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Archive for March, 2012

My Experience as a Prosper Borrower

If you have been reading this blog, you know that I have to borrow some money to pay off some back taxes.  One of the sources for the funds and part of my original plan was to use peer-to-peer lending.  Well, there are only 2 major P2P lending outfits in the United States that I could find.  They are Prosper and The Lending Club.  I had hoped to get the majority of the funds in this fashion.  However, Lending Club does not lend in the state of Indiana (one of only 8 where it doesn’t).  So that left Prosper.

I went to the website, created an account, and filled out some basic information.  Within minutes, I had learned my credit score but was informed that I did not qualify for the full $25,000 loan maximum but only $15,000.  I decided that I needed to take whatever I could get since the possibility always exists that something might come up and I only had a limited amount of time to get all the plans in place to pay the IRS.

Application Process

The application process was a breeze.  I filled out some personal and financial information online which then went into a profile that was posted online.  Investors could read about my need for funds, the interest rate that the loan was paying, and make an investment in my loan.  There was also a verification process that Prosper uses as any bank would with a 3 step code for where I was in the process.  This is to help investors know whether or not my financial information had been verified.

Prosper also sent out a security postcard to my address to make sure that it was actually me who signed up for the loan.  This was mailed to my physical address and I was asked to enter the code on the postcard online.  I thought this was a good step, but wondered what might keep someone from pretending to be me and simply moved recently.  I guess if the physical address didn’t match those on a pulled credit report, it might raise some red flags.

Financial Verification

I also had to send in some documentation to verify my financial information.  This worked out rather well also.  I filled out the application on a Thursday evening and was already getting some investors by the next morning.  I was a little delayed in getting back my financial information since I was out of town for the weekend.  But once I had the time to get the documents together, it couldn’t have been any easier.

I was able to scan everything into my computer and email it back.  I needed to send in the latest W-2 form, a recent pay check, and my bank statement to verify the income.  I also sent a cancelled check that was used to set up the automatic withdrawal from my checking account to make my loan payments.

Watching the Funding Roll In

Watching the loan get funded was an interesting process.  There were several investors that first night, then some more over the weekend.  Activity seemed to slow down after the first few days.  I suspected that it had to do with the fact that I didn’t have all my financial information back due to the weekend and my being out of town.  It turns out I was right, but not in the way that I had suspected.

After emailing my financial information back in, I logged into my account to see if any new investors had added funds to my loan about 12 hours later.  Surprisingly, the entire $15,000 loan had been funded just like that.  I looked through the investors and found that one investor had funded the remaining $13,000+ down to the penny.

After some searching on the internet, I discovered that there are a few big institutional investors that have made investments through Prosper and one of them had funded the rest of my loan.  So, 20 investors are likely individuals and 1 is an institution.  That is OK with me since I needed the money.

The funds were then directly deposited into my checking account about 4 business days after the loan fully funded.  Again, the process was easy.  Now, the payments will be automatically deducted.  In fact, the first payment is scheduled to go out tomorrow although I suspect it may end up being Monday since tomorrow is the weekend.

I am a Prosper Affiliate

The process was so easy and worked well for me.  So, I decided to become a Prosper affiliate.  If you are interested in getting a loan or want to invest your money with them, simply click on the banner in the upper right hand corner of this blog.  I know some of my readers invested in my loan and for that I am incredibly grateful.

The interest rate is a little over 18% so it will be a good investment for them.  I plan on paying it off as early as possible based upon the other interest rates that I am paying, but I won’t get to it right away.  I do still have some other obligations such as the Discover Card first.

Ultimately, I do hope to make a little affiliate income with Prosper.  I will be using it for debt pay down like I am doing with all of my blog earnings.

Readers:  Have you borrowed or lent through P2P lending?  Share your experiences.

 

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16 comments - What do you think?  Posted by Cash Flow Mantra - March 23, 2012 at 7:55 am

Categories: Credit/Debt   Tags: , , , , , , ,

Is the Housing Market Scraping the Bottom?

I read this article earlier today stating that in 98 of 100 of the top housing markets, buying is cheaper than renting.  I remember when buying was incredibly expensive in many cities compared to the median income of the area.  That signaled the top of the market.  It wasn’t long before the bottom fell out and there was no demand.  Now I have to wonder if the bottom of the real estate market is near.  Of course it could be another year or two before there is an increase in housing prices, but if it doesn’t make financial sense to rent, then that says something.

If nothing else, it means that investing in real estate makes sense for investors who have the money and can turn around and charge rent to those who are unable to get mortgages.  Mortgage rates are near record lows which is another good reason to purchase a home.

Historical Context

I remember growing up listening to my dad mention the mortgage rate of 12% that he was paying on the house where we lived.  From there I remember interest rates increasing into the late 70′s when you could get up to 8% on a passbook savings account.  As a result, I considered myself quite fortunate to get a mortgage for less than double digits when it came time to purchase my first house.

I also remember those days as being before the internet.  In order to see the impact of interest rate changes, you had to have a book and look at tables unless you were a financial professional with the nifty financial calculator.  But now, there are awesome mortgage calculators online that can be used to run all sorts of down payment and interest rate scenarios instantly.

With interest rates so low, this could be considered a once in a lifetime opportunity to purchase some real estate.  I wouldn’t worry about trying to time the market since the fact that renting is more expensive would suggest to me that renters will start looking at ways to get away from that option.  There is still a substantial portion of the population that desires to own a home.

In fact, I have a long term renter (about 3 years) that informed me earlier this month he had purchased a home and would be moving out.  Of course, I am not excited about losing a tenant and having to rent the place again.  But I am happy for him that he can finally afford to get his own place.  Besides, we always have someone looking to rent from us and have a few prospects already.  I bet that it can be rented without having to run an advertisement in the local paper.

One of the great things about the internet and Facebook is that my wife is able to keep tabs on lots of friends or acquaintances that might be looking for a place to stay.  We are often contacted about openings that we might have.  Unfortunately, we are not in a position to purchase ourselves and take advantage of the low interest rates.

Instead, we are working at paying off debt and are hoping that while the housing market is bottoming out, it takes several years to really pick up steam so we can buy low and eventually sell high.

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14 comments - What do you think?  Posted by Cash Flow Mantra - March 21, 2012 at 11:01 pm

Categories: Investing   Tags: , , , , , ,

Yakezie Member Post Up Plus Carnivals

Well, I have been very busy and really don’t have a regular personal financial post to share today.  I have been relying on guest posts for a lot of my content on my other blog the last several days.  However, I now have caught up with with the tasks I was hoping to get done so life will be back to a more normal pace.  The only problem is that the weather is starting to get incredibly nice so I am going to have to find some time for golf.

It’s Official

It is official!  I am now a member of Yakezie and my member post has been published.  I have also changed the badge on the right to reflect the new status.  Granted I was already accepted and have simply been waiting for the post to be published, but now I can share it with you in case you missed it.  It is an honor to be a member, and I plan to continue to be involved in the Yakezie Network.  I have developed great relationships with several fellow bloggers and hope to meet some more.

Carnival Links

I have also been a little negligent on posting some carnival links so I am going to go back a few weeks just to make sure that I cover them all.  Fortunately, I have Melissa from Mom’s Plans doing the submission and tracking for me.  I think this is a great service which allows me to focus on some of the other aspects of blogging that I enjoy more, like writing.

Links from 6 days ago:

Carnival of Personal Finance #352 - CFM
Canadian Finance Carnival #79- GPM, CFM
Canadian Finance Carnival #78- CFM
Carnival of Retirement #10 - CFM
Yakezie Carnival – Setting Your Clocks Edition- CFM
Links from 11 days ago:
Carnival of Financial Planning – Edition #226  – CFM
Canadian Finance Carnival #77 - GPM
Finally, links from 19 days ago:
Yakezie Carnival – Daytona Edition - CFM
Carnival of Financial Camaraderie #22 - CFM, GPM
This should catch me up to current dates.  I will have to do better in the future and maybe just attach these as an addendum to the nearest post that I have published rather than waiting for a weekend update post.  Now that spring and summer are coming, weekend activities may well prevent additional posts on the weekend.  Keeping up with the Monday, Wednesday, Friday schedule will be tough enough I bet.
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8 comments - What do you think?  Posted by Cash Flow Mantra - March 19, 2012 at 5:24 pm

Categories: Uncategorized   Tags: , , ,

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