run though, all transactions that are accumulated by global home loans and financing pass through government institutions. They are also actors in the financial system. Banks, exchanges, funds and private players have crucial roles. They are closely intertwined to the banks.

The global home loans establishment may be responsible for approving applications but as money rolls in, the government and international transactions come into play. However, the global financing system has been debated throughout the years because of its need for reformation.

It has been questioned whether the billion mortgage banking industry such as the global home loan is necessary. In fact, the answer is quite obvious. Since it has been successfully implemented and has given various loan transactions, there is no doubt global home loan and financing is crucial to the fiscal industry.

Finance Series – Exploring Investor Rationality

The Efficient Market Hypothesis has been under fire since Eugene Fame of the University Of Chicago Graduate School Of Business first suggested it back in the early 1960s. The central idea behind the Efficient Market Hypothesis is the theory that investors are completely rational in interpreting and acting on market news and information (which, ostensibly, is fully revealed public knowledge).

It has since come to be known as the Theory of Rational Expectations. This rational investor behavior is factored into the value of all news and information the moment it becomes available. And it happens to the extent that “beating the market” becomes an impossible task.

The idea of investor rationality has been under fire by the few “gurus” who have consistently beaten the market since its inception. Nobel Laureate and father of Behavioral Finance, Daniel Kahneman, pointed out that the failure of the rational model is not inherent in the logic of the theory, but rather in the human psyche. He posited that nobody has the ability to simultaneously process all incoming stimuli and attain a complete understanding and mastery of that stimuli.

From the many arguments for and against the theory of rational expectations, I observed that many of the arguments stemmed from a difference in the understanding of what rationality means in the first place (indeed, that is further proof that “rational” people can look at ideas and apply their own bias and still be regarded as “rational”). If the world is made up of blistering imbeciles making irrational decisions, like those who argued against the theory suggest, wouldn’t the world more closely resemble an assembly of monkeys? Yet, if the world is made up of rational humans the way the theory postulates, wouldn’t the world be more robotic than human?

For too long, academia has debated the theory by taking sides with either the monkeys or the robots without a clear understanding of what constitutes rationality in the first place. Is the investor who rushes blindly into the stock market during market bubbles irrational? Are investors rational beings if they buy undervalued and sell overvalued stocks? Essentially, all reasonable human beings are rational! Rationality is the consistency of action based upon a set of logical variables. The issue here is that the difference in one’s level of knowledge and life experiences is the determining factor that allows for the installation of a distinct set of logical parameters and values in every human being!

This means that two human beings looking at and interpreting the same information can come to two separate conclusions and resulting actions! The result of which is a two-sided market. An investor who has lost a significant amount of money in the stock market may prefer to stay out of an overextended stock regardless of how fantastic the news. On the other hand, investors who have never been through that same life experience would simply continue to buy on the news. Both investors, in this case, are rational in regard to their own level of knowledge and experience. This explanation of rationality effectively consolidates all the differing views on the Theory of Rational Expectation. Because investors are rational, two-sided markets are created, making the overall market more and more efficient. Because investors are rational, they rush after price bubbles on the expectation of profits only to be defeated by the Law of Regression to the Mean.

Being greedy is a rational response to one’s needs and wants and being fearful is a rational response to one’s past sufferings. The driving factors of Greed and Fear are also rational expressions! Contrarians who take positions against the market are rationally expressing their expectations that markets eventually turn against the prevailing trend. Trend followers who take positions along with market trends are rationally expressing their belief in that trend continuing into the foreseeable future. Both create a two-sided market for each other, driving the overall market towards more and more efficiency.

However, this explanation of rationality completely nullifies the part in the theory that states that “rational investors should act in a similar fashion in response to the same news”. Because there is no way of measuring or predicting whether or not there will be more decisions of rational buying or rational selling in response to new information, nobody can predict market movement with any moral certainty. Although not attributed to random behavior, the unpredictable nature of the market has more cause and effects than the theory itself can explain.

In summation, any argument to explain market behavior through the notion of rationality has limited application in reality. As investors in the stock markets, our understanding that the markets cannot be predicted and the set-up of realistic stop loss points in preparation for worst-case outcomes and hedging portfolios using stock options, are the most rational actions that can be taken. As behavioral finance suggests, everyone makes the best of a bad situation and the situation in the stock market has never been ideal for anyone.

Financing a Franchise in Canada

Clients who are contemplating purchasing a new or existing franchise in Canada are always asking how financing a franchise works in Canada. The Canadian franchise industry is of course huge and covers almost every type of business in Canada. Certainly the majority of franchises seem to be in the Hospitality and QSR (Quick Service Restaurant) industry, but in actuality every type of business has some sort of franchise model attached to it. The franchise concept is many an entrepreneurs’ answer to the Canadian dream of growth and profits through business ownership and self employment.

It should not come as a surprise to Canadian entrepreneurs that there is no one single option of solution for financing a franchise in Canada. The reality is that a number of possibilities exist, and in some cases you must use a combination of these sources to complete the financing successfully.

The main source of financing in Canada for franchising is a government ‘subsidized’ and ‘guaranteed ‘loan from the Federal government. The program has two names, the CSBFL, and the BIL. These are acronyms for the government’s formal name for the program.

We firmly believe that this is the best program, bar none, for rates, terms, and loan structures in Canada. While the program is available and applicable to all Canadian businesses the majority of businesses in Canada that are franchised fall under this program.

That’s the good news, the less than good news is that in many cases you cannot totally complete your business franchise purchase with this loan financing on it own. Why is that? Simply because the program is structured and has limitations on what can be financed.

What can be financed under this program? The answer is 3 items only-

Equipment
Leaseholds
Real Estate

So if your acquisition of a new franchise involves anything other than these three items additional financing sources are needed. Those additional financing sources tend to come from your own personal resources, other structured term loans, and in some cases a vendor take back from either the franchisee you are buying the existing business from, or potentially the franchisor itself. Don’t focus too much on the latter because in case you haven’t guessed by now, franchisors or master franchisors are interested in selling you a franchise so they can build another franchise unit into their network! They aren’t in the finance business per se.

The benefits of the franchise loan structure of the BIL/CSBFL program are significant. For a starter they carry only a 25% personal liability, and secondly the rates (3% over prime) (In 2010 Canadian primes continues to be very low!) are excellent. Under the spirit of the program the loan finances 90% of your eligible expenses. But don’t think that only a 10% equity or personal investment by yourself is going to get you approved. You should in general be thinking of anywhere between 25%+ as your own personal contribution to the business.

In summary, financing a franchise in Canada is a unique specialty type of financing. You don’t want to do it wrong the first time and endanger your prospects of success by poor planning and mis information. Speak to a trusted business financing advisor who has credibility, experience and background in this area of Canadian business financing. With proper planning and assistance you will be on our way to achieve the Canadian dream of business ownership through the franchise model.