What is Futures trading?

Futures trading is a kind of trading arrangement wherein traders agree to buy or sell assets within the future in a set price and standardized quantity and quality. Under this arrangement, the agreeing parties need to sign futures contracts to create the trade legally binding to prevent any problems when the delivery date arrives.

What assets are typically sold under this agreement?

In futures trading, a great number of assets are sold, and it is not limited to actual commodities only. However, the most typical kind of assets sold under this kind of agreement are agricultural commodities for example livestock, fruits, wheat, and vegetables, stock indexes, bonds, metals, rates of interest, oil, and other assets can also be traded.

Do you know the risks involved with futures trading?

Futures trading involves lots of risks, since it does not always guarantee profit. However, it is ideal with regards to situations where market price is constantly fluctuating, as it offers some level of security. Farmers who sell their crops before they harvest and agree with a set price even before the marketplace price at the time of harvest is determined can profit a lot more than other farmers if he sells the cost for higher compared to market price throughout the delivery date. For this reason it is important to have a futures contract, since it finalizes the offer so that none of the parties would back in the event of the undesirable outcome.

Who is involved in this type of trading?

In any futures trading arrangement, customers with rock-bottom prices hedgers and speculators. The first kind buys or sells particular assets, with market price risks in your mind whereas the second predicts movements in the market to see whether market prices of certain commodities will go up or down. The speculator plays a huge role in a futures trading agreement, as he will determine those things how the trader should take.

Futures trading contracts are typically regulated through the government, though there are also some independent agencies that regulate such agreements, with respect to the country. Those who break any rules in the contract is going to be held liable and you will be required to pay fines for breaking any clauses. This is why it is important to carefully choose the the agreement before agreeing to it, while you cannot change any kind of it when the contract has been signed and if you don’t decide properly, you may incur a large amount of losses when delivery time comes.

Iani Varga

Someone asked me yesterday, what are some good questions to ask to choose the best mortgage. I thought it was a great question. Here are the questions I, a mortgage broker for over 8 years, would ask if I were looking for a mortgage.

1. What interest rate can you get me? But mortgage interest rates don’t tell you the whole picture. You’ve got to ask about APR, which is your next question.

2. What’s the annual percentage rate (APR)? The lowest APR might not be the best, though. Some people will purposely leave out fees, just so they can quote you low APR’s. So, you have to also ask:

3. What are the fees included in the APR? Get it in writing. Don’t ask if there are fees that are not included in the APR. If they don’t put all of them in the APR, they might lie here too. Compare APR fees line by line.

Chicago home loans have been my business for over 8 years. I hear a lot of stories. So I think you need to ask the next question.

4. What are the closing costs, in dollars?

Comparing costs in dollars is easier. Just make sure you know what fees are included. Don’t forget to get the costs on a Good Faith Estimate form as these are standardized so comparisons are easier.

5. Do I have to pay any origination fees? Are there any discount points? Sometimes, to get a lower rate, you have to part with money upfront. You need to know that.

Technically, these should be questions 5 and 6. However, they’re so closely related that I made them be #5 only. Sue me.

When you talk about discount points, a point equals 1% of the loan amount. You get a lower rate by paying discount points. Usually paying 1% upfront (1 discount point) lowers your interest rate by 0.125%.

Origination fees are fees your mortgage broker charges for doing the loan.

6. . Is locking the rate free? When can I do it?

Interest rates change. If you like the one you’re being offered, you should lock. A lock is for a short period of time, usually long enough to get you the loan. If rates go up, you still get the low one you locked.

7. Does this loan have a prepayment penalty?

Some loans have them. They exist because lenders want to make sure they make their money on your mortgage loan. Whether they’re for 1% of the mortgage or a few months’ worth of interest, you need to know they’re there and for how long they’re in force.

8. What kind of a down payment do I have to have to get this interest rate?

The interest and terms of your loan are in relation of the down payment. The higher the down payment, the less risk you represent, the lower the interest rate, the better the terms.

9. What’s required to qualify for this loan?

Rules change from lender to lender. It’s best if you know all their rules from the beginning. Don’t just apply, then find out they have rules you cannot abide by.

10. What kind of documentation is needed?

Because if you know this before you apply, you can gather all of it and turn it in with your application. Thereby, speeding up the process a lot, ensuring your lock doesn’t expire, ensuring, in other words, that you get the low rate you want.

11. How long is it going to take get the mortgage loan?

Important for when you lock the rate. If it’s longer than banks give you rate locks, you’re better off not starting

12. What can delay the approval process?

Past history can alert you to areas of possible problems for you, either because of the mortgage broker or because of you. If they look like the mortgage broker caused them, move on. If they were caused by borrowers, make sure you learn from them.

Changes in your financial situations that can have an effect on how a bank thinks about your ability to repay should be reported to the mortgage broker right away, and the mortgage broker should report them to the lender they’re working with. Not reporting is fraud.

These 12 questions will help you choose a mortgage broker. They’re based on my 8+ years of experience as a Chicago mortgage broker.

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