Additionally, first time buyer mortgages are yielding low interest rates due to finance companies’ efforts to attract more customers.

Low Mortgage Interest Rates Are Here

According to the recent 2012 Freddie Mac Primary Mortgage Market Survey, 30-year fixed mortgage rates are averaging below four percent, which is a 40-year low. A year ago, rates were over five percent. For 15-year mortgages, the rates are just over three percent. This is not only good news for new home buyers, but also those who want to refinance their current home loans.

This is the time for want-to-be homeowners who were fortunate enough to survive the troubled economy to look at taking out their first mortgage. With a large down payment and a good credit score, those consumers can find rates as low as 2.24 percent. For a smaller down payment of 10 percent, those consumers can still get low interest rates that range from 3.79 to 4.89 percent.

Getting More House Than You Pay For

Some homeowners who need to get out of their mortgages are taking big losses on their homes. Studies show that losses of 40 percent or more of the original value are common. In a situation like that, a young couple who is looking for their first home loan may be able to buy a house that would be worth 300,000 dollars for only 180,000. Some buyers are reporting even deeper discounts in some areas.

Preparing for Your First Mortgage

Lenders used to require at least a 20 percent down payment for first time buyers. Mortgage companies are more lenient now because they desperately need new customers. Many companies are offering loans for only 10 percent down and some are offering them for as low as four to five percent down.

To get ready for your first purchase:

• Make sure you have clean credit. Pay all debts on time and try to reduce the total amount you owe.
• If you have no credit, start building it with small loans or credit cards. If you have to get a secured loan, do so, but pay it on time.
• Start saving your down payment. Save as much as you can, but try to put down as little as you can. Many experts agree that it’s not a good idea to put a large down payment on a house, so shop around and learn the minimum you will need. Remember, you will probably have closing fees too.
• Do some math to learn what you can afford. Financial experts typically recommend budgeting more than 28 percent of your income for housing. After you know that number, you will know how much house you can afford.

Take the Plunge As Soon As You Can

Economic downturns have always reversed. Financial experts expect that to happen again. If you are planning to buy a home in the future, make it as soon as possible. The day will surely come when property values will increase again and first time buyer mortgages will have higher interest rates. If you can comfortably make your purchase now, your home will gain equity fast as the economy recovers.

I know it’s been a while since we last talked, and I do sincerely apologize for not keeping in touch more frequently. Life has just been tough as of late, and to put the icing on the cake, I lost my job. Needless to say, your words are now haunting me, and I surely wish I listened to you and your suggestions to put money aside. Sadly, I chose not to listen to you and continued to spend foolishly on fancy dinners, nice clothing and dates with women who meant nothing more to me than a quickie. I miss hanging out, and surely miss our nights out on the town together.

Anyways, I’m virtually out of savings and I was hoping that you can lend me a thousand dollars. My severance check is en route, so I’m hoping your money loan will help me pay my next rent. I promise, as soon as my severance check arrives, I’ll have the money back to you.

Sincerely,

Jobless Friend

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Talk about an awkward situation above. Even though it’s just an example, lending money to friends will certainly lead to awkward moments in the future.

Your friend asked you for $1000, and you lent them the money. They promised to pay it back ASAP. That was three months ago, and still they’ve yet to pay you your money back. Your impatience is getting the better of you, and all you want is your money back. Now things are awkward and you’re stuck between a heart and a rock. Do you ask for your money back or simply give up on the friendship and the money all together?

Lending money to friends will become awkward sooner than later. Your friend may have needed the money for rent, but they’re out every weekend partying away. So what gives? Suddenly you’re quite interested in the spending habits of your friend. You begin to wonder; “Couldn’t my friend have stayed home this weekend and just paid me back my money?’

Who’s to judge.  You don’t want to come off as needy, cheap, desperate or someone who’s spying on the life of your friend. How does one approach the topic without coming off as desperate?

Not all is doomed though, there are ways to keep things clean and  possibly get your money back. You’ll notice that I said only the words clean and possibly. However, I’m certain you’ll still experience awkwardness at some point. In the mean time, let’s look at some options to safely administer personal loans between friends.

Secure Friend Lending Services

Two web services that pop out are lendfriend.me and wikiloan.com can be used to safely administer the loan between family and friends. The two systems are independent of each other, yet work on the same principle. Both of the systems create a ledger so you can both see when payments are due and paid. There are premium features available which allow you to use  PayPal to set up payments and  help you out to create a legal contract  between the two parties.

WikiLoan gives the borrowers an opportunity to enter their financial information, which prospective lenders can view before deciding to fund the loan. Asking a friend for a personal loan can be awkward, and with the help of these online services , the overall process is much easier for someone to ask you or for you to ask someone for a personal loan.

Create Your Own Agreement

Another option is to create an agreement between you and the friend or family member you’re lending the money. Simply state the amount and don’t forget to include the dates, when the money was lent and the mutual agreement on when the money should be returned. This way as the lender you have something in writing.

The above three options only address if you’re lending the money in the future. What if you’ve already lent money? I’m certain that if you’ve come to this point that you’re nervous about wrecking a friendship. I did say somewhere about things  getting awkward. However, the awkwardness of confrontation is worth the payoff of knowing where things stand, and more importantly what you can do to resolve the issue at hand.

Reach out, there is nothing to be ashamed of for reaching out. Explain to the borrower that your relationship is a priority, and be honest that it’s at stake as well. Offer to workout a payment plan, and if nothing works out, don’t be ashamed to walk away with your head high.

I’m sure you’re probably wondering what my response would be to the above email. So, here’s the response:

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Dear Unemployed,

You’re a dumb-ass. I feel much better since I got that out of the way.  I never start emails off like that, but seriously you’re a BIG dumb ass. I wish you would have just listened slightly at what was being said to you. I assure you that things would have been different.

I’m sure you’re probably wondering if I’ll lend you the cash. Me too. I’m also wondering if I should lend you the cash. Heck,  you’ve already been irresponsible, and your track record speaks for it self by not listening to some of my suggestions in the first place. However, I do have a heart. You know very well that I’m not the type to kick anyone when they’re down. Maybe on their way down, but certainly never when they are down.

So, here’s what I’ll do. I can’t spot you a full grand, but I’ll give you $800. Consider it an early Christmas gift. Would I like you to pay me back the money? Absolutely. However, I’m comfortable giving this amount to you and knowing that I may never see it again. The bright side of all of this, is that I would hate to throw our relationship down the toilet for $800. I’ll leave it up to you on how you handle this transaction from now on.

Sincerely,

Your true friend

Readers, have you ever lent money to a friend? What was the end outcome?

Eddie

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