A mortgage and a note are both terms used in relation to loans and borrowing. When taking a loan, a person should have signed either a note or mortgage documents. They are both agreements between two individuals or between an individual and a financial institution. They are both legally binding documents and if the borrower does not repay as promised, the lender can take legal action against the borrower. A note is a document that the individual signs, promising to pay the lender the sum that is owed to him. It can also contain details pertaining to the interest specified on the money, and the time and mode of repayment. A mortgage on the other hand is a document that a person signs with a lender, pledging property against the money borrowed. Whereas a mortgage requires the borrower to pledge property, a promissory note has no such requirement. Additionally, a mortgage is registered in a recording office while a note is not registered anywhere.
Considering the nature of obtaining a promissory note, they are private while and are done between individuals. Mortgages on the other hand are commercial. The payment is made to a financial institution or to a bank. The note will outline the total amount borrowed, the interest on the money, and the mode of payment. The promissory note may also contain an acceleration clause which denotes that the entire payment is automatically due after one payment is due. Mortgages also outline the amount of money lent, the interest rate and the mode of payment.
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People generally have two options when deciding to own property. One option is to lease and the other is to buy through mortgage. Leasing can be more expensive than buying but people still opt for it. It is important for the person to consider their personal preferences before they decide which option to take. Bothe ways have their cons and pros but most people opt for leasing as opposed to purchasing.
There are many factors that can affect a person’s decision to lease or to mortgage. The most influential factor is the finances available to that person. The down payment for purchasing property can be too much that a person may not be able to raise the money. Other issues also come into play including poor or inadequate credits, or excessive debts. There are also some responsibilities that fall upon a home owner when they decide to buy or mortgage property. In case of purchased property, the owner is responsible for maintaining and repairing the property. In leased property however, the responsibility remains on the owner to make repairs. For some people, the expense of maintaining property is a detriment to some people. Additionally, people are not always settled to stay in one particular location forever, buying property makes it impossible to make drastic changes as regards location in the future. Leasing property, however, allows the person to move any time they want. It will save the person the troubles of having to sell the property in case they have to move.
When renting, it is important to consider the negative effects of renting and weigh them against the advantages of leasing and make an informed decision on whether or not to lease property. A person expects a certain level of privacy when renting property. Although the landlord or the owner of the property may have the keys to the property, it does not mean that they should enter the property without prior notice to the tenant. Depending on the nature of the building and its proximity to other people, they may have to listen in on neighbors or the neighbors may listen in on them and risk having their personal information. Additionally, when renting, the person gives up certain freedoms including the freedom to repaint and make considerable changes to the environment.
Bonds are instruments of indebtedness. It is a debt security where the issuer owes the holder a debt and, depending on the terms of the bond, is obliged to pay interests to them. Additionally, the issuer may have to repay the principal later. In many cases, bonds are negotiable. Bonds have a clear advantage over other securities. Bonds are less volatile than other equities. They are viewed as safer investments than stocks (Cherry & Jacob, 2016). The liquid nature of bonds makes it easier for institutions to sell a large quantity of bonds without affecting the price. People taking bonds also enjoy a measure of legal protection. In most countries, when companies go bankrupt, bond holders are given an opportunity to receive their money, contrary to equities which become valueless in the event of bankruptcy.
Taxable bonds are considered preferable in the market by government and different corporations. Treasury bonds can be easily bought and sold and are considered the safest investments. They set the basis for the interest rates against which all other bonds are judged. Taxable bonds are high-yield with lower credit ratings and pay higher yields and lower credit ratings. Usually, bonds purchased at a lower value will be taxed upon its redemption at the capital gains rate. Considering that the taxation comes at end when the bond has already served its purpose, it is more appealing to people reaching out for money in such situations to go for a cheaper alternative.
When interest rates fall, an organization may opt to refinance its bonds or not. In opting to refinance its bonds, it must consider the actions available to it. The first option is reconstructing the debt. Generally, reconstruction gives the bond a longer maturity time it also ensures a lower interest rate. The second course of action would be to issue new equity to pay down the debt load. This alternative is generally exercised when the company cannot access the traditional credit markets. The company will always decode whether or not to refinance the bond depending on the impact of the fall in interest rates has on the overall dynamics of the business.
Feasibility studies are meant to determine the viability of an idea. It includes ensuring that the project is legal, technically, and economically operational. It tells the investor whether the project is worth the investment. It prevents organizations from performing futile tasks on projects that are neither doable nor profitable. A feasibility study must establish that a project is operational, legal and profitable. Feasibility studies are informed by an organization’s desire to make the right decisions.
References
Cherry, B., & Jacob, S. R. (2016). Contemporary nursing: Issues, trends, & management . Elsevier Health Sciences.
