Quicken Loans Inc., headquartered in Detroit, Michigan, is the largest online mortgage lender and the 5th largest retail mortgage lender overall in the USA. The company consists of the QuickenLoans.com online lending site, the Rock Financial brand in southeast Michigan, One Reverse Mortgage,[1] based in San Diego, California, and Title Source, a mortgage settlement service provider. In 2010, Quicken Loans processed approximately $29 billion in residential mortgage loans.
The company employs about 3,700 people and is listed as one of the Top 30 Best Places to Work in America by Fortune magazine, a notable mention it has held for several years.
Saturday, May 21, 2011
Insurance
The Insurance segment activities include offering property, casualty, life and credit insurance as an underwriter and as an insurance agency, and providing reinsurance coverage to primary mortgage insurers, through two business units: Balboa Life and Casualty Operations, and Balboa Reinsurance Company.
Balboa Life and Casualty Group underwrite property, casualty, life and credit insurance in all 50 states through the Balboa Life and Casualty Group. Its products include Lender-Placed Property and Auto, which includes lender-placed auto insurance and lender-placed, real-property hazard insurance; Voluntary Homeowners and Auto, which underwrites retail homeowners insurance and home warranty plans for consumers, and Life and Credit, which underwrites term life, credit life and credit disability insurance products.
Balboa Reinsurance Company provides a mezzanine layer of reinsurance coverage for losses between minimum and maximum specified amounts to the insurance companies that provide private mortgage insurance (PMI) on loans in its servicing portfolio. It provides this coverage with respect to substantially all of the loans in the Company's portfolio that are covered by PMI, which generally includes all conventional loans with an original loan amount in excess of 80% of the property's appraised value. In return for providing this coverage, it earns a portion of the PMI premiums.
Balboa Life and Casualty Group underwrite property, casualty, life and credit insurance in all 50 states through the Balboa Life and Casualty Group. Its products include Lender-Placed Property and Auto, which includes lender-placed auto insurance and lender-placed, real-property hazard insurance; Voluntary Homeowners and Auto, which underwrites retail homeowners insurance and home warranty plans for consumers, and Life and Credit, which underwrites term life, credit life and credit disability insurance products.
Balboa Reinsurance Company provides a mezzanine layer of reinsurance coverage for losses between minimum and maximum specified amounts to the insurance companies that provide private mortgage insurance (PMI) on loans in its servicing portfolio. It provides this coverage with respect to substantially all of the loans in the Company's portfolio that are covered by PMI, which generally includes all conventional loans with an original loan amount in excess of 80% of the property's appraised value. In return for providing this coverage, it earns a portion of the PMI premiums.
Bank of America Home Loans
Bank of America Home Loans is the mortgage unit of Bank of America. Bank of America Home Loans is composed of:
Mortgage Banking, which originates purchases, securitizes, and services mortgages. In 2008, Bank of America purchased the failing Countrywide Financial for $4.1 billion. In 2006 Countrywide financed 20% of all mortgages in the United States, at a value of about 3.5% of United States GDP, a proportion greater than any other single mortgage lender.
Banking, which operates a federally chartered thrift that primarily invests in mortgage loans and home equity lines of credit primarily sourced through its mortgage banking operation.
Capital Markets, which operates as an institutional broker-dealer that primarily specializes in trading and underwriting mortgage-backed securities.
Global Operations, which provides mortgage loan application processing and loan servicing.
During the year ended December 31, 2005, for example, the Mortgage Banking segment generated 59% of the company's pre-tax earnings.
On January 11, 2008, Bank of America announced that it planned to purchase Countrywide Financial for $4.1 billion in stock. On June 5, 2008, Bank of America Corporation announced it had received approval from the Board of Governors of the Federal Reserve System to purchase Countrywide Financial Corporation. Then, on June 25, 2008, Countrywide announced it had received the approval of 69% of its shareholders to planned merger with Bank of America. On July 1, 2008, Bank of America Corporation completed its purchase of Countrywide Financial Corporation. In 1997, Countrywide had spun off Countrywide Mortgage Investment as an independent company called IndyMac Bank.[1] Federal regulators seized IndyMac on July 11, 2008, after a week-long bank run
Mortgage Banking, which originates purchases, securitizes, and services mortgages. In 2008, Bank of America purchased the failing Countrywide Financial for $4.1 billion. In 2006 Countrywide financed 20% of all mortgages in the United States, at a value of about 3.5% of United States GDP, a proportion greater than any other single mortgage lender.
Banking, which operates a federally chartered thrift that primarily invests in mortgage loans and home equity lines of credit primarily sourced through its mortgage banking operation.
Capital Markets, which operates as an institutional broker-dealer that primarily specializes in trading and underwriting mortgage-backed securities.
Global Operations, which provides mortgage loan application processing and loan servicing.
During the year ended December 31, 2005, for example, the Mortgage Banking segment generated 59% of the company's pre-tax earnings.
On January 11, 2008, Bank of America announced that it planned to purchase Countrywide Financial for $4.1 billion in stock. On June 5, 2008, Bank of America Corporation announced it had received approval from the Board of Governors of the Federal Reserve System to purchase Countrywide Financial Corporation. Then, on June 25, 2008, Countrywide announced it had received the approval of 69% of its shareholders to planned merger with Bank of America. On July 1, 2008, Bank of America Corporation completed its purchase of Countrywide Financial Corporation. In 1997, Countrywide had spun off Countrywide Mortgage Investment as an independent company called IndyMac Bank.[1] Federal regulators seized IndyMac on July 11, 2008, after a week-long bank run
Arguments against debt
Some argue against debt as an instrument and institution, on a personal, family, social, corporate and governmental level. Islam forbids lending with interest even today, while the Catholic Church allowed it from 1822 onwards, and the Torah states that all debts should be erased every 7 years and every 50 years (in the Jubilee year, as described in the Book of Leviticus).
Debt will increase through time if it is not repaid faster than it grows through interest. This effect may be termed usury, while the term "usury" in other contexts refers only to an excessive rate of interest, in excess of a reasonable profit for the risk accepted.
In international legal thought, Odious debt is debt that is incurred by a regime for purposes that do not serve the interest of the state. Such debts are thus considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state.
In an economy with high interest rates, debt will be more costly to a business than more flexible dividends on equity investment. It may be easier for a struggling business to be financed through equity investment as it may be possible to avoid paying a dividend if times are hard.
At the household level, debts can also have detrimental effects. In particular when households make spending decisions assuming income to remain the same -or increase- for the years to come. When households take-on credits based on this assumption, life events can easily change indebtedness into over-indebtedness. Such life events include unexpected unemployment, relationship break-up, leaving the parental home, business failure, illness or home repairs. Over-indebtedness has severe social consequences, such as, financial hardship, poor health (physical and mental), family stress, stigma, barriers to obtaining employment, exclusion from basic financial services (European Commission, 2009), work accidents and industrial disease, a strain on social relations (Carpentier and Van den Bosch, 2008), absenteeism at work and lack of organisational commitment (Kim et al, 2003), feeling of insecurity, and relational tensions.
Debt will increase through time if it is not repaid faster than it grows through interest. This effect may be termed usury, while the term "usury" in other contexts refers only to an excessive rate of interest, in excess of a reasonable profit for the risk accepted.
In international legal thought, Odious debt is debt that is incurred by a regime for purposes that do not serve the interest of the state. Such debts are thus considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state.
In an economy with high interest rates, debt will be more costly to a business than more flexible dividends on equity investment. It may be easier for a struggling business to be financed through equity investment as it may be possible to avoid paying a dividend if times are hard.
At the household level, debts can also have detrimental effects. In particular when households make spending decisions assuming income to remain the same -or increase- for the years to come. When households take-on credits based on this assumption, life events can easily change indebtedness into over-indebtedness. Such life events include unexpected unemployment, relationship break-up, leaving the parental home, business failure, illness or home repairs. Over-indebtedness has severe social consequences, such as, financial hardship, poor health (physical and mental), family stress, stigma, barriers to obtaining employment, exclusion from basic financial services (European Commission, 2009), work accidents and industrial disease, a strain on social relations (Carpentier and Van den Bosch, 2008), absenteeism at work and lack of organisational commitment (Kim et al, 2003), feeling of insecurity, and relational tensions.
Effects of debt
Debt allows people and organizations to do things that they would otherwise not be able, or allowed, to do. Commonly, people in industrialised nations use it to purchase houses, cars and many other things too expensive to buy with cash on hand. Companies also use debt in many ways to leverage the investment made in their assets, "leveraging" the return on their equity. This leverage, the proportion of debt to equity, is considered important in determining the riskiness of an investment; the more debt per equity, the riskier. For both companies and individuals, this increased risk can lead to poor results, as the cost of servicing the debt can grow beyond the ability to pay due to either external events (income loss) or internal difficulties (poor management of resources).
Excesses in debt accumulation have been blamed for exacerbating economic problems.[3] For example, prior to the beginning of the Great Depression debt/GDP ratio was very high. Economic agents were heavily indebted. This excess of debt, equivalent to excessive expectations on future returns, accompanied asset bubbles on the stock markets. When expectations corrected, deflation and a credit crunch followed. Deflation effectively made debt more expensive and, as Fisher explained, this reinforced deflation again, because, in order to reduce their debt level, economic agents reduced their consumption and investment. The reduction in demand reduced business activity and caused further unemployment. In a more direct sense, more bankruptcies also occurred due both to increased debt cost caused by deflation and the reduced demand.
It is possible for some organizations to enter into alternative types of borrowing and repayment arrangements which will not result in bankruptcy. For example, companies can sometimes convert debt that they owe into equity in themselves. In this case, the creditor hopes to regain something equivalent to the debt and interest in the form of dividends and capital gains of the borrower. The "repayments" are therefore proportional to what the borrower earns and so can not in themselves cause bankruptcy. Once debt is converted in this way, it is no longer known as debt.
Excesses in debt accumulation have been blamed for exacerbating economic problems.[3] For example, prior to the beginning of the Great Depression debt/GDP ratio was very high. Economic agents were heavily indebted. This excess of debt, equivalent to excessive expectations on future returns, accompanied asset bubbles on the stock markets. When expectations corrected, deflation and a credit crunch followed. Deflation effectively made debt more expensive and, as Fisher explained, this reinforced deflation again, because, in order to reduce their debt level, economic agents reduced their consumption and investment. The reduction in demand reduced business activity and caused further unemployment. In a more direct sense, more bankruptcies also occurred due both to increased debt cost caused by deflation and the reduced demand.
It is possible for some organizations to enter into alternative types of borrowing and repayment arrangements which will not result in bankruptcy. For example, companies can sometimes convert debt that they owe into equity in themselves. In this case, the creditor hopes to regain something equivalent to the debt and interest in the form of dividends and capital gains of the borrower. The "repayments" are therefore proportional to what the borrower earns and so can not in themselves cause bankruptcy. Once debt is converted in this way, it is no longer known as debt.
Debt, inflation and the exchange rate
As noted below, debt is normally denominated in a particular monetary currency, and so changes in the valuation of that currency can change the effective size of the debt. This can happen due to inflation or deflation, so it can happen even though the borrower and the lender are using the same currency. Thus it is important to agree on standards of deferred payment in advance, so that a degree of fluctuation will also be agreed as acceptable. It is for instance common[citation needed] to agree to "US dollar denominated" debt.
The form of debt involved in banking accounts for a large proportion of the money in most industrialised nations (see money, broad money, and demand deposits for a discussion of this). There is therefore a relationship between inflation, deflation, the money supply, and debt. The store of value represented by the entire economy of the industrialized nation, and the state's ability to levy tax on it, acts to the foreign holder of debt as a guarantee of repayment, since industrial goods are in high demand in many places worldwide.
Inflation indexed debt
Borrowing and repayment arrangements linked to inflation-indexed units of account are possible and are used in some countries. For example, the US government issues two types of inflation-indexed bonds, Treasury Inflation-Protected Securities (TIPS) and I-bonds. These are one of the safest forms of investment available, since the only major source of risk — that of inflation — is eliminated. A number of other governments issue similar bonds, and some did so for many years before the US government.
In countries with consistently high inflation, ordinary borrowings at banks may also be inflation indexed.
The form of debt involved in banking accounts for a large proportion of the money in most industrialised nations (see money, broad money, and demand deposits for a discussion of this). There is therefore a relationship between inflation, deflation, the money supply, and debt. The store of value represented by the entire economy of the industrialized nation, and the state's ability to levy tax on it, acts to the foreign holder of debt as a guarantee of repayment, since industrial goods are in high demand in many places worldwide.
Inflation indexed debt
Borrowing and repayment arrangements linked to inflation-indexed units of account are possible and are used in some countries. For example, the US government issues two types of inflation-indexed bonds, Treasury Inflation-Protected Securities (TIPS) and I-bonds. These are one of the safest forms of investment available, since the only major source of risk — that of inflation — is eliminated. A number of other governments issue similar bonds, and some did so for many years before the US government.
In countries with consistently high inflation, ordinary borrowings at banks may also be inflation indexed.
Types of debt
A company uses various kinds of debt to finance its operations. The various types of debt can generally be categorized into: 1) secured and unsecured debt, 2) private and public debt, 3) syndicated and bilateral debt, and 4) other types of debt that display one or more of the characteristics noted above.[1]
A debt obligation is considered secured, if creditors have recourse to the assets of the company on a proprietary basis or otherwise ahead of general claims against the company. Unsecured debt comprises financial obligations, where creditors do not have recourse to the assets of the borrower to satisfy their claims.
Private debt comprises bank-loan type obligations, whether senior or mezzanine. Public debt is a general definition covering all financial instruments that are freely tradeable on a public exchange or over the counter, with few if any restrictions.
A basic loan is the simplest form of debt. It consists of an agreement to lend a principal sum for a fixed period of time, to be repaid by a certain date. In commercial loans interest, calculated as a percentage of the principal sum per year, will also have to be paid by that date.
In some loans, the amount actually loaned to the debtor is less than the principal sum to be repaid; the additional principal has the same economic effect as a higher interest rate (see point (mortgage)), and is sometimes referred to as a banker's dozen, a play on "baker's dozen" – owe twelve (a dozen), receive a loan of eleven (a banker's dozen). Note that the effective interest rate is not equal to the discount: if one borrows $10 and must repay $11, then this is ($11–$10)/$10 = 10% interest; however, if one borrows $9 and must repay $10, then this is ($10–$9)/$9 = 11 1/9 % interest.[2]
A syndicated loan is a loan that is granted to companies that wish to borrow more money than any single lender is prepared to risk in a single loan, usually many millions of dollars. In such a case, a syndicate of banks can each agree to put forward a portion of the principal sum. Loan syndication is a risk management tool that allows the lead banks underwriting the debt to reduce their risk and free up lending capacity.
A bond is a debt security issued by certain institutions such as companies and governments. A bond entitles the holder to repayment of the principal sum, plus interest. Bonds are issued to investors in a marketplace when an institution wishes to borrow money. Bonds have a fixed lifetime, usually a number of years; with long-term bonds, lasting over 30 years, being less common. At the end of the bond's life the money should be repaid in full. Interest may be added to the end payment, or can be paid in regular installments (known as coupons) during the life of the bond. Bonds may be traded in the bond markets, and are widely used as relatively safe investments in comparison to equity.
A debt obligation is considered secured, if creditors have recourse to the assets of the company on a proprietary basis or otherwise ahead of general claims against the company. Unsecured debt comprises financial obligations, where creditors do not have recourse to the assets of the borrower to satisfy their claims.
Private debt comprises bank-loan type obligations, whether senior or mezzanine. Public debt is a general definition covering all financial instruments that are freely tradeable on a public exchange or over the counter, with few if any restrictions.
A basic loan is the simplest form of debt. It consists of an agreement to lend a principal sum for a fixed period of time, to be repaid by a certain date. In commercial loans interest, calculated as a percentage of the principal sum per year, will also have to be paid by that date.
In some loans, the amount actually loaned to the debtor is less than the principal sum to be repaid; the additional principal has the same economic effect as a higher interest rate (see point (mortgage)), and is sometimes referred to as a banker's dozen, a play on "baker's dozen" – owe twelve (a dozen), receive a loan of eleven (a banker's dozen). Note that the effective interest rate is not equal to the discount: if one borrows $10 and must repay $11, then this is ($11–$10)/$10 = 10% interest; however, if one borrows $9 and must repay $10, then this is ($10–$9)/$9 = 11 1/9 % interest.[2]
A syndicated loan is a loan that is granted to companies that wish to borrow more money than any single lender is prepared to risk in a single loan, usually many millions of dollars. In such a case, a syndicate of banks can each agree to put forward a portion of the principal sum. Loan syndication is a risk management tool that allows the lead banks underwriting the debt to reduce their risk and free up lending capacity.
A bond is a debt security issued by certain institutions such as companies and governments. A bond entitles the holder to repayment of the principal sum, plus interest. Bonds are issued to investors in a marketplace when an institution wishes to borrow money. Bonds have a fixed lifetime, usually a number of years; with long-term bonds, lasting over 30 years, being less common. At the end of the bond's life the money should be repaid in full. Interest may be added to the end payment, or can be paid in regular installments (known as coupons) during the life of the bond. Bonds may be traded in the bond markets, and are widely used as relatively safe investments in comparison to equity.
Debt
Debt is that which is owed; usually assets owed, but the term can also cover moral obligations and other interactions not requiring money. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned. Some companies and corporations use debt as a part of their overall corporate finance strategy.
A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in most cases, plus interest.
A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in most cases, plus interest.
Debt
Debt is that which is owed; usually assets owed, but the term can also cover moral obligations and other interactions not requiring money. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned. Some companies and corporations use debt as a part of their overall corporate finance strategy.
A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in most cases, plus interest.
A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in most cases, plus interest.
Debt
Debt is that which is owed; usually assets owed, but the term can also cover moral obligations and other interactions not requiring money. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned. Some companies and corporations use debt as a part of their overall corporate finance strategy.
A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in most cases, plus interest.
A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in most cases, plus interest.
Debt
Debt is that which is owed; usually assets owed, but the term can also cover moral obligations and other interactions not requiring money. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned. Some companies and corporations use debt as a part of their overall corporate finance strategy.
A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in most cases, plus interest.
A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in most cases, plus interest.
Debt
Debt is that which is owed; usually assets owed, but the term can also cover moral obligations and other interactions not requiring money. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned. Some companies and corporations use debt as a part of their overall corporate finance strategy.
A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in most cases, plus interest.
A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in most cases, plus interest.
Wednesday, May 18, 2011
All Info About Home Loans
Any individual who has thrown out a mortgage should get serious; which means that you want discover your way close to the various conditions and jargon which individuals use once speaking concerning mortgages. You nee to discover the conditions so that absolutely nothing gets by your and you perceive what people who are more knowledgeable are speaking concerning. You do not want to be left from the synonyms do you? Besides, it will conserve you a lot of time and confusion so which you do not need to do explore all the time. Below are most terms which you may come upon once speaking concerning mortgage loan at most direct or another.
Initially expression that you may want to be acquainted with is Acceleration Clause. It is a time period for any get in touch with provisions which may offer the lender his suitable to need repayments for any loan stability simply in situation the individual who rented the income violates any clause in the contract. The bank may even get the well-rounded total volume of the loan in most cases. You need to bear in mind which that can take place to you so guarantee that you are capable to fulfill all of the clauses in the deal; so one beneficial lesson here is that you examine your commitment thoroughly.
A different time period that you could listen to is anything called Accrued Interest, which implies curiosity which is not paid but somewhat one that is earned. That is the interest which provides up to the overall amount which you rented. So for example, you borrow x overall amount that gets y interest a month. That means the exact amount you pay is X Y=XY. It generally simply adds until a larger overall amount. Which is all.
Following time period that you may need to get to understand is anything named Adjustable Rate Home loan or ARM. ARM is a kind of mortgage loan in which the interest fee may be modified by anyone who lends the income, but only the original period. You could discover that in many various international locations outdoors the US, these folks allow the transforms in rates to be the loan provider’s decision. The US features is a far more standard way and has more uniform charges.
Bad Things To Mess Up Your Credit Score
If you know what things not to do to hurt your credit score then you can avoid doing it. There are things that affect yourcredit score that you may not even know about at all. Jot down some notes as you are reading along the way.
Make sure you get your free credit score check online to first see where you stand. Read through all the material and then look at your credit report so see what needs to be changed.
1. First look at how much of a balance you carry and your credit limit on that card. If the balance of debt you owe divided by the credit limit of that card exceeds more than 30%, then you need to spend less on that card. Keeping the max you spend at under a fourth of the credit limit is a great way to start towards your finances.
2. The next best think you can do to screw up your credit score is to pay your bills late or to never pay them. Having a late payment on your credit report will drop your credit score at least by 20 points.
3. Keeping the number of active credit lines open is a good idea, but don’t have too many accounts open or too little. You want an aggregate of all your credit limits to see how much of it you can spread out.
I would consider you wise if you got your free credit score credit report at the same time. It’s like your yearly check-up at the doctor or hospital.
It’s even more important if you are a home owner so you need check your credit report mortgage rates. These are some of the examples of why your credit score is important. You can probably get the highest credits score.
Paying Off Student Loans - Tips
Right now, the student loan industry is going through one of its worst periods in decades. New Federal regulations have forced many banks to stop offering student loans, and students are being forced to either find a direct loan or start paying back what they owe. Enrollment figures are being affected dramatically and right now, many students simply cannot afford to go to school.
This problem is extending to those that are already trying to pay on their student loans. It has become harder than ever to consolidate old student loans and the interest rates are not helping matters either. It is important to pay off your student loans as quickly as possible, especially if you want to save money over the long term. Here are some tips to help you accomplish this.
1. Try asking your family for help.
If your family is in the position to help you financially, this should be your first stop. No one really likes borrowing money from their parents, but if you can pay off all of your loans, it is worth it. You won’t have to worry about crazy interest rates and you’ll have a chance to make bigger payments on the loan. However, you’ll need to make sure that you can set up a payment plan and stick to it to avoid causing any family disputes.
2. Get a second job.
This is a tough one, especially if you are already working full time. However, it can mean the difference between paying on student loans for the next decade, or taking just a year to pay them off. For example, if you owe $98,000 on your student loans, and you get a part time job that pays an extra $1000 a week, you could pay off that loan in less than two years. There are many high paying second jobs, such as bartending, where you can easily work off that student loan in no time at all.
3. Leverage your debt.
If you don’t have the time to get a second job, you may want to consider a technique known as debt leveraging. This involves taking out a loan and making an investment. Whether it is in an interest bearing account, new business idea or stock is up to you. Just make sure that you can count on the returns. This will create a secondary stream of income that can be used to pay down your student loans in a lot less time.
4. Negotiate.
If all else fails, try negotiating with the loan company to get a lower interest rate. If you have been paying on your loan faithfully they will be much more likely to help you out. It never hurts to ask or to apply for a consolidation loan. The worse they can say is no, and you’ll still have a lot of different options out there. The important thing is that you don’t fall behind on your debts. It may take some hard work, but you’ll appreciate it once you’re free of the yoke of your student loans.
Create Wealth With Debt
On the surface, this seems like an oxymoron. How could you possibly use debt to create more money? It actually isn’t an oxymoron, but you’re going to need to change your perception of debtand classify into two different categories for this to make sense. There are many ways that going into debt can actually end up securing your future, just as there are many ways that going into debt will ruin your future. Let’s look at both to discover how to turn your debt into wealth.
First, let’s discuss the kind of debt that you are probably most familiar with. Bad debt is the kind of debt that most of us get into afteroverspending on things that we really don’t need. It’s easy to get caught up in commercialism and want to have all the things that we think we deserve. Many of try to live like millionaires on a small percentage of their budget. With poor management, debt quickly grows out of control and before long, we find out that we are in way over our heads. Bad debt is very common, especially among people who are just starting out and have yet to learn this very valuable lesson.
The second kind of debt is much different. This is the kind of debt that you use to invest in something. The first kind of good debt you’ll probably get into is your home. While it really doesn’t have many measurable returns, unless the property value increases, it does have emotional returns and serves as a good lesson in how using debt can help you get better off in the long run. Think of this as an introduction in how to use debt to grow wealth.
There are many ways that you can leverage your debt to start creating alternative streams of income. For example, let’s say that you are living paycheck to paycheck and you have the opportunity to invest in a stock that is destined for greatness. You may have a couple of bucks put aside, but it’s barely enough to buy one share. You can let this opportunity pass you by, or you can leverage debt to help you take advantage of this future stream of income.
What’s better – going into a little debt to reap big returns or spending the rest of your life wishing that you had the money way back when before that stock took off? Managed properly and used for the right reasons, debt is a very powerful tool. If you want to make money, you are going to have to have money. Unless you came into this world with a silver spoon and a trust fund, chances are you don’t have a lot of it just sitting around. That doesn’t mean that you can’t become wealthy.
By leveraging debt and using it well, you can easily achieve your dreams of greatness. Just make sure that you don’t overextend yourself or make bad decisions.
Student Loans Not Always 'Good' Debt
You may have heard about the concept of "good" debt versus "bad" debt – meaning that some debt generally is viewed as OK because it will give you a return on investment like a high-paying job later in life.
Millions of students must be parading the notion of "good" debt as the amount of money they are taking out for student loans has ballooned to amazing numbers. In fact, total student loan debt has now surpassed credit card debt in the United States. Last June, total student loan debt was estimated by FinAid.org to be $833 billion, while credit card debt was $826.5 billion.
What’s even more disturbing is the fact that more and more people are having trouble paying back these student loans. According to a recent report by the Institute for Higher Education Policy, less than 40 percent of borrowers are able to make timely payments on their student loans without postponing payments or becoming delinquent.
It's possible now that for some people, school debt has become more of a burden than a help when it comes to their future. In a recent column for the Washington Post, Michelle Singletary says that student loans aren't always wise debt to take on. This type of debt seems to not be delivering on its promise of paving a path to a good job with a high salary, she notes.
The median cumulative debt among graduating Bachelor's degree recipients at four-year undergraduate schools was nearly $20,000 in 2008. And the job market since then has been less than stellar, offering little opportunity for new graduates to move into a decent-paying job.
4 Tips to Getting Bad Debt Under Control
If you are swimming in a sea of bad debt, keeping your head above water can be incredibly difficult. Thanks to our consumer culture, the availability of credit cards and a general lack of concern for what debt means, many people find that their bad debt is out of control. Luckily, there are a few easy solutions that anyone can implement to get that debt to behave and start finding a way onto a safe island in the sea.
1. Consolidate if possible.
If you are paying on numerous credit cards or loans, chances are you are paying way too much interest. A consolidation loan can be very beneficial in many ways such as providing you with one monthly payment instead of several, and generally, you will be paying less interest.There are a few cautionary notes about consolidation loans however. In order to experience real savings on interest, these are best kept to short term loans. While variable rates offer the ability to save money, they are not as safe as a fixed rate. Carefully weigh your options before consolidating and look at both the short term and long term picture before you make your decision.
2. Pay down your debt consistently.
Making only the monthly minimum payments on your debt can lead to treading water in your sea of debt. You won’t be making any real progress, and it’s all too easy to get tired and sink. Work on paying more than this minimum, even if it’s only five dollars to start with. Gradually increase the amount you are paying each month and you will be able to pay down that debt in a lot less time.
3. Control your spending.
Once you are adrift in the sea of debt, it is vital to end the behavior that put you there. Cut up your credit cards if necessary, but don’t close the accounts. Keep up your payments and you’ll make progress a lot faster. If you have difficulty controlling your spending, you may need to find ways to make more money so that you have more to work with, but this can end up leading to a vicious cycle. It is best to learn self restraint in order to undo the damage that bad debt causes.
4. Learn the difference between good debt and bad debt.
Not all debt is bad, and in fact, good debt has the power to help you stay secure and handle your bad debt more effectively. Put simply, bad debt works against you, draining your finances. Good debt works for you, increasing your monthly income.
As an example, a good debt could be something like a rental property, that brings you income every month. A bad debt is something that has not value beyond its sticker price that will only end up costing you interest every month.
By implementing these techniques, you can start swimming to safety and get out of that sea of debt permanently. Don’t forget the lessons you learn along the way since the last place you want to end up is right back in that sea.
Bad Credit Mortgage Loans
People seek out bad credit mortgage loans for many reasons. These include divorce, bankruptcy, failure to pay secured and unsecured credit lines and more. However they find themselves in their current situation, the avenues to home ownership are few and fraught with unique challenges. Experts recommend fixing bad credit before attempting to buy a home, but if waiting is not an option, consider the following possibilities.
There are three common ways to home ownership when a person has a low credit score. The home buyer can search for a hard money loan, work with subprime specialists in the mortgage industry or apply for FHA loans. Each option has its advantages and disadvantages, and not every option is appropriate for everyone.
To begin with, industry lenders specializing in subprime lending, or getting people with poor credit ratings approved, expect certain conditions to be met. The first condition is a large down payment or proof of substantial available cash. A lender requiring 25 to 30 percent down on the home is not unusual and lessens their liability should the buyer default.
The second condition is charging a higher interest rate. Bad credit mortgage lending is not the same as hard money, but buyers can expect to pay 20 to 30 percent higher interest rates. A markup like this often means paying double digit interest. The buyer must also demonstrate a steady and adequate source of income.
Hard money loans are the second pathway to home ownership. This type of loan is given by private firms unregulated like traditional mortgage houses. These companies do not require credit checks but do charge hefty fees. The borrower will be charged several thousand dollars worth of points up front, which will degenerate the down payment. The borrower will also pay an interest rate in the mid to high teens.
Hard money terms are often short, and if the buyer is able to keep up with their monthly installments, they will need to refinance as soon as possible. Refinancing with better terms will only be possible if the homebuyer is able to improve their credit situation while making their mortgage payment.
The third possibility is applying for an FHA loan. Applicants for these notes have bad and good credit alike, but are drawn to the program because of the favorable terms. A credit score as low as 600 is often acceptable, and the average down payment is only 3.5 percent. The FHA also allows co-borrowers provided their credit rating is sufficient.
Signing off on bad credit mortgage loans does not have to be a permanent situation. Borrowers who have a sufficient down payment and income to be approved by a regulated lender can immediately take steps to improve their FICO score. Bringing accounts current, catching up on past due bills and demonstrating responsible account management over a period of time will have a positive effect on an individual’s report. When these steps are taken, the borrower will be in a better position to refinance with improved terms when the time comes.
Thursday, May 12, 2011
When Insurance Companies are Liable
When Insurance Companies are Liable
Some state courts have recognized that there are times when an insurer should be aware when something fishy is going on—when a person named as the beneficiary had no “insurable interest” in the insured.
New York lawyer Norman L. Tolle, who represents health and life insurance carriers, and has written on the subject of insurance-related murder and the obligations insurers have to be on the lookout for shady behavior.
In this article, Tolle notes an important case, Liberty National Life Insurance Co. v. Weldon, in which the Alabama Supreme Court held that insurers have a responsibility to “use reasonable care not to create a situation which may prove to be a stimulus for murder.”
The 1957 case involved the murder of a 2-year-old by her aunt, who had been named a beneficiary on a life insurance policy for the child despite having no role in the child’s upbringing. The father of the child sued the insurer for failing to exercise “reasonable diligence” in ensuring the aunt had an insurable interest in her niece’s life.
Here’s what the court found:
It has long been recognized by this court and practically all courts in this country that an insured is placed in a position of extreme danger where a policy of insurance is issued on his life in favor of a beneficiary who has no insurable interest. . . . Where this court has found that such policies are unreasonably dangerous to the insured because of the risk of murder and for this reason has declared such policies void, it would be an anomaly to hold that insurance companies have no duty to use reasonable care not to create a situation which may prove to be a stimulus for murder.
In this case, the company didn’t even bother to notify the child’s parents that the aunt was taking out an insurance policy of their daughter. The parents found out about the policy only after the death of their child.
Some state courts have recognized that there are times when an insurer should be aware when something fishy is going on—when a person named as the beneficiary had no “insurable interest” in the insured.
New York lawyer Norman L. Tolle, who represents health and life insurance carriers, and has written on the subject of insurance-related murder and the obligations insurers have to be on the lookout for shady behavior.
In this article, Tolle notes an important case, Liberty National Life Insurance Co. v. Weldon, in which the Alabama Supreme Court held that insurers have a responsibility to “use reasonable care not to create a situation which may prove to be a stimulus for murder.”
The 1957 case involved the murder of a 2-year-old by her aunt, who had been named a beneficiary on a life insurance policy for the child despite having no role in the child’s upbringing. The father of the child sued the insurer for failing to exercise “reasonable diligence” in ensuring the aunt had an insurable interest in her niece’s life.
Here’s what the court found:
It has long been recognized by this court and practically all courts in this country that an insured is placed in a position of extreme danger where a policy of insurance is issued on his life in favor of a beneficiary who has no insurable interest. . . . Where this court has found that such policies are unreasonably dangerous to the insured because of the risk of murder and for this reason has declared such policies void, it would be an anomaly to hold that insurance companies have no duty to use reasonable care not to create a situation which may prove to be a stimulus for murder.
In this case, the company didn’t even bother to notify the child’s parents that the aunt was taking out an insurance policy of their daughter. The parents found out about the policy only after the death of their child.
All about Residence Insurance
Residence insurance isn’t a specific insurance type, but simply refers to any type of homeowners policy that you purchase to protect the financial investment you've made in your abode.
What it Covers
This type of plan is often referred to as a "package policy." That's because it provides coverage for:
- Damage to the structure of your home
- Damage to your personal belongings
- Additional living expenses if you're temporarily unable to live in your home after it's been damaged
- Liability if someone is injured on your property
Of course, the specifics of these coverages are determined by what kind of policy you have and how much you've insured your home for. To help you figure out what kind of policy you need, let's take a look at some general coverage options.
Coverage Options
As you shop for home insurance, you'll notice there are a handful of policies from which to choose.
According to the Insurance Information Institute (III), the most common examples include the following:
Limited (HO-1): This bare bones policy covers 10 perils, including damage caused by fire, smoke, lightning, theft and vandalism.
Basic (HO-2): This policy covers 16 perils, including damage caused by the weight of snow and ice, frozen pipes and other accidental water damage from appliances.
Special (HO-3): This is the most popular residence insurance policy, as it covers all perils, except for damages from flood, landslide, mudslide, and war.
It's important to remember that this is not an all-inclusive list; there are other comparable residence insurance policies available for other types of homes, such as condos, mobile homes or historic homes.
Levels of Coverage
Once you've decided which type of policy is right for you, you'll need to consider the level of coverage you need: actual cash value, replacement cost or guaranteed replacement cost.
Actual cash value: This level of coverage pays to replace your home and possessions, minus depreciation. That means if you bought a laptop two years ago for $1,200, you probably won't be reimbursed the full $1,200.
Replacement cost: This level of coverage pays to replace your home and possessions without a deduction for depreciation. This means if you can show you paid $1,200 for your laptop, you'll be reimbursed for that amount (up to your policy amount).This is the most popular level of residence insurance coverage.
Guaranteed replacement cost: This level of coverage pays whatever it costs to rebuild your home and replace your possessions—even if it exceeds the policy limit. As protection is concerned, this offers the highest level of coverage.
Saving Money
Whether you live in a house, mobile home or condo, you can save on residence insurance by:
Shopping around. Online shopping sites like InsureMe.com allow you to compare multiple quotes from local insurers to find the policy that's right for you.
Increasing your deductible. Agreeing to pay more out-of-pocket on claims will automatically shrink your premium. Just remember to choose a deductible you can afford!
Combining your home and auto polices. Most insurers give a nice discount to homeowners who insure their vehicles with the same company.
Making home repairs. If you've recently replaced your roof, upgraded your plumbing, or purchased a new heating system, you may be eligible for a discount!
Installing electronic alarms and fire safety equipment. Make sure to tell your agent if you have an electronic anti-theft alarm, sprinklers or live near a fire department. All of these things may be worthy of a premium discount.
What it Covers
This type of plan is often referred to as a "package policy." That's because it provides coverage for:
- Damage to the structure of your home
- Damage to your personal belongings
- Additional living expenses if you're temporarily unable to live in your home after it's been damaged
- Liability if someone is injured on your property
Of course, the specifics of these coverages are determined by what kind of policy you have and how much you've insured your home for. To help you figure out what kind of policy you need, let's take a look at some general coverage options.
Coverage Options
As you shop for home insurance, you'll notice there are a handful of policies from which to choose.
According to the Insurance Information Institute (III), the most common examples include the following:
Limited (HO-1): This bare bones policy covers 10 perils, including damage caused by fire, smoke, lightning, theft and vandalism.
Basic (HO-2): This policy covers 16 perils, including damage caused by the weight of snow and ice, frozen pipes and other accidental water damage from appliances.
Special (HO-3): This is the most popular residence insurance policy, as it covers all perils, except for damages from flood, landslide, mudslide, and war.
It's important to remember that this is not an all-inclusive list; there are other comparable residence insurance policies available for other types of homes, such as condos, mobile homes or historic homes.
Levels of Coverage
Once you've decided which type of policy is right for you, you'll need to consider the level of coverage you need: actual cash value, replacement cost or guaranteed replacement cost.
Actual cash value: This level of coverage pays to replace your home and possessions, minus depreciation. That means if you bought a laptop two years ago for $1,200, you probably won't be reimbursed the full $1,200.
Replacement cost: This level of coverage pays to replace your home and possessions without a deduction for depreciation. This means if you can show you paid $1,200 for your laptop, you'll be reimbursed for that amount (up to your policy amount).This is the most popular level of residence insurance coverage.
Guaranteed replacement cost: This level of coverage pays whatever it costs to rebuild your home and replace your possessions—even if it exceeds the policy limit. As protection is concerned, this offers the highest level of coverage.
Saving Money
Whether you live in a house, mobile home or condo, you can save on residence insurance by:
Shopping around. Online shopping sites like InsureMe.com allow you to compare multiple quotes from local insurers to find the policy that's right for you.
Increasing your deductible. Agreeing to pay more out-of-pocket on claims will automatically shrink your premium. Just remember to choose a deductible you can afford!
Combining your home and auto polices. Most insurers give a nice discount to homeowners who insure their vehicles with the same company.
Making home repairs. If you've recently replaced your roof, upgraded your plumbing, or purchased a new heating system, you may be eligible for a discount!
Installing electronic alarms and fire safety equipment. Make sure to tell your agent if you have an electronic anti-theft alarm, sprinklers or live near a fire department. All of these things may be worthy of a premium discount.
Federal Home Loan Programs
FEDERAL HOME LOAN MODIFICATION
If you are up and determined to keeping your dream home and saving your real estate property from foreclosure, then you might as well consider one of the more popular options homeowners are turning to, that of federal home loan modification schemes developed by the Obama government to save distressed properties from foreclosure and help millions of American families keep their dream houses. Of course, before getting into these home loan modification or home loan restructuring schemes – whether initiated by the federal government or the private banking sector, there are several things that you should be aware of.
Home loan modification programs are designed to help homeowners recover from problematic mortgages. This mean that these loan modification schemes do have the objective to allow homeowners to pay their mortgages at monthly amortizations that are possibly way lower that what has previously been agreed upon. Of late, the United States treasury has already announced that certain federal home loan modification programs do allow homeowners to pay amortizations amounting only to 38% of their actual income. Prior to this, incentives were offered by the Obama government to banks, lenders and financial institutions to encourage them to restructure the loans and mortgages of homeowners who can now barely afford to make their monthly payments. These incentives formed part of a rather comprehensive bail out package designed by the federal government to boost the financial sector and the real estate market as well.
It has likewise been thought of that the reason why there are homeowners that leave their homes to foreclosure or opt for a short sale, is because of the depreciating values of their properties. However, properties do continue to depreciate if the situation turns from bad to worse, where foreclosure begins to affect not just one or two homes but majority of the residences in a community, resulting to a steep decline in real estate value. Thus, saving distressed properties from foreclosure should also work towards boosting the real estate market.
Aside from the attractive terms of payment and interest rates home modification programs being offered by the government also come with incentives to those who make prompt and religious payments.
At the same time, the federal home loan modification program has also been expanded to include the more expensive priced mortgages. Terms of the home loan modification scheme drafted by the federal government now includes homes with outstanding principal balances of almost $730,000.
In the end, the home loan modification schemes designed and thought of by both the federal government and the private banking and financial sector can be seen as beneficial to both homeowner and the lender, and even to the real estate sector as well. While the homeowner gets to keep their dream homes, the lender enjoys continuous payments on loans and mortgages, notwithstanding the fact that these payments are less than the original terms. Meanwhile the real estate sector gets a much needed boost as a slowdown on the rate of foreclosures are sure to bar the decline in real estate property prices and values.
Friday, May 6, 2011
Long Term Care Insurance - Make sure these are included in your policy!
The majority of people need long term care insurance because not everyone will afford the cost of the nursing home facility. Around 50% of Americans will require long term care insurance in their life time so it makes sense to ensure your care insurance includes/covers the following...
Variable Coverage. Get a long term care insurance policy that includes coverage for home health aids, assisted living facilities, adult day care providers and nursing homes so you’ll have the best choice of care.
Inflation protection. Ensure you get a long term care insurance policy that includes inflation protection because the cost of these nursing homes will be considerably more in 15 to 30 years time.
A minimum of 70% Daily Benefit. If you require care services, ensure you don’t pick the cheapest daily amount. Instead investigate what the average daily cost is of a nursing home in the area and request around 70% of that. Also ensure you adjust this annually to account for changes per year.
Independent Care Management. The long term care insurance company will send a representative to determine the benefits you need. It’s essential to make sure your long term care insurance policy enables you the option of having a licensed health care provider that is independent and not someone working for the long term care insurance company.
How Can You Choose Pet Health Insurance For Your Particular Pet?There are many factors that may come into play when choosing the best pet health insur
There are many factors that may come into play when choosing the best pet health insurance for your pet. You must balance between providing the most loving and responsible care possible for your pet but keep the costs within your budget. Let's examine some of these factors.
Is your pet too young or too old for the best pet health insurance? Some insurance companies will not insure animals under a year old so that inherited conditions can manifest making true health conditions apparent. Similarly, animals that are older are sometimes not insurable as they may have had treatment for a condition that can re-occur or are expected to have increasingly frequent conditions develop. Be sure to check on any age restrictions before signing up.
Will the breed of your pet preclude obtaining the best pet health insurance? Application for the pet insurance may be denied if certain characteristics are known to produce conditions or behaviors that could cause an unusually large number of claims. Large dog breeds that are pre-disposed to hip dysplasia fall into this category. Some companies will not cover Shar Pei's as they can have a number of health issues. Dog breeds that are well known to develop aggressive behaviors may not be covered. The legal adage is 'every dog gets one free bite'! After that the owner is liable.
The best pet health insurance offers a variety of plans to fit your pet. After taking into consideration the age and breed of your pet, what kind of circumstances to you feel you will need to have covered by insurance? Do you want just emergency services covered in case of an accident? Do you want surgeries such as spaying and neutering covered? What about normal maintenance such as vaccinations, heart worm test and treatments? Each of these variables will have a different price and will therefore effect your budget.
What can you expect from your insurance carrier in terms of their payments on your claims? Is there a deductible that must be met before their payments commence? Do they have a co-pay available for office visits, etc? Some may offer a flat fee for certain procedures or may pay a percentage of the charges from your veterinarian. Also there may be a maximum payout per year or per pet that you should know about. As you can see, there are many things to consider in choosing the best pet health insurance and good research will pay off in great care for your pets at a price you can afford.
Sharon Brown lives on the Central Coast of California and loves her pets. She does research in many areas of the Pet Industry as well as Senior Education and the Environment.
Motorbike Theft Insurance
Motorbike theft is becoming a huge problem and will continue to be. If a motorbike is stolen it is often never recovered. After the thieves strip the motorbike they move quickly to use these parts to build another bike.
There are multiple ways which can prevent your motorbike from being stolen. A very effective way is to keep the motorbike in a garage. Although this is not always possible it should be your first priority. A thief can be deterred by several security systems that can be installed on your motorbike. A secure solid lock attached to a large stationary object is often the most effective.
The above are great ways to secure your motorbike but you really should consider a comprehensive insurance policy. In most cases, the insurance company will replace the stolen motorbike or reimburse you at the current book value. We hope this never happens but at least your motorbike will be covered.
When looking into the motorbike insurance policy ensure you review the insurance company’s procedures in processing claims. Insurance companies always pay close attention to detail to lower the chance of making mistakes. You will recall that this is not pleasant if you’ve ever had to file a claim with a motorbike insurance company. It seems a never ending process and always want to know as much information as possible.
It’s outlined in the policy how they perform this procedure. Knowing what the motorbike insurance company requires will most definitely speed up the process. Often the claim takes longer because the information needed was not completed correctly or additional documents missing. Having the correct documents laid out from the start will avoid delays in processing the claim.
What Is A Fixed Annuity?
What is a Fixed Annuity? An annuity is a contract from an insurance company to pay money in the future. The company guarantees a fixed rate of return, usually based on some underlying bond crediting rate. The contract is between the insurer and the owner of the annuity contract.
Annuities are used to provide a future benefit in the form of a stream of payments. These payments are made within one year, in the case of an Immediate Annuity. They may also take place at some future date, more than a year, as in a Deferred Annuity.
A Fixed Annuity differs from Variable Annuities because the insurer backs the interest rate earned. A Variable Annuity permits the owner to invest the payments in the market for a potentially higher return. This also means that the owner of a Variable Annuity has a substantially higher investment risk. As such, Variable Annuities are registered security products; fixed annuities are not. One fixed annuity, the equity indexed annuity is also not considered a security.
Fixed Annuities have two distinct phases: accumulation and annuitization. During the accumulation or build-up phase, payments are made and grow on a tax-deferred basis. When the owner decides to receive income, the annuity is "annuitize" or paid-out. Payout can take place all at once or over years based on the life of an annuitant. The annuitant is similar to insured in a life insurance policy.
Annuities are often compared to mutual funds and other investment products. This is a mistake because there are stark differences between the two. To start, Fixed Annuities are not investment products. They provide a way to defer income for a period of time. Their guaranty return is unique and not found with mutual funds that face market risk. A Fixed Annuity has mortality and expense charges that are not found in investment products.
An initial payment into an annuity can be made all at once or over a series of period. These are single pay and fixed pay annuities respectively. Annuities enjoy tax advantages during the accumulation phase and should not be used until age 59 and a half. Taking money out prior to that age for purposes other than a special need may result in penalties and fees. Many Fixed Annuity contracts have what are known as surrender charges. A surrender charge is a declining fee, based on the number of years money is held. They can be as high as 30 percent and last up to 20 years.
Fixed Annuities are useful in planning for such life events as retirement. They may also be used to distribute lump sum payments such as inheritances or lawsuits. These are special Fixed Annuities known as structured settlement annuities. A Fixed Annuity gives ease of mind to a person who is uncertain about the market. They tend to be competitive with bank certificates of deposit but again are unique products.
When considering the purchase of a Fixed Annuity contract you should consult a licensed insurance agent or financial adviser. A competent agent or counselor can provide you with comparative information and help determine the appropriate product. A Fixed Annuity may be valuable addition to your product holdings.
