A bond is an IOU payable to the holder, usually a bank or mortgage company in incremental payments or a lump sum payment. It is a collateral backed bond that necessitates the promise of property in return for the bond payment. If the bond payment is missed, or in default, the property is sold to recover the cost of the bond.
How to Obtain a Bond:
A bond is best applied for through a Bond Originator. The Bond Originator is well versed in the financial world, particularly mortgages and insurance and knows how to avoid the pitfalls found in the financing process. They are able to advise the applicant every step of the way through the process and find competitive rates and incentives for the borrower.
The applicant fills out one application and the Bond Originator does all the leg work for you. They shop the application around to all lending institutions and because the Bond Originators deals with thousands of applications, they have a strong relationship within the lending market and can generally negotiate a much better rate than the average person. The Bond Originator can usually obtain an offer from more than one lender allowing the applicant to choose the opportunity best suited to them.
The Bond Originator:
Bond Originators have the uncanny ability to cut through all the red tape and take an application through the process in less time than the average person. That ability streamlines the entire process and a lot of time isn’t wasted running into speed bumps and road blocks along the way. Right away the Bond Originator has saved the applicant a lot of money from negotiating the best possible rate.
Beware by just using any bond originator. Some bond originators might give you a bad deal just so they can benefit from it themselves. So make sure to do proper research and choose an reputable originator.
As the financial market fluctuates, bond rates will also fluctuate. It may be in the best interest of the bond holder to renegotiate a lower rate when rates are low. That will lower the premium payments allowing the holder extra capital for savings or paying off other debt.
If your bond originator has negotiated a low or no early payment penalty, this will give you the ability to pay ahead and reduce the amount of interest paid over the life of the bond. This can result in substantial savings, allowing the holder to pay off the bond earlier than anticipated.