| Q: Will the problems in the residential mortgage | | | | Q: How often and why do rates change? |
| industry effect the marine side? | | | | A: Rates don't necessarily change every day, but |
| A: While the experts initially hoped the subprime | | | | they can. These changes are based on a variety of |
| mortgage mess would be contained to a small | | | | factors, but mainly will correlate to changes in the |
| segment of the housing industry, concerns are now | | | | bond market due to breaking financial news, world |
| being raised in other segments of the economy | | | | events, stock market movement, and sometimes |
| about the potential fallout. What is undoubtedly | | | | supply and demand of marine loans. |
| occurring is a general tightening of access to credit. | | | | Q: What is APR? |
| It may become harder to purchase a house, yacht, | | | | A: APR stands for annual percentage rate. APR is the |
| or even get a credit card, due to higher standards | | | | effective rate you will pay on your boat loan based |
| for minimum credit scores in all areas. However, | | | | on the interest rate and related closing costs. It will |
| historically speaking it really has never been easier to | | | | almost always be higher than the interest rate on |
| get a loan for a boat for less. Many marine lenders | | | | your boat loan, because it factors in your "cost to |
| are very aggressively competing for good boat loans, | | | | obtain the credit". However, it is important to know |
| and have positioned their competing rates, as such. | | | | that your payment is based on your simple interest |
| The lending process still is relatively simple and easy. | | | | rate, not your APR. |
| Q: What is "credit score"? | | | | Q: What are "points"? |
| A: Each individual has a credit score. This score | | | | A: A point is 1% of the yacht loan amount, and is a |
| reflects the level of risk associated with lending to | | | | cost associated with closing. If you have a $100,000 |
| that individual. Scores range from 400-800, with | | | | boat loan, a point is $1,000. |
| higher being better. | | | | Q: What comprises my monthly payment for my |
| Negatively affecting your score are things such as | | | | Yacht Loan? |
| late payments, judgments or collections, heavy use | | | | A: Your monthly payment for your boat typically |
| of credit, high ratio of actual credit to available credit, | | | | includes principle, and interest. |
| and inquiries into your credit. Credit score plays a | | | | Q: What documents do I need to apply for a Boat |
| significant role in determining your ability to get a loan | | | | Loan? |
| of any kind (marine, residential, or even a credit card). | | | | A: Banks require a variety of documents, including: |
| Q: How does an appraiser determine a boat's value? | | | | · Income Documentation: |
| A: Most appraisals are determined by a licensed yacht | | | | - Hourly or Salaried Employment - W2's for the past |
| surveyor. He computes your boat's value a few | | | | two years and paycheck stubs covering most recent |
| different ways, by analyzing other comparable | | | | 30 days. |
| vessels currently for sale, by analyzing comparable | | | | - Self-Employed - Typically most recent complete |
| boats that have recently sold, and integrating these | | | | Federal income tax return with W-2. |
| numbers with the "book value". | | | | - Retired - Original Social Security Award Letter or |
| While there is no clear science, the goal is to give the | | | | Pension Award Letter. |
| lending entity an understanding of the value of the | | | | · Assets: To verify evidence of sufficient |
| boat, to ensure that they are not lending money on | | | | funds for closing, the following will be required: Most |
| an asset that is grossly over-valued. | | | | recent original statement (all pages) for all checking, |
| Q: What is an escrow account? | | | | savings, or other asset accounts. |
| A: An escrow account is set up at closing to pay | | | | · Contract: Provide copy of fully executed |
| your boat's insurance, taxes (if applicable), and can | | | | purchase agreement for the boat you want to buy, |
| also be a safe place to keep your deposit. Typically | | | | signed by you and the owner of the boat. |
| your yacht broker will have a legal escrow account | | | | · Other: Yacht Survey, Copy of Driver's |
| you can safely use. | | | | License or Passport. |