You might clearly know that your credit card provider charges a fixed annual interest rate of say nineteen percent, but payday loans are advertised a little differently. Instead of telling you the rate first, they tell you the dollar amount of borrowing. For example, its common to see ads that will say borrow three hundred dollars for two weeks for 69. What you might not realize is that a cost of borrowing 300 for two weeks for 69 is the equivalent of a 599.
64 percent interest rate. Heres how to figure that rate out: Take the cost of borrowing which is 69, and divide that by the amount borrowed which is 300.
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Reserves Needed for Specific Types of Loans. The amount of reserves necessary will vary by loan type And by property type (such as number of units) Typically need at least 2 months of reserves But could be as high as 12 months or even more.
For Fannie Mae and Freddie Mac loans (conforming), reserve requirements vary based on credit score and LTV, along with property type. For example, no reserves may be required for a 1-unit primary residence, whereas two months may be required types of collateral for personal loans unemployed a second home, and six months for a 2-4 unit primary residence or investment property. Ultimately, they can range from as little as zero months to as much as 12 months, depending on the scenario.
As a rule of thumb, more risk requires more reserves. There is no reserve requirement for FHA loans on 1-2 unit properties. However, 3-4 unit properties typically require three months of PITI. For USDA loans, no reserves are required, but they can be used as a compensating factor if necessary.