Fluctuating Mortgage Rates Result in a Refinancing Craze

shutterstock_182304722Mortgage rates reached their lowest point in 2014 last week, dipping below 4 percent to 3.97 percent (on average for a 30-year fixed mortgage). The dip in rates was a direct result of the commotion that seized financial markets and caused stock prices and bond yields to drastically fall.

These fluctuating rates made the opportunity for refinancing seem too good to be true, and according to Josh Boak and Alex Veiga of the Associated Press, “Ultra-low rates do carry risks as well as opportunities. Charges and fees can shortchange refinancers who are focused only on the potential savings. And falling rates are often associated with the broader risk of an economic slowdown that could eventually reduce the income that some people have to pay their mortgages.”

Because the rates dipped so low, and due to the current mortgage market, many homeowners took this as a sign that it was time to refinance, before interest rates go up again.

The swift fall of interest rates came as a surprise as many assumed rates would begin to increase (to around 6 percent) due to the Federal Reserve raising its key short-term rate next year, which would result in overall higher mortgage rates. The rates dropped to their lowest point however because investors put their money in the U.S. Treasury, effectively raising prices on government bonds, causing their yields to fall.

Don’t expect to see these types of rates again soon, or ever as this week already mortgage rates have increased (minimally, but they are still on the rise).

For more information regarding Mortgage Loans and Rates call us today: at (888) 277-1697!

CELTIC BANK is committed to offering the best selection of mortgage loans geared to meet your specific financial circumstances. With a range of choices, we give you the freedom and flexibility to build your dream home, whether it’s upgrading your current residence or purchasing a new one.

Celtic Bank is also an awarded SBA Lender of the Year with a history of successful history of partnerships with small business owners. Through our SBA loansasset-based loansconstruction financeand equipment financing, we provide the financial framework your company needs to grow and succeed.

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A Complete Guide to Asset Based Lending

459375933What is it?

Asset-based lending implies a secured lending arrangement whereby the assets securing the loan are the primary source of repayment as opposed to cash flow or earnings from the business.   In conventional bank underwriting, earnings from operations are assessed to determine debt service capacity and a lender may or may not take collateral to secure the loan as a secondary source of repayment.  In an asset-based structure, the loan is self-liquidating and the conversion of the underlying assets to cash comprises the lender’s primary underwriting focus.  The most common example of this occurs from the collection of accounts receivable and sale of inventory whereby the proceeds are used to relieve or repay the loan.

At Celtic Bank we describe an asset based loan as: revolving working capital financing for businesses involved in the extension of credit and management of inventory. These types of loans can be used as working capital, to refinance revolving debt, and for purchase order financing (depending on location and loan amount).

Asset based lending usually becomes the most viable option for getting financing for companies that have exhausted all their other fund raising options, or for businesses in dire need of immediate capital. In most cases, these loans have lower interest rates because if the loan is to default the lender will seize and in most cases liquidate the assets tied to the loan.

What are the Advance Rates?

The advance rates for an asset based loan from Celtic Bank are up to 85 percent on Accounts Receivable and up to 50 percent on inventory, with some limitations based on acceptable A/R to inventory ratios.

When it comes to these types of loans we are fairly aggressive on inventory relative to the market, depending on the company and their reasoning behind the need for an inventory advance.

Usually we offer a one to two-year renewable contract term, but we area also open to longer-term deals depending on the business and their needs.

What are the Costs?

The interest rates are a floating rate over Prime with total rate determined based on loan size and credit profile of the borrower. The smaller the deal the higher the rate because it puts more risk on the lender. Larger deals will generally have smaller rates, as will lower risk deals.

There is a closing cost of between 1 and 2 percent, depending on the loan program – these are one-time fees and are not annually recurring.

All other costs associated with an asset-based loan will be included in the rate of interest. There is a monthly minimum fee (not additional) which requires about 30 percent utilization of the line – this means that if there is a one million dollar deal made, each month their monthly minimum fee would be based on the interest the lender earns on a $300,000 average loan balance.

What Assets Qualify as Collateral?

Celtic Bank only requires A/R and Inventory.

What Inventory is Eligible?

Any raw materials (goods used in production) as well as finished goods waiting to be shipped qualify as eligible inventory. No work-in-process will be considered eligible as an inventory asset.

What is the Maximum Loan Amount?

Generally we make loans up to 5 million dollars. We may be able to increase your loan line to six or seven million in California for the right transaction

What are the Closing Procedures?

In general closing a loan like this can take anywhere from three to four weeks. After pre-screening, underwriting is done. If the deal looks good, we will provide a term sheet. If the term sheet is accepted, we take a deposit for expenses or an audit deposit. Then we collect all personal information on the guarantors and we ask for you to submit an application package. From there it usually takes about two to three weeks for our underwriter to send the loan package to loan committee. After a loan has been approved by the committee it typically takes two to three weeks to close.

How is Celtic Bank Different?

What sets us apart from other banks is our underwriting approach. We are far more liberal on underwriting/credit quality and on deal structuring than conventional banks. This is because we use government guarantee programs to reduce our credit risk, meaning we have the ability to help more small businesses across the country. What makes us different from factors and commercial finance companies and non-bank asset-based lenders is our rates; they are typically 33 to 50 percent the cost of typical factors. Another aspect of our approach that sets us apart from other lenders is our aggressive inventory approach.


Let us know if you have any questions about asset based lending, and if you are interested in learning more about our flexible and affordable working capital solutions call Daniel Godfrey at (888)241-7157

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Student Loans Outlook Ahead Looks Better

studentloansAccording to a September 24, 2014 Bloomberg Businessweek Article, the outlook for student loans, which has previously been quite bleak in the United States, looks much better for the future. According to the article, fewer individuals are not able to pay their student loans back year after year, and the student loan default rate decreased from 14.7 percent to 13.7 percent from 2013 to 2014 alone. Although the forecast for student loans seems to be getting better, there are still a large amount of young adults defaulting on their loan payments, meaning there is a larger problem with the state of Student Lending in general that needs to be addressed.

Education debt has the potential to affect the whole country, not just the student who are defaulting on their loans, and not just the schools they attend. Those students to face harmful credit scores and those schools do face decreased federal funding the more students default (most of the schools facing losing funding are for profit schools with a high percentage of students defaulting on student loans).

Student loans are a rocky terrain, and there is a lot of information out there that the American Public doesn’t know or understand. Before seeking a loan, any type be sure you can adhere to the terms, and if default is imminent do everything in your power to fix your financial situation and make payments again. The lending economy affects our whole economy.

learn more about student loans here.

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Banks and Big Data

161906068Your financial institution has access to your name, phone numbers, home and work addresses, social security number, credit card data, account information and whatever other personal information you use as your security checks. This information has turned banks, credit unions and alternative lenders into technological companies that are driven by data with the ability to analyze millions and billions of data points. In a market where companies would do anything for this type of data, what are your financial institutions using it for?

  1. Fraud Detection: because we have the ability to use our financial information anywhere at any moment, fraud has become more prevalent. To combat the fraudulent use of credit card and identity information, financial institutions are using your data to detect falsified transactions among all of your legitimate account activity. Has your bank or credit card company ever called you in order to approve a transaction? It was most likely because this transaction was unusual to your spending history based on the data your financial institution analyzes about you.
  2. Risk Management: your data isn’t only being used to keep you safe; your financial institutions are also using your data to protect themselves. Banks can use your data to monitor your spending and credit activity and make predictions as to how your portfolios will perform over the course of a fiscal year, based on this they can decide to extend or decrease your lines of credit, or refinance your loans.
  3. Target Marketing: financial instutitutions are also using your data to get to know you better so they will be able to target specific offers, deals and advertisements specifically at you. This data helps banks and credit card companies better understand how you behave financially so that they can target deals and sales on that to give them better success rates.

Big data is trending right now as more and more companies are realizing how valuable all of this information actually is. Due to the Heartbleed bug and other large data breaches at companies like Home Depot and Target, people are also being way more careful with how they handle and allocate all of their personal information. Financial institutions are kept secure under lock and key, both physical and digital, but we do give them a wealth of our extremely sensitive personal data. Due to this growing concern about our personal data, we have decided to delve deeper to get a better understanding of what it is financial institutions actually do with your personal information.

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Why Women Business Owners Are Having Trouble Finding SBA Loans

Although there has been a steady increase in the amount of businesses owned by Women Entrepreneurs this past year, Small Business Loan approval rates for Women Owned Businesses has not increased, and in fact is seemingly getting worse. The approval rate for women Small Business Loans is between 15 and 20 percent below that of their male counterparts. One reason for this trend might be that these Women Owned businesses are newer, and have less revenue which deems them as a riskier asset to most traditional lenders. It has also become apparent that women business owners on average have lower credit scores than male business owners, which makes it harder for them to secure traditional financing as well. 2/3rds of all women owned businesses actually have less than $25,000 in revenue a year, another big hinderance to their financing needs. We can only hope and assume that as women owned business age and become more common their lending forecast will look much better

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