Gold Investment is an old age tactic of putting y...
Gold Investment is an old age tactic of putting y...
You've heard it before: Asset allocation is key to prudent, long-term investing. ...
Cash back credit cards explained
The initial credit cards w...
A mutual fund is a type of professionally-managed collective investment sc...
Stock Options - Introduction...
What are Reward Points?
Gold Investment is an old age tactic of putting your money to grow and as insurance for future unseen dangers. It is a liquid and tangible investment. There are so many motives behind gold investment. Some invest in the hope of future increment in the value, some because they love the yellow metal, some other for price speculation and so on.
It can be a trading item, store of value, investment, insurance and others. You have the options of investing in gold, gold stock, gold bullion, gold certificates, options, forward contracts, gold linked notes and such other gold related options. Trading gold has also been an old established business. Trading may be like other currencies for future appreciation in the value.
Speculation is the main cause for trading. There may be different types of gold investors like people who store gold, people who include in their portfolio, banks who keep part of their deposit in gold, financial institutions, gold bugs, speculator, petroleum speculator, portfolio hedger etc. There are several ways of investing in gold. Bars, certificates, coins, account, exchange traded funds, and mining companies, derivatives etc. are some ways for gold investment.
Benefits of Gold Investment
Gold investment can be termed as a long term investment which gives long term benefits also.
Most of the investment experts and consultants nowadays recommend gold investment due to the worth of gold. Unlike other currencies and materials of financial interest gold never loses it worth and will bring a lot of revenue. The value of gold is not affected by inflation or devaluation of money because of it rare or unique existence. Thus, gold investment is a very nice option as it will help in securing a safe and a prosperous future.
One of the main advantages of gold investment is that you can purchase or sell gold in part or corner of the world. You would not face any problems while buying or selling gold at different places, due to its high demand and value. Gold investment becomes quite reasonable as you can sell or buy gold comfortably.
Gold plays a vital role in keeping the economic circle of our world alive. Most of the developed and developing nations of the world have invested in gold in the form of shares. This helps different countries during economic downturns and serves as a source of financial security. This means that gold investment is one of the best investment options nowadays.
Different economies of the world were hit hard and are still handling the economic recession. Many strong economies would have crashed if they had not made investments in gold. It is gold which saves the economies from falling down during such time periods of economic recession.
Having a proper investment portfolio will help you in staying stable. The reason is that the prices of gold are quite stable and fluctuate very less if compared to the mutual fund or stock market funds. Gold investment is certainly lucrative and has wide term benefits and as a result is a very famous investment choice.
Gold Investing Tips
The foreign exchange market (forex, FX, or currency market) is a form of exchange for the global decentralized trading of international currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies.
Forex Option Defined – A forex option is a financial currency contract giving the forex option buyer the right, but not the obligation, to purchase or sell a specific forex spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the forex option buyer pays to the forex option seller for the forex option contract rights is called the forex option “premium.”
The foreign exchange market is unique because of
How the forex Market Works
When you’re expecting the value EUR/USD to fall, you might trade the other way by selling Euros for dollars and buying then back when the forex rate has changed to your advantage.
The forex Trading Systems
While you may be right in being cautious about any forex trading system that’s advertised, there are some good ones around. Most of them both utilize forex charts and by means of these, identify forex trading signals which tell the trader when to buy or sell. These signals will be made up of a particular change in a forex rate or a trend and these will have been devised by a forex trader who has studied long-term trends in the market so as to identify valid signals when they occur.
Many of the systems will use forex trading software which identifies such signals from data inputs which are gathered automatically from market information sources. Some utilize automated forex trading software which can trigger trades automatically when the signals tell it to do so. If these sound too good to be true to you, look around for online forex trading systems which will allow you undertake some dummy trading to test them out.
By doing this you can get some forex trading training by giving them a spin before you put real money on the table.
How Much do you Need to Start off with?
This is a bit of a ‘How long is a piece of string?’ question but there are ways for to be beginner to dip a toe into the water without needing a fortune to start with. The minimum trading size for most trades on forex is usually 100,000 units of any currency and this volume is referred to as a standard “lot”. However, there are many firms which offer the facility to purchase in dramatically-smaller lots than this and a bit of internet searching will soon locate these. There are many adverts quoting only a couple of hundred dollars to get going!
Where do You Start?
The single most obvious answer is of course – on the internet! Online forex trading gives you direct access to the forex market and there are lots and lots of companies out there who are in business just to deal with you online. Be vigilant, do spend the time to get some good forex trading education, again this can be provided online and set up your dummy account to trade before you attempt to go live. If you take care and take your time, there’s no reason why you shouldn’t be successful in forex trading so, have patience and stick at it!
Benefits of the Forex Market
– Superior liquidity
Liquidity is what really makes the Forex market different from other markets. The Forex market is by far the most liquid financial market in the world with more than 3 trillion dollars traded every day. This ensures price stability and better trade execution. Allowing traders to open and close transactions with ease. Also such a tremendous volume makes it hard to manipulate the market in an extended manner.
– 24hr Market
This one is also one of the greatest advantages of trading Forex. It is an around the click market, the market opens on Sunday at 3:00 pm EST when New Zealand begins operations, and closes on Friday at 5:00 pm EST when San Francisco terminates operations. There are transactions in practically every time zone, allowing active traders to choose at what time to trade.
– Leverage trading
Trading the Forex Market offers a greater buying power than many other markets. Some Forex brokers offer leverage up to 400:1, allowing traders to have only 0.25% in margin of the total investment. For instance, a trader using 100:1 means that to have a US$100,000 position, only US$1,000 are needed on margin to be able to open that position. Remember leverage is like a double sword, it could work in your favor as well as against you.
– Low Transaction costs
Almost all brokers offer commission free trading. The only cost traders incur in any transaction is the spread (difference between the buy and sell price of each currency pair). This spread could be as low as 1 pip (the minimum increment in any currency pair) in some pairs.
– Low minimum investment
The Forex market requires less capital to start trading than any other markets. The initial investment could go as low as $300 USD, depending on leverage offered by the broker. This is a great advantage since Forex traders are able to keep their risk investment to the lowest level.
– Specialized trading
The liquidity of the market allows us to focus on just a few instruments (or currency pairs) as our main investments (around 80% of all trading transactions are made on the seven major currencies). Allowing us to monitor, and at the end get to know each instrument better.
– Trading from anywhere
If you do a lot of traveling, you can trade from anywhere in the world just having an internet connection.
All these benefits make the Forex market very attractive to investors and traders. We need to make something clear though, even when all these benefits of the Forex market are notorious; it is still difficult to make a successful career trading the Forex market. It requires a lot of education, discipline, commitment and patience.
Real Estate Investment
Real estate investing involves the purchase, ownership, management, rental and/or sale of real estate for profit. Improvement of realty property as part of a real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate development.
Real estate is an asset form with limited liquidity relative to other investments, it is also capital intensive (although capital may be gained through mortgage leverage) and is highly cash flow dependent. If these factors are not well understood and managed by the investor, real estate becomes a risky investment. The primary cause of investment failure for real estate is that the investor goes into negative cash flow for a period of time that is not sustainable, often forcing them to resell the property at a loss or go into insolvency.
Become a Real Estate Investor
What is the conclusion? That real estate investing is a business about owning a piece of ground that, when researched and purchased sensibly by impartial numbers and careful management, and with reasonable goals and caution, will likely be more valuable tomorrow than it is today.
Benefits of Real Estate Investments
* Real Estate Investing Has Tax Benefits
The government understands that real estate ownership and development is good for everyone. That’s why there are so many tax advantages to investing in real estate. Mortgage interest is deductible in most situations. In some cases, depending on how you finance and handle your real estate investments, even profits can be tax deductible. Sheltering your profits and deducting your expenses from your tax bill is just as good as putting money in your pocket.
* Investing in Real Estate Offers Significant Profit Potential
In a perfect world, all investments would return a profit. In case you haven’t noticed, we’re not living in that world. We are in a world where the supply of secure and affordable housing is dwindling, and the number of deteriorating homes is growing. This situation offers an outstanding opportunity for real estate investors who buy, renovate, and then sell or rent out properties. Investing in real estate easily returns profits in the 30-40 percent range, and has the potential to return much more.
* Real Estate Investing Diversifies Your Portfolio
Investing in real estate is a great way to diversify your financial portfolio. Investment opportunities abound in today’s world, and there’s no reason to pick just one. Some of them have great potential for profit, and for significant loss. You have to make your own financial decisions about which investments are right for you. But chances are it will be your real estate investments that keep you going when your riskier investments aren’t performing well.
* Investing in Real Estate Provides Income
Real estate investing gives you options. If you want to supplement or replace your monthly income, you can choose to rent out a property instead of selling it. A property manager can handle the rental for you, which means your only work for the month will be depositing the checks.
* Real Estate Investments Appreciate If you can count on anything, then you can count on your real estate investments increasing in value. Based on long-term, historical trends, you can expect real estate to appreciate about nine percent a year. And that’s if you do nothing at all. Just imagine what could happen if you buy a handyman special and do some renovation.
Risks & Rewards of Real Estate Investing
Reputation: A reputation is slow to build up and easy to ruin. For every cause there is an effect, and for every effect there is a reputation at stake. If you plan to invest in real estate for any length of time you will have some-sort of a reputation. Will it be held with honor and respect, as a name that people know to call when they are in need your services? Will your reputation be soiled from the beginning of your career; perhaps keeping you from ever truly succeeding or believing in your own abilities? Or will you never develop a reputation because of your inaction to ever pull the real estate trigger?
Credit: A few times in my real estate career I have been invited to joint venture with other real estate investors if I would become their “straw buyer.” A straw buyer is essentially a silent partner that gets paid a fee for signing his/her name and credit to successfully get approved for a loan and fund a real estate transaction. The going rate was $5,000 per loan at the time. I could make a quick and easy $5,000 simply by successfully getting approved and closing on an investment property for other investors to hold, maintain, pay for, or flip for a profit. But was it easy money? When the real estate bubble burst in Tampa back in 2007 I knew several newbie “straw buyers” that had their credit scores destroyed by other investors or joint venture partners that simply let the property slide into foreclosure instead of risking more of their own money.
Knowledge: Some of my best lessons I’ve learned have been from mistakes I have made while real estate investing. While in the negotiation process for a mobile home park I was very interested in purchasing I over negotiated and lost an already greatly negotiated deal. The investor who bought the mobile home park has since sold it for a significant five-figure profit. During the negotiation I was very conscious that the last counter offer made to me was excellent and more than fair; but what could it hurt to ask for a little more of a reduced price? This deal was seized by another, more seasoned investor that perhaps had already been through the lesson I was just learning. I soon internalized the quote, “You can’t steal in slow motion” as a life motto. Without this painful and costly lesson I would have missed my opportunity for other more profitable deals I have executed since this first negotiation blunder.
Time & Energy: Perhaps the most valuable of all our commodities is our personal time and energy. This entails the energy you spend finding your real estate deals and making unaccepted offers, the time you spend worrying what to do next, the time of cashing a $30,000 profit check and the lack of energy you will spend vacationing for a month with loved ones. Every one of us has 24 hours in every day. Between working, spending time with our families, and a few hours of sleep, we seldom feel like we have any more time for additional commitments. You will eventually be faced with this decision, “Do I risk my time and energy now, to try and attempt something that may make me and my family happy for the foreseeable future?” The choice is yours and there is no wrong answer.
The wonderful thing about a topic like Risk vs. Reward is that there are no right or wrong answers, just your opinion. After you perform your due diligence to know whether or not your potential real estate deal is a favorable one, the choice to pull the trigger and take the risk is yours alone. If you make a profit, society will call you a genius; if you fail then society . . . forget society; If you fail, then you will stand up and keep climbing your way to where you want to be.
Always keep in mind ALL that you truly have to risk, and gain in every real estate transaction.
Stock Options – Introduction
Stock options are one of the most creative, innovative and flexible financial derivative instrument that has ever been created. It has found its place not only in the stock markets but also as employee benefits in order to participate in a company’s growth. Learning about what stock options are is a must for anyone who wishes to participate in options trading. This tutorial shall provide a free, in-depth look into what stock options are, the different types of stock options, how they work and much more.
What Are Stock Options?
Option is a financial instrument that is traded in derivative segment at the stock market. An option contract is a contract between the buyer and the seller. It is a contract to buy and sell a fixed number of underlying assets on or before the date on which the contract expires. As a buyer of an option contract one has the right to exercise the option contract with the time period of the contact. But the buyer of the option is not bound to exercise the option. But a seller of the option contract is bound to honor the contract if the buyer exercises his contract. The price at which the contract is decided for trade, that price is called the strike price. There can be different assets that are traded through the option contract – it can be stocks, index, commodity or other derivative instrument like future contract.
There are two different types of options that are traded at the stock market – Call Option and Put Option.
Benefits of trading in stock options
1. Less risk. Most people assume that options have higher risk then stocks because you can lose 100% of what you invest. While this part may be true the amount you invest with options is lower than what you would invest with if you buy the stock. For example an option on a $50 stock may be just $3. Because of this you are only risking $3 on the trade. If you had bought the stock you would be risking $50.
2. Higher profit potential. Stock movements are magnified with options. If a stock moves up 10% that could mean an option will move up hundreds of percentage point. Because they are so highly leveraged a small move in a stock could mean a big move in the option.
3. Options can take advantage of all market directions. While call options make money when a stock goes up, put options make money when a stock goes down. This can be very beneficial in a bears market when it is hard to find stocks that are going to rally but easy to find stocks that are going to tank.
4. Options can be bought and sold. Because of this option not only let you take advantage of what a stock is going to do, but they also let you take advantage of what a stock is not going to do. That can be helpful when a stock doesn’t do much at all.
5. They help you to get out a losing trade faster. Most new traders will buy a stock and watch it fall. These traders do not sell their stock because they expect it to go up in the long run. So they hold onto it and watch their loss get bigger and bigger. If they had an option on the stock they would have been able to take a small loss and move onto the next trade.
A mutual fund is a type of professionally-managed collective investment scheme that pools money from many investors. While there is no legal definition of mutual fund, the term is most commonly applied only to those collective investment schemes that are regulated, available to the general public and open-ended in nature.
An Introduction to Mutual Funds
Over the past decade, American investors increasingly have turned to mutual funds to save for retirement and other financial goals. Mutual funds can offer the advantages of diversification and professional management. But, as with other investment choices, investing in mutual funds involves risk. And fees and taxes will diminish a fund’s returns. It pays to understand both the upsides and the downsides of mutual fund investing and how to choose products that match your goals and tolerance for risk.
Key Points to Remember
Mutual funds are not guaranteed or insured by the FDIC or any other government agency — even if you buy through a bank and the fund carries the bank’s name. You can lose money investing in mutual funds.
Past performance is not a reliable indicator of future performance. So don’t be dazzled by last year’s high returns. But past performance can help you assess a fund’s volatility over time.
How Mutual Funds Work
What They Are
A mutual fund is a company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. The combined holdings the mutual fund owns are known as its portfolio. Each share represents an investor’s proportionate ownership of the fund’s holdings and the income those holdings generate.
Some of the traditional, distinguishing characteristics of mutual funds include the following:
Advantages and Disadvantages:
Every investment has advantages and disadvantages. But it’s important to remember that features that matter to one investor may not be important to you. Whether any particular feature is an advantage for you will depend on your unique circumstances. For some investors, mutual funds provide an attractive investment choice because they generally offer the following features:
But mutual funds also have features that some investors might view as disadvantages, such as:
You’ve heard it before: Asset allocation is key to prudent, long-term investing. You’ve probably heard this before, too—depending on your age and tolerance for risk, your portfolio should contain a mixture of investments, including stocks, bonds and cash. This is sound advice. But do you understand the critical characteristics of bonds?
Bonds and bond funds can be extremely helpful to anyone concerned about capital preservation and income generation. Bonds and bond funds also can help partially offset the risks that come with equity investing—regardless of prevailing market conditions. They can be used to accomplish a variety of investment objectives. Bonds and bond funds hold opportunity—but they also carry risk.
What is Bond?
A bond is a loan that an investor makes to a corporation, government, federal agency or other organization. Consequently, bonds are sometimes referred to as debt securities. Since bond issuers know you aren’t going to lend your hard-earned money without compensation, the issuer of the bond (the borrower) enters into a legal agreement to pay you (the bondholder) interest.
The bond issuer also agrees to repay you the original sum loaned at the bond’s maturity date, though certain conditions, such as a bond being called, may cause repayment to be made earlier. The vast majority of bonds have a set maturity date—a specific date when the bond must be paid back at its face value, called par value. Bonds are called fixed-income securities because many pay you interest based on a regular, predetermined interest rate—also called a coupon rate—that is set when the bond is issued.
Understanding bond basics is critical to making informed investment decisions about this investment category. The more you know now, the less likely you will be to make a decision you later regret.
Top 10 things you need to know about investing in bonds.
Cash back credit cards explained
The initial credit cards were simple, standard ones with no fancy advantages or programs attached to them. With the credit card use increasing and attractiveness getting higher among users, card companies have come up with several offers and loyalty programs with the intend of offering gains to both the consumer and the bank.
Credit cards with incentive programs allow cards holders to earn rewards for the purchases they make utilizing the company’s credit card. For each transaction made or a dollar spent, the cardholder gains some points and the points, thus collected, can be redeemed by the consumer.
Most companies present good cash rewards as they value a consumer’s fidelity and frequent paying ability. A requirement for many of these incentives is for the customer to have a good credit rating. Even the customer feels he is receiving something in return and likes this, making him a more reliable client.
Using cash back credit cards, cardholders can gain cash rewards for the purchases they make. Generally, on many cards, users can earn 1 % of the total purchased amount. Some card companies provide even higher percentage but just for the first few months. Often, the incentive begins at 1% and climbs up to 5 % only if you have made purchases of five to ten thousand dollars. There are some cards which give greater cash rebates only at particular business stores or for select purchases. Few companies offer 5% cash back on the select purchases with no annual fee, on the card, levied.
Generally cash back credit cards are always better than gas rebate or frequent flyer points as the card owner can use the money at his/her convenience. However, one should not be carried away by these returns and should read the offer carefully as these cash back credit cards are expensive to the companies so they normally have a yearly fee.
Suppose, a company is presenting you a great rebate but charging you a high Annual Percentage Rate (APR), then it’s not such a good deal as it can cancel out the benefits it presents. This is precisely why, while choosing a cash back credit card, the card owner must think over some points which are exclusive to every program. The percentage cash back he would be receiving must be clear.
The card owner should know the maximum authorized limit of the points earned and lastly, time/period extent within which these points have to be redeemed before they expire. A lot of cards have difficult redemption rules like points can be redeemable only in some days which a card owner may not know of and he may miss out on the gain. The card owner should always read the fine print carefully to avail the full benefits.
Cash Back Credit cards are most useful when making huge purchases as the cash back rate is high. These cards are good for those people who use their credit card widely for making purchases and most significantly, for cardholders who are regular with their monthly payments and in no way miss them. These cash back credit cards can earn decent sum of money for cardholders over a period of time if utilized the correct way.
How to Get Cash Back on a Credit Card
6 Best Cash Back Reward Credit Cards
Chase Freedom Visa
This card, issued by JP Morgan Chase, is considered by some to be the best of the cash-back cards. It offers a 5 percent cash back quarterly rotating discount on gas, groceries, department stores, travel, home improvement, restaurants, movies and more. When you use it to shop online, you get a whopping 10 percent back.
Blue Cash Everyday
This American Express card offers 3 percent cash back on purchases in supermarkets, 2 percent on gas and department store purchases and 1 percent on all other purchases. The best thing about it is there are no rotating categories and no minimum spending limit. And it offers a 0-percent annual percentage rate for a year. Its signing bonus isn’t as good as the Freedom Visa, but it’s not bad: You receive $100 cash back if you spend $1,000 within the first three months.
Discover offers several good cash-back cards. Like the Freedom Visa Card, the traditional Discover Card gives customers 5 percent cash back on quarterly rotating categories, such as gas, department stores, travel, home improvement, restaurants, etc. And you get an unlimited 1-percent cash back on all other purchases after your total annual purchases exceed $3,000. Purchases that are part of your first $3,000 earn a 0.25 percent rebate. The Discover Card offers a 0-percent APR for purchases and balance transfers for 15 months – a nice perk. An added bonus: You can double the value of your rebates by redeeming them for gift cards at more than 100 partners.
Citi Dividend Platinum Select
This card gives you 5-percent cash back on quarterly rotating categories, such as gas, groceries, department stores and travel, and 1-percent cash back on all other purchases. It also offers 5-percent cash back when you shop with Citi’s partner merchants.
Discover More Card
This card offers a 5-percent cash-back bonus in rotating categories, such as gas, restaurants, department stores and more. For groceries, you get 1-percent cash back. It offers 0-percent APR on purchases for six months, but one of the best things about this card is it offers a 0-percent APR on balance transfers for 18 months. You also get 24/7 access to U.S.-based customer service as well as email fraud alerts.
PenFed Visa Platinum
This card stands out for offering 5-percent cash back on gas year round, a great benefit for those who drive a lot. This card also offers no annual fee. Unlike the other cards mentioned here, this card isn’t free, but it’s not expensive either. You can get one by paying $20 to join the National Military Family Association or join the Voices for America’s Troops group for a $15 one-time fee or donate (money or blood) to the American Red Cross. If you are a federal employee, a member of the U.S. military or a Red Cross employee, it’s free.
Disadvantages of a Cash Back Credit Card
What are Reward Points?
Many credit card customers receive rewards, such as frequent flyer points, gift certificates, or cash back as an incentive to use the card. Rewards are generally tied to purchasing an item or service on the card, which may or may not include balance transfers, cash advances, or other special uses. Depending on the type of card, rewards will generally cost the issuer between 0.25% and 2.0% of the spread.
Networks such as Visa or MasterCard have increased their fees to allow issuers to fund their rewards system. Some issuers discourage redemption by forcing the cardholder to call customer service for rewards.
On their servicing website, redeeming awards is usually a feature that is very well hidden by the issuers. With a fractured and competitive environment, rewards points cut dramatically into an issuer’s bottom line, and rewards points and related incentives must be carefully managed to ensure a profitable portfolio. Unlike unused gift cards, in whose case the breakage in certain US states goes to the state’s treasury, unredeemed credit card points are retained by the issuer.
8 ways to maximize your credit card rewards points
Just as the number of available credit cards has ballooned over the years, so has the number of reward cards. Compared with a few years ago, chances are you’ll have a much wider selection of goodies within your card’s program — such as a new DVD player, plane tickets, gift cards and even practicing air-to-air dogfighting techniques at the controls of a small fighter plane.
Choosing from among so many options is a good problem to have. But it can also be daunting to find good values.
So to find out how to get the best deals with your points, we turned to several people who know credit card rewards programs best — the people who run them. While card issuers oversee the programs, they rely heavily on outside companies to administer them and provide strategic advice.
In 2009, 68 percent of Americans said they participated in some form of loyalty rewards program, an increase of 10 percentage points over 2007, according to a study by Colloquy, the research arm of LoyaltyOne, which manages rewards programs for companies across a range of industries. That means there are increasing numbers of people trying to figure out how to spend their points.
Here are eight tips from the experts for maximizing your reward points:
1. If you have an airline, hotel or retailer credit card, look first at the rewards linked to that company. Typically, credit-card reward programs give back rewards of about 1 percent of what you spend. But it’s possible to beat that rate by using cards affiliated with other companies. For instance, if you have a Best Buy Reward Zone MasterCard from HSBC Bank, you can get back at least 2 percent in gift certificates, and the card’s rewards with Best Buy are probably better than any other card’s rewards at that electronics chain.
Similarly, if you have an airline rewards card, you can find good deals on plane tickets, especially expensive ones. Redeeming for cheap tickets, though, is often not as good a deal.
2. Compare awards on multiple cards. If you have more than one card and are looking for a rental car voucher, for example, see how many points that rental costs on each card. One could be a better deal.
3. Find smaller awards. Don’t think you have to stockpile points to get a decent reward. There’s been a big shift in recent years toward making awards available on the cheaper end, such as low-value gift cards and music downloads.
For instance, Citi’s Thank You network, for customers who have cards such as Citi Forward, offers one MP3 download from Sony Music for just 100 points. Some of the best sellers on Chase’s Ultimate Rewards include books, video games and DVDs.
4. Consider gift cards. There’s a reason gift cards are the most popular reward, accounting for about 55 percent of all reward redemptions in March 2010. Gift cards are flexible, and people can easily understand how much they’re worth. Compared with redeeming your points for merchandise, gift cards can offer a better value.
For instance, say you want an inflatable mattress for your daughter. If you have a Chase credit card, you could redeem 9,600 Ultimate Rewards points for a 50-inch-by-25-inch AeroBed. Or you could get the same AeroBed by spending 7,500 points for $75 in gift cards at Wal-Mart, where it sells for $65.
5. Look up the price of what you’re eyeing. Points are a different currency than real money. Using the 1 percent reward rate as a guide, look online for the price in dollars to help you figure out if it’s a good deal for the points. Credit card companies typically pay less than retail price for merchandise because they’re buying in bulk, but that doesn’t mean they make the products available cheaply to you.
6. Check out the specials. Just as you would at a store, look for sales in your rewards program. A lot of rewards programs offer a changing list of specials, typically items that aren’t moving and they want to get rid of.
7. Combine your points with someone else’s. An increasing number of rewards programs allow you to transfer your points to others, which means two people, could share a gift that neither could reach individually.
For instance, if you and your die-hard hockey fan buddy each had 20,000 points in RBC Bank’s rewards program, you could share a team autographed Carolina Hurricanes jersey, which at 40,000 points would have been otherwise out of reach.
8. Look for cash-back options. Redeeming points for cash back or a statement credit might not be flashy, but it could make sense for you if you want help paying your bills. If this appeals to you, be aware that there’s been huge growth in the number of cash-back credit cards in recent years that give you money back automatically. The return rates on those cards are often greater than the cash returns on more general rewards cards.
Types of Credit Cards with Reward Programs
Disadvantages of credit cards
Thrifty and balanced spenders won’t have much trouble with credit cards. For them, credit cards are truly a convenience. Most people however are neither balanced nor thrifty which is why Credit Card companies are able to stay in business and make such huge profits. Here are some of the disadvantages of credit cards :
Some Precautions for Good Credit Card Management
1. Consider using credit-counseling services (especially if you have built up large debts, including credit card obligations; can see no way to pay off those debts given your current income and living expenses; and have no visible prospect of increasing your income in the near future). Counselors help work out budgets and negotiate with your creditors for better terms. Many advertise in the phone book and on the Internet. Ask friends who may have used such a service or get a report on the credit counselors’ performance from the Better Business Bureau in your area. Check out what each offers and choose the best counseling service for you.
2. Watch out for “teaser rates” on credit cards that look good today, but can be raised substantially later on. A credit card company could offer you a 5% interest rate today and six months later jump to 15% once you have moved all your debt to the new card.
3. Always read the credit card contract and any mail that arrives from your credit card companies; sometimes the cards’ plans terms are changed to include higher interest rates and fees.
4. Be careful with so-called “pre-approved plans” which usually still require you to apply and may wind up giving you a lot lower credit limit than advertised. You can still be turned down even if you are “pre-approved.”
5. Know how interest is assessed against your unpaid card balances: The average daily balance method with a built-in grace period before interest is assessed? The two-cycle method where interest can be charged if you have any unpaid amounts over a two-month period? Or, some other interest calculation method? If you’re not sure, ask the credit card company you deal with. They are supposed to explain this, under the law, in simple, straightforward language.
6. Always remember to “shop around” for credit of any kind. Check out several plans; use the Federal Reserve Board’s twice-a-year survey to help you find the best credit-card plan that meets your individual needs.
7. Remember that self-control and financial discipline are the keys to successful management. The Greeks of centuries past had a great phrase: “nothing too much.” It is well worth remembering if you wish to be a good money manager and enjoy a great life. If you have too many cards or some cards are “maxed out” to their limits, consider cutting up the troubling one and limit your cards to a few (many financial experts recommend holding just 2 or 3 credit cards).
Credit Cards for Rebuilding Bad Credit
To rebuild a bad credit history, you must begin adding positive information to your credit score. The more positive information you can add, the more your credit score will improve. The trouble is finding credit cards for rebuilding bad credit. The majority of credit cards on the market are for people with good to excellent credit scores. Finding credit cards for rebuilding credit isn’t always easy. But, there are some credit cards out there that approve people who are rebuilding their credit.
Capital One has two credit cards with a reputation for approving applicants with poor credit scores. The Capital One Classic Platinum MasterCard and the Capital One Standard Platinum Card are very similar. The Standard card has a $19 annual fee and a 24.9% interest rate while the Classic card has a $39 annual fee and interest rates between 17.9% and 22.9%. Both cards are designed for applicants who’ve had late payments, loan default, bankruptcy, or limited credit history. If you’re approved, you’ll get at least a $300 credit limit.
Orchard Bank also has a line of credit cards aimed at applicants with bad credit history – the Classic, Gold and Platinum MasterCard’s. With Orchard Bank’s application process, you don’t choose the card. Instead, the bank lets you know which credit card you qualify for based on your credit history. If you don’t qualify for any of their unsecured credit card options, you’ll be offered their secured credit card.
Secured Credit Cards
Secured credit cards are good options for rebuilding credit because they typically don’t require a credit check. If you have enough money for a security deposit, then you can get a secured credit card. (Your deposit could be as low as $49 on the Capital One Secured MasterCard.)
Secured credit cards behave like regular credit cards. The difference is that you have a security deposit against the credit limit on the card. The deposit is put in a savings account and only used if you default on your credit card. Otherwise, your purchases go against your credit limit.
There are several good secured credit cards on the market – the Orchard Bank Secured MasterCard, Walls Fargo Secured Credit Card, and the Capital One Secured MasterCard made our list of best secured credit cards. Look for a secured card that reports to the major credit bureaus, has low annual fees, and converts to an unsecured credit card after a period of timely payments.
Other Credit Card Options
Retail credit cards are an option, but the high interest rate and limited use make them less attractive than other credit cards for rebuilding credit. Use these as a last resort.
Watch out for credit cards like the Applied Bank Gold Visa that charge extremely high annual fees relative to the credit limit – a $125 annual fee for a $500 credit limit in this case. These cards provide little benefit compared to the exorbitant cost you pay.
Finally, prepaid cards are a credit card or checking account alternative that can be used to make credit card and debit card type purchases. However, these cards don’t improve your credit score – at least not the mainstream credit score that most lenders use to approve your applications.
Bad Credit Card Application Info
For people struggling with credit issues there are traditional credit cards even if you have bad credit having an opportunity to see the online bad credit card application. You’re recommended to make the bad credit card application with a secure online try getting acquainted with the exact issuer’s information which is regular APR period, monthly, annual fee and things like late payments or going over your credit limit. Once you have found the card that is best for you and filled out an online bad credit card application, in some cases even you can get a credit decision within 60 seconds.
Finding no deposit credit card for bad credit can often be difficult, but there are offers that help you avoid putting money down as collateral. These no deposit credit card offers will approve you for a credit line and instead of requiring a deposit will begin your credit line with this amount deducted from your total credit limit. In this way they can offset the higher risk of approval but still provide you with a credit card for bad credit with no deposit required.
Among bad credit card fees there are credit cards with high initial fees that are charged even if you never make a purchase. Watch out for bad credit cards fees such as account set-up, participation fees, and fees for credit limit increases. Credit cards can’t charge more than 25% if your initial credit in fees. That’s still a high price to pay just to have a credit card and it’s a fee you should think twice about paying.
10 Side Effects of Bad Credit
1. High interest rates on your credit cards and loans
Creditors and lenders see bad credit applicants as riskier than their better credit counterparts. They make you pay for this risk by giving you a higher interest rate. Over time you’ll end up paying more in interest than you would if you have better credit.
2. Credit and loan applications may not be approved
Because creditors and lenders think you’re a risk, they might not want to lend to you at all. You may find that your applications are being denied because of bad credit.
3. Difficulty getting approved for an apartment
Who knew that landlords checked credit before allowing you to sign a lease? It’s true. Having bad credit can leave you homeless or close to it.
4. Security deposits on utilities
Utility companies – electricity, phone, and cable – check your credit as part of the application process. If you have a bad credit history, you may have to pay a security deposit to establish service in your name, even if you’ve always paid your utility bills on time.
5. You can’t get a cell phone contract
Yep, cell phone companies check your credit too. They contend that they’re extending a month of service to you, so they need to know how reliable your payments will be. If your credit’s bad, you may have to get a prepaid cell phone or go without one at all.
6. You might get denied for employment
Certain jobs, especially those in the finance industry, require you to have a good credit history. You can actually be turned down for a job because of negative items on your credit report, especially high debt amounts, bankruptcy, or outstanding bills.
7. Higher insurance premiums
Insurance companies check credit too. They say that lower credit scores are linked to higher claims filed. Because of this theory, they check your credit and charge a higher premium to those with lower credit scores, regardless of the number of claims you’ve actually filed.
8. Calls from debt collectors
If you have past due bills, chances are debt collectors are calling you for them. It typically comes with the territory when you have bad credit.
9. Difficulty starting your own business
Many new businesses need banks loans to help fund their startup. A bad credit history can limit the amount you’re able to borrow to start a new business, even if you have the greatest idea and the data to prove it.
10. Difficulty purchasing a car
Banks check your credit before giving you a car loan. With bad credit you might get denied or you might get approved with a high interest rate. Most of those “no credit check” car lots charge extremely high interest rates that make it difficult to make your monthly car payments.
Since each person’s financial needs are different, it makes sense that there are different types of credit cards. Before you apply for a credit card, become familiar with the various kinds of credit cards to make sure you’re choosing the best credit card for you.
Standard Credit Cards
The most common type of credit card allows you to have a revolving balance up to a certain credit limit. Credit is used up when you make a purchase and made available again once you’ve made a payment. A finance charge is applied to outstanding balances at the end of each month. Credit cards have a minimum payment that must be paid by a certain due date to avoid late-payment penalties.
Standard credit cards are also called “plain-vanilla” credit cards because they offer no frills or rewards. They’re also uncomplicated and relatively easy to understand.
Premium Credit Cards
These cards offer incentives and benefits beyond that of a regular credit card. Examples of premium credit cards are Gold and Platinum cards that offer cash back, reward points, travel upgrades, and other rewards to cardholders. Premium cards can have higher fees and usually have minimum income and credit score requirements.
Both standard credit cards and premium credit cards have specific types of credit cards. Student credit cards, zero percent interest cards, and travel cards are just a few types available.
Charge cards do not have a preset spending limit and balances must be paid in full at the end of each month. Charge cards typically do not have a finance charge or minimum payment since the balance is to be paid in full. Late payments are subject to a fee, charge restrictions, or card cancellation depending on your card agreement.
Limited Purpose Cards
Limited purpose credit cards can only be used at specific locations. Limited purpose cards are used like credit cards with a minimum payment and finance charge. Store credit cards and gas credit cards are examples of limited purpose credit cards.
Secured Credit Cards
Secured credit cards are an option for those without a credit history or those with blemished credit. Secured cards require a security deposit to be placed on the card. The credit limit on a secured credit card is equal typically at least the deposit made on the card, but it could be more in some cases. You’re still expected to make monthly payments on your secured credit card balance. Check out reviews of the best secured credit cards.
Prepaid cards require the cardholder to load money onto the card before the card can be used. Purchases are withdrawn from the card’s balance. The spending limit does not renew until more money is loaded onto the card. Prepaid cards do not have finance charges or minimum payments since the balance is withdrawn from the deposit. These cards are not actually credit cards and they don’t directly help you rebuild your credit score. Prepaid cards are similar to debit cards, but are not tied to a checking account.
Business Credit Cards
Business credit cards are designed specifically for business use. They provide business owners with an easy method of keeping business and personal transactions separate. There are standard business credit and charge cards available.
Alternative Credit Card Types
Credit Cards Secured By Your Purchases – some credit cards are issued through retail stores. Sears card, for example, take collateral in the items you purchase using the Sears credit card. That means if you fall behind making your credit card payments, the lenders might decide to repossess the property you buy with the card. If you try to file bankruptcy, a card secured with collateral may cause problems with your rights under bankruptcy laws.
Credit Cards Secured By Your Home – some companies allow you to get a credit card that is attached to your home equity line of credit. When you use the card to make a purchase, the purchase is secured by your home. Even though these are among the easiest credit cards to get approved for as a homeowner, they are very rarely, if ever, a good idea! The potential consequence of not paying your credit card becomes more than a lawsuit or debt collection effort – you can lose your family’s home! You are better off seeking a home equity credit line with a low interest rate than you are using a credit card secured by your home equity loan.
Cashed Checks From Credit Cards – have you ever received a check in the mail from a credit card company? All you have to do is cash or deposit the check. You’ll receive the value of the check, but you’ll be accepted a high interest rate and stuck with the high balance on the account from day one. It’s much better to look at credit card offers and fine one with a reasonable interest rate and then use the card wisely – by making small purchases and paying them off each month.
Credit Cards Secured By Your Bank Account – as far as secured credit cards go, this is likely to be your best option. These cards are secured by a deposit you have at the bank, and your credit limit is equal to that of your deposit. If you can’t make your payments, the company will just keep your deposit. These cards are useful in helping people improve their credit if they’ve experienced a tough financial situation, but if you go this route at least make sure the card does not charge interest on purchases, no annual fee, and that it reports your on time payments to the credit bureaus, otherwise these cards are a waste of time and money.
Some might refer to the good ol’ credit card as the Fantastic Plastic. As recent statistics have shown, credit cards in the western world are proving to be anything but fantastic, especially for those who succumb to its use. Debt quickly emerges and strangles the card owner somewhat like a Boa Constrictor strangling its host.
Perhaps it would be better referred to as Deceptive Plastic. Many card holders don’t realize what their balance is, on a day to day basis, or just how much interest they are paying on funds not paid in full by the due date.
Others should consider dubbing their credit cards Drastic Plastic. These are the people who call on their credit cards for emergencies, yet they have no management plan for the newly acquired debt. They resort to using their credit cards when times are lean, or when the temptation of a purchase makes their financial situation even more drastic!
Credit Card Debts
Credit card debt is at record levels, as the cash-strapped struggle to give up a certain standard of living, or forego a lifestyle that is not necessarily essential to their basic daily living requirements. Instead, they continue to over-commit themselves financially, and look to utilize a Band-Aid solution of putting it on the plastic. They believe they have survived to live and play another day. Another day, that is, until the debt escalates and becomes insurmountable.
Credit Cards Use
There are those who use their plastic to ‘keep up with the Joneses’. Others possess a…‘I would like to have’ mentality. When cash and household budgets are tight, cutting back on frivolous spending, and doing without should be a preferred way of thinking, especially when so much of life’s necessities are already being paid for by credit card. In harsh economic times, think smart, buy smart and save smart.
On average, students in the USA carry in excess of $4,000 on credit cards by the time they graduate. Indeed, education has its price. At the other end of the demographic, pensioners each carry an average of over $10,000 in credit card debt by the time they retire.
Savings or Credit?
There are ironies aplenty when one considers the credit card and how it is used. At the point of sale, the sales person or cashier, after swiping the card, is often heard to ask, is that savings or credit? Understandably, the consumer is entitled to snicker – Savings? For many, savings is something that has gone the way of the Unicorn and the Dodo into folklore oblivion. Something of fictitious existence in a time no longer known.
The message with credit cards is clear. You need to ensure that your fantastic plastic is your servant and not your master. If you can’t clearly determine how this is done, it is best to slip it out of your wallet or purse and leave it at home in the dark corners of your bedside drawer.
Have you ever eaten at a restaurant, paid with a credit card, and forgotten to get your copy of the credit card receipt? Did you know that many of these receipts have your credit card number printed right there for anyone to see (and use)? And, if you’ve signed them, your signature is also right there for someone to carefully copy. This can lead to the most simple form of identity theft.
With this bit of information, some unscrupulous person can be well on his way to making purchases either by phone or on the Internet using your credit card number. You won’t know about it until you get your statement (a good reason why you should always study the charges on your credit card statements!). All they have to have, in most cases, is your mailing address, which can be looked up in a phone book or easily found on the Internet.
Credit card fraud is identity theft in its most simple and common form. It can be accomplished either through a scenario like the one we just mentioned, or it can happen when your pre-approved credit card offers fall into the wrong hands. All a person has to do is get these out of your mailbox (or trash can) and mail them in with a change of address request and start spending. Someone can even apply for a credit card in your name if they have the right information. You won’t know a thing about it until the credit card company tracks you down and demands payment for the purchases “you” have a racked up.
With a person’s name, social security number and date of birth, someone can get loans, access the person’s existing bank accounts, open new bank accounts, lease or buy cars, get insurance, you name it. Think about the things you throw in the trash. Do you throw your pay stubs away once you’ve recorded the amount in your checkbook?
Take a look at some of the information on that seemingly unimportant piece of paper:
Your full name
Your social security number
Your complete bank account number (if you have direct deposit)
Your employer and its address
Your rate of pay
Now, think about the types of information you have to provide in order to get a credit card or a loan or lease a car. There is very little additional information that is needed in order to get that loan. I recently got a home equity loan and did all but the final signing of the documents over the phone, and faxed all of my financial information directly to the loan officer. It would not have been that difficult to “create” those documents using someone else’s social security number, bank account numbers and other personal information.
That’s a scary thought! Imagine finding out that someone had gotten a mortgage in your name. Clearing that up with the bank and getting it off of your credit history would be quite a battle. You are left with the time-consuming task of repairing your credit and getting your finances back on track.
Types of Credit Card Fraud
Physical Loss. Lost or stolen cards remain the leading causes of credit card frauds. Each credit card contains enough information required to complete a transaction online, over phone payment systems or through physical swiping. This includes your card number, expiry date, and CVV (Card Verification Value) number. In the beginning, card numbers and expiry dates were sufficient to use a credit card online; but these days, CVV number is essentially required to ensure that you are in the possession of the card. As an added security measure, a number of sites also require billing address of the holder, as registered with the issuing institution. However, this practice is still not widely adopted. To use a credit card for swiping at a billing counter, all one needs is the card.
Offline Identity Theft. The identity thieves might give you calls, send sms, or otherwise steal your information. Their target may not essentially be your credit card information, though that is often the main reason. They may collect data, like your name, address, phone number and other personally identifiable information that may be used to create some fake credit accounts in the victim’s name or to impersonate as the victim.
Pseudo-representation. On the basis of collected information, a criminal may create a whole new credit card account in the name of someone else. This way, the trickster spends on the card and the victim is held liable for the bills.
Skimming. The technique is more common in places, where the customer is not keeping an eye on the card being swiped, e.g., restaurants. The person handling the card ‘skims’ the sensitive information through photocopying or electronic capture. There have also been cases when some cards were smartly skimmed right in the front of the customer without them understanding.
BIN Attack. This is a method of generating possible credit card numbers through various permutations and combinations. This used to be a bigger threat when the card issuers did not assign randomly generated card numbers.
Mail Redirect. This works both online and offline, where the criminal intercepts or redirects the mails to his own account or address. In some cases of unauthorized snail mail redirect, the fraudsters redirected some newly issued credit cards to their own addresses! Online, a criminal may redirect ‘password reset’ or other sensitive emails to their id and break into an online account.
Quantum breach. When it comes to transaction alerts, mostly users set them for amounts beyond a certain limit. This practice has some serious drawbacks as a criminal might simply choose to make very small purchases over a period of time, so as not to come in the notice of the customer or the card issuer.
Computers don’t steal, people steal’
Theft of information over the Internet has been tempered by online security measures, and consumers can generally feel safe when shopping on websites that display a lock emblem and an “https” heading in the Internet browser. This indicates that an online retailer offers a highly secure website employing the latest in Secure Socket Layer (SSL) technology, which fully encrypts personal and credit card account data. Brewer says that online shoppers should also look for sites that have seals from companies such as VeriSign to prove that the transaction will be secure.
While many dangers lurk in e-commerce, consumers want to know that the vast majority of credit card numbers are actually stolen in brick and mortar stores by physical employees — not online. “Shopping over the Internet, as long as you’re dealing with reputable retailer, is safe, especially when it’s a site you’ve sought out rather than one in which you’ve responded to a solicitation. It’s safer to shop online than in person because computers don’t steal things; people steal things. When you buy something online, it’s an automated process. In a store, you’re handing your card to somebody. Most of the online phishing cases involve people compromising their personal information because they didn’t know it was unsafe to give it out.”
To ensure that you are not an identity theft victim, Brewer recommends checking your credit card statements frequently and carefully. If you are married, sit down with your spouse and account for every charge. Brewer has prosecuted criminals who steal many credit card numbers but put only nominal charges on each card, such as $9.95 or $12.50. Some will even make a $1 donation to a charity. Most consumers won’t notice little charges here and there and may assume they were purchases by their spouses. The crooks make a killing when they do this to thousands of people every day.
Brewer also suggests diligently checking your credit report at least once a year to make sure you are aware of all accounts in your name, and that any time an inquiry to your report was made, you know who made it. Keeping identity theft at bay takes vigilance, but is vital if you want to keep your finances safe in this digital age.
Avoiding Credit Card Fraud:
Tax relief is any deduction from taxes allowed to taxpayers by federal or state tax authorities for certain expense categories. An example is allowing the deduction of interest paid on educational loans from the income tax payable. Tax relief also takes the form of full or partial tax exemptions for low- and moderate-income families. In some cases, tax relief includes releasing citizens from paying taxes immediately, particularly during cases of natural disasters and similar contingencies. An example is tax relief granted to families following the devastation caused by hurricanes in the south during 2005.
Tax relief helps everyone, particularly the low-income families. It is normally provided as deductions from any of the various taxes like income tax, state tax, property tax, etc. In 1992, a tax-relief program introduced by the Internal Revenue Service was specifically targeted at helping individuals and corporations settle back taxes. This helped persons who were in financial hardship to pay back at least a part of the taxes that they owed. This process, which allows taxpayers settle the back taxes that they owe for less than the full amount, is known as an offer in compromise.
Normally, tax relief works through a process where tax authorities review the ability of a taxpayer to pay taxes based on information regarding the person’s income and assets. A tax relief is granted if it’s found that the recovery of a certain tax is unreasonable on the grounds that asset values have significantly decreased. However, tax authorities grant a tax relief only if the taxpayer’s request for relief is based on a valid reason as defined under law. Tax relief is also granted under special circumstances. In the case of taxes on inheritance and gifts, a relief can be granted if it’s ascertained that the value of the assets received has significantly reduced.
Know All About Tax Relief
If you are bogged down with IRS problems, a tax relief may be a great idea for you. Tax relief is available for people who are facing huge problems trying to figure out how they can catch up with their pending tax payments.
Offer-in-compromise is a form of the tax relief option, which will help people who want to foreclose to wash away the debt that you owe. In those few cases where the foreclosure amount is greater than the amount that you owe, the resulting difference of amount may be taxable.
The offer-in-compromise works only when IRS realizes that you are not in a position to pay the debt, or when there is a doubt regarding the about whether you are actually liable for the tax debt.
To ensure that you get the full benefit of the relief, you should stick to the conditions that will be laid down in the form. In short, you will have to file your tax returns on time for the next five years; you will of course have to pay the amount that is decided in the offer. You also agree to let IRS keep any refunds, which would have been payable in the next calendar year.
Disaster tax relief
If there is some kind of disaster that strikes your area, you are most often than not eligible for some kind of relief. The Hurricane Katrina victims, for instance have been granted tax relief under a number of conditions.
Low-income tax relief
People with genuine low income may also be liable for tax relaxation. There are a number of instances when the state has helped people with less income by giving them a relief, since they need to amount to sustain a livelihood.
Tax relief is available for people who live below the poverty line, and also for homeowners who make under $60,000 annually.
A number of times, lack of information can mean that you have to pay up more tax than you can actually handle. Remember that there is nothing more important than knowing all about the various tax relief options that are available in your situation. There are a number of tax relief services that can help you. However, before you go about hiring a professional, you should always choose a professional with a lot of experience in the field.
Since you are looking for tax relaxation, you surely do not have enough cash on yourself, so ensure that the professional does not charge you the sky. He should also give you a clear idea of how he proposes to help you with the tax benefits and relief and should give you a detailed explanation about your financial condition and whether it is enough to help you with a tax relief.
What is Federal Income Tax?
The tax imposed by the U.S. government on the taxable incomes of individuals, corporations, trusts and estates is known as federal income tax. Personal income taxes are payable on the total income of the individual (after some permissible deductions). Corporate income taxes are payable on the gross profit, the difference between the total receipts and total direct and indirect expenses.
Federal income tax was imposed for the first time by the U.S. government in 1861 to finance the Civil War. A tax of 3 percent was levied on incomes above $600, which rose to 5 percent for incomes above $10,000. These rates were raised in 1864. A new income tax act was enacted in the late 1800s. After the Civil War, income tax was rescinded in 1872.
Overview of Federal Income Tax
In the present scenario, the revenues of the federal government mainly accrue from personal and corporate income taxes. Earlier, tariffs on imported goods constituted a large chunk of the government?s revenues, but, at present tariffs represent only a minor portion of federal revenues. Other non-tax fees are also levied, which recompense agencies for services or fill specific trust funds.
Several specific taxes, in addition to the general income tax, are also collected by the federal government. For example, the social support programs such as social security and Medicare are funded by taxes on personal earned income. Estate taxes are also levied on inheritances.
It is income tax that forms the bulk of the taxes collected by the U.S. government. Personal income tax rates range from 0 to 35 percent, depending upon the individual’s total income.
Income tax is called a progressive tax because its levy is based on the total income of individuals: the higher the income, the more the tax. Corporate tax rates also range from 0 to 35%. A corporation pays taxes on its profits and may choose to distribute its profits after tax as dividend to its shareholders. Despite the fact that the money paid as dividend has been taxed at the corporate level, it is taxed again in the hands of the shareholder at the personal level. This is known as double taxation. The tax paid on the dividends by an individual is called dividend tax.
Understanding Federal Income Tax
Federal income tax is a very important issue and you can make the chore of paying this tax much easier if you take some time and learn about the process. Paying taxes does not have to be complicated and there are many resources out there that will help you through all of the steps and provide you with the answers you are looking for.
When you begin looking at your federal income tax, you may want to also begin looking at some resources that can help you understand how everything works. The IRS has a great website that can walk you through many of the processes and you may be able to take care of your taxes from the privacy of your own home. There are many other resources on the internet that should give you many options to help you with your personal or business taxes.
If you are completely overwhelmed with the Federal income tax, you may want to hire an accountant, or tax professional to help you complete any of the forms you are having problems with. You may also have many questions and this is a great person to give you the answers. You want to make sure that you work with someone that you trust, as they will be viewing many of your most personal documents.
Federal income tax is something that cannot be avoided and if you take some time and learn as much as you can, it can make a big difference in your results. The more you understand the less stressful the process will be.
What is Medicare Tax?
The Medicare tax is the amount withheld by your employer from your paycheck that helps cover the cost of running the Medicare program. It is part of FICA that your employer is required to collect and send to the Internal Revenue Service quarterly, who then puts it into a government trust fund. Your total FICA is 7.65 percent. Of that, 1.45 percent represents your contribution to Medicare, with the balance used for the Social Security program. In addition, your employer pays a like amount for Social Security and Medicare.
Medicare is a national social insurance program, administered by the U.S. federal government, that guarantees access to health insurance for Americans ages 65 and older and younger people with disabilities as well as people with end stage renal disease. As a social insurance program, Medicare spreads the financial risk associated with illness across society to protect everyone, and thus has a somewhat different social role from private insurers, which must manage their risk portfolio to guarantee their own solvency.
Overview of Medicare Tax
President Harry Truman felt that the United States should provide cost-effective medical coverage to senior citizens. For 20 years, it was debated in Congress before it was signed into law as part of Lyndon Johnson’s “Great Society.” Since then, the costs of the Medicare program have increased as have both the rates and the amount of salary one makes that is subject to the tax.
With the advancements of medical cures have come startling increases in the premiums of private health care insurance. Without Medicare coverage, many seniors would have to do without medical attention because of the cost. Instead, they have been paying a small amount throughout their working lives, which now makes it possible for a monthly premium of less than $100 for coverage.
You will pay twice the amount of tax than an employee if you are self-employed. That means you will pay total FICA taxes of 15.30 percent, with 2.9 percent representing your contribution to the Medicare program. Of course, you will be able to take a business deduction on your income tax for one-half of all you pay.
In most cases, you will become eligible for Medicare coverage when you are 65 years old. At that point, if you receive Social Security, it will be reduced by the premium you will pay. Currently, that premium is under $100. Under certain circumstances, you may be eligible for Medicare or Medicaid coverage before you turn 65.
Medicare will be available to you so long as the medical services are rendered in the United States. Medicare benefits will not cover any procedure that you receive if you move out of the country or travel overseas. Seniors are strongly urged to secure private health insurance before leaving. This is especially important for older people who are more likely to become ill.
Medicare will cover about 80 percent of most medical care. However, it does not cover prescription drugs. For that reason, you can subscribe to Medicare Supplemental coverage that, for little or no additional premium, will take over where Medicare stops.
What is Unemployment Tax?
The Federal Unemployment Tax Act (or FUTA) is a United States federal law that imposes a federal employer tax used to help fund state workforce agencies. Employers report this tax by filing an annual Form 940 with the Internal Revenue Service. In some cases, the employer is required to pay the tax in installments during the tax year.
FUTA covers a federal share of the costs of administering the unemployment insurance (UI) and job service programs in every state. In addition, FUTA pays one-half of the cost of extended unemployment benefits (during periods of high unemployment) and provides for a fund from which states may borrow, if necessary, to pay benefits.
An overview of unemployment tax benefits
Unemployment is a serious problem in the country. In recent times, the problem of unemployment has reached a serious proportion. As the case of unemployment is rising in the country, so is the importance of qualifying for the status as unemployed. Like majority of the states in the country, in the state of Texas also, in order to qualify as an unemployed person, you need to fulfill certain criteria.
First of all, you must be physically and mentally fit and must be capable of working, you must be available for a job and you must be seeking a job.
Some guidelines are used to determine whether or not you are eligible for filing for unemployment benefits. As a thumb rule, if you have worked for the last 8 months, you may be eligible for getting the status as unemployed. The formula that is used to determine your status can be found in the Unemployment Insurance Benefits and Work Search Information Handbook.
As per the guidelines, certain reasons behind your separation from the last employer are taken as accepted. If you are separated from your last employer due to some reasons such as lack of work, reduction in the hours of work for some reasons other than misconduct, if you have been fired for some reasons other than misconduct etc, then you may be eligible for filing for unemployment benefits.
In order to apply for unemployment benefit, you are also required to provide documents related to your employment history and salary. You are also required to give your social security number.
What is Property Tax?
A property tax (or millage tax) is a levy on property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state, a county/region, or a municipality. Multiple jurisdictions may tax the same property.
There are three types of property: land, improvements to land (immovable man-made objects, such as buildings), and personal property (movable man-made objects). Real property (also called real estate or realty) means the combination of land and improvements. Under a property tax system, the state requires and performs an analysis of the monetary value of each property, and tax is assessed in proportion to that value.
Overview of Property Tax
Property tax is assessed against residential and commercial real estate according to each state’s tax assessment policies. Property taxes are used to pay for needs within county communities such as law enforcement and firefighter salaries, improvements to existing schools, building of new schools, and road and infrastructure repairs.
Property tax is calculated by multiplying the assessed property value times the state tax rate. For example, if the state tax rate is 5-percent and appraised property value is $100,000, the annual tax rate would be $5,000.
Property taxes are paid on an annual basis, but most states allow homeowners to pay in two installments. Using the calculation above, property owners would pay $2500 per installment. Homeowners would need to set aside $416.66 per month to cover their tax bill. This amount is in addition to their monthly home loan payment.
The importance of property taxes differs greatly across levels of government.
Advantages of the Property tax are:
What is Social Security Tax?
Social Security is a social insurance program that is primarily funded through dedicated payroll taxes called Federal Insurance Contributions Act tax (FICA). Tax deposits are formally entrusted to the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, the Federal Hospital Insurance Trust Fund, or the Federal Supplementary Medical Insurance Trust Fund.
The Social Security tax makes up part of the Federal Insurance Contributions Act tax along with the Medicare tax. The percentage of the tax depends on your status as either an employee or self-employed. The Social Security tax applies to all earned income and is not reduced by pretax deductions such as contributions to a 401k plan.
How Much Social Security Tax Costs to You?
When you work as employee, your employer must withhold the specified percentage from each of your paychecks. As of publication, the employee percentage of the Social Security tax equals 4.2 percent; however, this is a temporary reduction. Unless the lower rate is extended, the employee portion of the Social Security tax will rise to 6.2 percent in 2013. Employers continue to pay 6.2 percent. To figure your Social Security tax withheld from your paycheck, multiply your gross pay by the Social Security employee rate.
If you are self-employed or work as an independent contractor, no Social Security gets taken out of your paycheck. Instead, you are responsible for both the employer and employee portions of the Social Security tax on your income. This means you pay 10.4 percent of your self-employment income in Social Security taxes, the employee rate of 4.2 percent and the employer rate of 6.2 percent.
Limits on the Tax
Each year, the Social Security Administration adjusts the limit on the maximum earnings subject to the Social Security tax. As of publication, the limit equals $106,800. If you earn more than this, your employer will stop taking out Social Security taxes after you reach the annual limit. To figure the maximum Social Security taxes you will pay in a year as an employee, multiply the employee portion of the Social Security tax by the annual limit. For example, in 2011, the most an employee pays in Social Security taxes equals $4,485.60.
Self-Employment and Employee Income
If you work as both an employee and as an independent contractor and your total earned income exceeds the annual limit, you first pay the Social Security tax on your employee earnings. Then you pay the higher self-employed Social Security tax rate on only enough self-employment earnings to reach the annual income limit. For example, if in 2011 you have $90,000 in employment earnings and $60,000 in self-employment earnings, you would only have to pay the Social Security tax on $16,800 of your self-employment earnings.
Benefits of Social Security Tax
What is Income Tax?
An income tax is a tax levied on the income of individuals or businesses (corporations or other legal entities). The income tax is determined by applying a tax rate, which may increase as income increases, to taxable income as defined. Individuals and corporations are directly taxable, and estates and trusts may be taxable on undistributed income. Taxable income is total income less allowable deductions. Income is broadly defined. Most business expenses are deductible. Individuals may also deduct a personal allowance (exemption) and certain personal expenses, including home mortgage interest, state taxes, contributions to charity, and some other items. Some deductions are subject to limits.
Income tax is charged to both people and businesses alike. In either case it is calculated on the amount of money that the person or business makes. In the United States, the tax system is based on a progressive scale. This means that the more you make, the higher percentage that you have to pay is. The highest rate is 38 percent while the lowest is zero percent.
Again, in most cases businesses and people are treated very similar in the eyes of tax law. If a business does not earn much money, then its tax liability will be less than one that might earn millions.
Overview of Federal Income Tax
In the United States, the Internal Revenue Service (IRS) is the revenue service by the federal government. This agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue. The IRS is responsible for collecting taxes and the interpretation and enforcement of the Internal Revenue Code.
It is obvious and essential that you must pay federal income tax regardless of where you live in the United States, in accordance with this, most states also have additional state income tax. However, states like Texas, Florida, Nevada, Washington, Wyoming, South Dakota and Alaska have no state income tax. Tennessee and New Hampshire only apply state income tax to interest and dividend income. Each state will collect taxes from you in one way or another. The states that do not charge income tax impose higher rates on the other things like Sales tax or Property tax.
The process of tax preparation is to prepare your tax return, often income tax return, often for a person other than the taxpayer, and generally for compensation. It may be done by the taxpayer with or without the help of tax preparation software and online services. Tax preparation may also be done by a licensed professional such as an attorney, certified public accountant or enrolled agent, or by an unlicensed tax preparation business. As United States income tax laws are considered to be complicated, many taxpayers seek outside assistance with taxes.
If you are paying your taxes very first time then it is obvious to arise bunch of questions in your mind about what to do, how to do, etc. There are certain things you need to do before you file your taxes. Filing your taxes does not need to be an intimidating process, you really do not need to worry about a wide variety of forms and tax laws, since computer software can help to simplify the entire process:
Once you are done with the procedure, make sure you get the confirmation from the Internal Revenue Service regarding your efile has been submitted. Looking for an exemption is nothing but waste of time and energy as there cannot be any substitution for paying your federal tax, instead you can surely get some relaxations in terms of deductions in regards with your applicability.
Building a Better Credit Report
If you’ve ever applied for a credit card, a personal loan, or insurance, there’s a file about you. This file is known as your credit report. It is chock full of information on where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy. Credit reporting companies sell the information in your report to creditors, insurers, employers, and other businesses with a legitimate need for it.
They use the information to evaluate your applications for credit, insurance, employment, or a lease. Having a good credit report means it will be easier for you to get loans and lower interest rates. Lower interest rates usually translate into smaller monthly payments.
The Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness, and privacy of information in the files of the nation’s credit reporting companies. The FTC enforces the FCRA with respect to these companies.
Here are answers to some of the questions consumers have about consumer reports and credit reporting companies.
Q. Do I have a right to know what’s in my report?
A. You have the right to know what’s in your report, but you have to ask for the information. The credit reporting company must tell you everything in your report, and give you a list of everyone who has requested your report within the past year or the past two years if the requests were related to employment.
Q. What type of information do credit reporting companies collect and sell?
A. Credit reporting companies collect and sell four basic types of information:
Q. Is there a charge for my report?
A. Under the Free File Disclosure Rule of the Fair and Accurate Credit Transactions Act (FACT Act), each of the nationwide credit reporting companies Equifax, Experian, and Transunion is required to provide you with a free copy of your credit report once every 12 months, if you ask for it.
Q. How do I order my free report?
A. The three nationwide credit reporting companies are using one website, one toll-free telephone number, and one mailing address for consumers to order their free annual report. Do not contact the three nationwide credit reporting companies individually. You may order your free annual reports from each of the credit reporting companies at the same time, or you can order them one at a time. The law allows you to order one free copy from each of the nationwide credit reporting companies every 12 months.
Q. What information do I have to provide to get my free report?
A. You need to provide your name, address, Social Security number, and date of birth. If you have moved in the last two years, you may have to provide your previous address. To maintain the security of your file, each nationwide credit reporting company may ask you for some information that only you would know, like the amount of your monthly mortgage payment. Each company may ask you for different information because the information each has in your file may come from different sources.
Q. Are there other situations where I might be eligible for a free report?
A. Under federal law, you’re entitled to a free report if a company takes adverse action against you, such as denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the credit reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft. Otherwise, any of the three credit reporting companies may charge you up to $10.50 for another copy of your report within a 12-month period.
Ideally, we would all be able to get a secure a loan to buy a house or car, be able to rent an apartment, or land the job of our choice without any difficulty or hassle. But in reality, those who would loan you money or advance you credit in most instances are going to want to make some kind of objective evaluation first. While there may be no obvious standards to determine just what exactly makes someone either a good or a bad credit risk, each potential creditor knows what they are looking for, and if they judge your creditworthiness to be unsuitable your application for a loan or for new credit will not be approved.
When your credit is bad, you are going to want to do something about this situation as quickly as possible. When you take steps to improve your credit rating in order to increase your chances of being able to acquire a home loan, or lease a car, or apply for a credit account with a retailer in the future, it is this process that we refer to as credit repair.
Finding Your Credit Rating
TransUnion, Equifax and Experian, the three credit reporting agencies, collect your information from past creditors, give you a credit score based on what they find, and share that score with any potential new creditor that contacts them. You are entitled to one free copy of your credit report from each of these services once a year – and this is the first step you should take once you become aware that there may be a problem with your credit rating.
If everything on a credit report is accurate, and the credit score is still a problem, then it will be necessary to undertake the process of credit repair by re-establishing proof of your ability and willingness to pay what you owe promptly and completely. Credit scores will change over time in response to your future activities, so if you pay off your past due bills, are sure to make future payments for financial obligations promptly, and just generally show yourself to be a reliable risk, it should be possible to repair credit so that it will be much easier to get loans, make purchases, and secure housing or employment in the future.
Necessity of Credit Repair
Your life options may be limited in important ways if your credit rating is bad. This is why taking action to repair your credit once you find out your score is in a relatively poor credit score range is more of a necessity than an option. Fortunately, credit repair is highly achievable it is mostly a matter of making absolutely sure the information in your credit report is accurate, and making absolutely sure that you don’t repeat the mistakes of the past if it is.
10 Signs You Need Credit Repair
1. You’ve been denied for a credit card.
2. Your electricity is in someone else’s name.
3. Debt collectors are calling you.
4. You can’t find anyone to co-sign your loans.
5. Your credit report is keeping you from getting a job.
6. Landlords won’t rent to you.
7. You’re afraid to check your own credit report.
8. Your credit score is low.
9. Your interest rates keep going up.
10. Card issuers are closing your credit cards.
How To Fix Our Credit
Unless you were born into an extremely wealthy family, it is unlikely that you will be able to get through life without having a few credit problems. It is just the nature of the current economy that credit problems happen. Establishing or repairing bad credit can take some time and you must be patient. It may take up to a year if not more to fix or repair credit from bad to good. It all depends on how bad your current credit situation is. On the upside, your credit score will improve monthly as you pay your monthly payments on time, removing past due amounts and collection accounts. There are companies willing to serve you repair your credit report.
You’re probably asking “how do I fix my credit”? We have broken it down in to six steps below.
What is credit history?
Your credit history is the record of how you have paid borrowed and repaid debts. This information is obtained from one or more national credit bureaus. Your credit report may include information about your previous credit performance, current level of indebtedness, length of credit history, types of credit in use, pursuit of new credit, accounts in collection, defaults, bankruptcies, lien, judgments, and charge-offs, and other applicable information.
A creditworthy person is one who has a positive credit history and meets other requirements as determined by the lending institution.
Why is credit history important?
Having a good credit history will be a central part of making a successful personal and financial future for you in US. Your credit history can help open doors to you or keep them locked. People and businesses will use this record of how well you kept your previous payment agreements to judge whether they can risk making a similar agreement with you. Cell phone companies, landlords, lenders, insurers, even possible employers often make decisions about your future based on your credit history.
It is a good idea to check your credit report frequently. Except under certain circumstances, there is a small charge for this service. The three primary credit bureaus are Equifax, Experian and Transunion. Use caution when requesting a copy of your credit report. Never give personal information to someone unless you initiated the contact, on the telephone, by mail or on the web.
What goes into credit history?
Establishing Credit History:
Tips for Keeping Good Credit
Q. What Is a credit score, and how does it affect my ability to get credit?
A. Credit scoring is a system, creditors use to help determine whether to give you credit, and how much to charge you for it. Information about you and your credit experiences, like your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report.
Using a statistical formula, creditors compare this information to the credit performance. A credit scoring system awards points for each factor. A total number of points = a credit score, helps predict how creditworthy you are.
Improving Your Credit Report
– Developing a Budget
The first step toward taking control of your financial situation is to do a realistic assessment of how much money you take in and how much money you spend. Start by listing your income from all sources. Then, list your “fixed” expenses those that are the same each month like mortgage payments or rent, car payments, and insurance premiums. Next, list the expenses that vary like entertainment, recreation, and clothing. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses, and prioritize the rest. The goal is to make sure you can make ends meet on the basic needs.
– Contacting Your Creditors
Contact your creditors immediately if you’re having trouble making ends meet. Tell them why it’s difficult for you, and try to work out a modified payment plan that reduces your payments to a more manageable level. Don’t wait until your accounts have been turned over to a debt collector.
– Dealing with Debt Collectors
The Fair Debt Collection Practices Act is the federal law that dictates how and when a debt collector may contact you. A debt collector may not call you before 8 a.m., after 9 p.m., or while you’re at work if the collector knows that your employer doesn’t approve of the calls.
– Credit Counseling
If you’re not disciplined enough to create a workable budget and stick to it, can’t work out a repayment plan with your creditors, or can’t keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are non-profit and work with you to solve your financial problems. But be aware that just because an organization says its “nonprofit,” there’s no guarantee that its services are free, affordable, or even legitimate.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
– Auto and Home Loans
Your debts can be secured or unsecured. Secured debts usually are tied to an asset, like your car for a car loan, or your house for a mortgage. If you stop making payments, lenders can repossess your car or foreclose on your house. Unsecured debts are not tied to any asset, and include most credit card debt, bills for medical care, signature loans, and debts for other types of services.
Most automobile financing agreements allow a creditor to repossess your car any time you’re in default. No notice is required. If your car is repossessed, you may have to pay the balance due on the loan, as well as towing and storage costs, to get it back. If you can’t do this, the creditor may sell the car. If you see default approaching, you may be better off selling the car yourself and paying off the debt: You’ll avoi
Loans made to borrowers with poor credit. The interest rate is generally higher than for borrowers with good credit. When you have bad credit, almost all banks or credit unions will not allow you to get a loan. The bad credit loan, however, can help people who are currently in a situation of bankruptcy, foreclosure, or other credit-challenged circumstances.
Things to Look Out For in Bad Credit Loans
If you’re considering taking out a bad credit loan, look out for some of the following pitfalls.
How Does it work?
Many consumers with less than perfect credit scores often think that is impossible for them to find lenders eager to provide them the credit accounts they need. After all, they know for a fact that credit companies usually shy away from extending financial assistance to people with poor credit
However, with the gradual economic improvement, more and more banks and credit agencies are now willing to provide credit accounts even to consumers with low credit scores. So, if you are diligent enough, for sure you will find banks and lenders that can provide you the bad credit personal loans you need.
Still, many people do not know how such credit programs work. And not everyone is knowledgeable of the features and common characteristics which these poor credit loans possess. So, we have provided a short discussion regarding these credit programs below.
With bad credit personal loans, people with poor credit history will find it possible to receive sufficient funds that they can use in financing their needs. Not only that. By responsibly managing these credit accounts, they can also effectively pave the way towards reestablishing their credit profiles and recovering their financial health.
A Payday loan (also called a Payday advance) is a small, short-term, loan secured against a customer’s next pay check. The loans are also sometimes referred to as cash advances, though that term can also refer to cash provided against a prearranged line of credit such as a credit card. Pay day advance loans rely on the consumer having previous payroll and employment records.
How much does it cost?
The fee on a payday loan is usually $15 for every $100 borrowed. So if you loan $400 you will be charged a $60 fee, and when the loan term is up (in 14 days) you will be required to pay a total of $460 back to the payday lender.
How do you get a payday loan?
You can apply for a payday loan from a payday lender online or in a shop. To get a payday loan you simply have to prove your identity and show proof that you have a regular income. Once approved for the loan, the money will be deposited into your bank account or you will be given a check or cash on the spot. The ease, speed and convenience of getting a payday loan makes them very inviting.
Can I get a payday loan if I have a bad credit score?
Yes. Most payday lenders don’t check your credit score. So you can get a payday loan even if you have a bad credit score.
How a payday loan works
Here’s how the payday loan process works:
TYPES OF PAYDAY LOANS
You are probably aware of the payday loan industry, but are you aware that there are various different types of payday loans available? If you are not, then you should read on. Below we will cover a couple of different types of loans, giving you the knowledge that you will need to make an informed choice.
Bad Credit Loans
Bad credit loans are short term loans of small amounts of money. You can easily get these loans, as the companies that offer them are used to working with people that do not have good credit. Because the loan amount is small, companies that offer these loans are not scared of losing the money as larger companies often are. Instead, they can step in and help when larger companies and banks have told you no. This gives you the chance to catch up and get on top of your financial situation, enabling a better future.
Faxless Payday Loans
Faxless payday loans are one of the newer forms of payday loans available to consumers today. These loans are entirely paperless and they often take little or no time to obtain. All you need to do to get one of these loans is go online from the comfort of your own home, and fill out an online application. In as little as a few hours, your application will be reviewed and approved. You can then expect the loan amount to be automatically deposited into your checking account in as little as 24 hours, and usually not more than 48.
Instant Payday Loan
Instant payday loans are great for people that find they need some cash right away. Anyone who meets the minimum qualifications will be automatically approved, allowing a person to draw on the money very quickly. This is a great alternative to waiting a few days, especially if you need to pay a bill or take care of something extremely urgent. This type of payday loan is one of the most popular because when people find themselves in an emergency, they generally need money right then.
Overall Cash Advances
While there are many different cash advances out there for consumers these days, you will only be allowed to have one out at any given time. As this being the case, you need to make sure to research different companies and what they offer before you settle on the loan that you will apply for. They are not hard to get, but you may end up saving money and time by applying for and obtaining the right loan.
5 Easy Payday Loan Tips
Apply in the morning:
The earlier in the day you apply for a payday loan the better. Most lenders start closing their day around 12PM, and if you want your money fast – apply as soon as you wake up. This will give you a better chance of getting approved for a loan, and getting your application in for same day wires.
Apply Early in the Morning:
We really want to stress this point. Most Payday Loan lenders have a daily limit or cap, and after they fund their quota of loans for the day there do not take any more applications. This means your loan request will not be presented to the lenders that are done looking at new customers for the day. If you apply to late in the day it limits your chances of getting a loan, because the more lenders that look at your payday loan request , the better chance you have of getting a loan.
When applying for a payday advance, we recommend that you fill out the application correctly. Do not leave out important information or try to mislead the lenders in any way. Remember, we are still in an economic downturn, and lenders are looking for any excuse not to fund your loan.
Tell the truth, your information needs to make sense to the lender, remember they want to help people with less than perfect credit: So don’t lie about your income, time at job, time at bank, or any other important underwriting criteria. They will figure it out, and you may destroy your payday loan credit history in the process and never be able to get a loan again.
Sell Yourself to the Lender:
There are still quite a few lenders that will call you on the phone to verify and then fund your application. If you have positive information about yourself let them know, they could still be on the fence. Tell them anything that will help your case, they will be more likely to make sure to fund your loan fast, and increase your loan amount.
If you can’t pay on time, let the lender know:
The truth is the payday loan business is over 40% collections, and lenders understand that. If you fall behind, you need to let your lender know. “They will work for you”, they are used to this. It’s no problem you just need to let them know and make arrangements to pay.
Buying a Home
Before you start shopping for a home, it’s important that you understand the home buying process and the different types of loans that are available.
Learning the basics will help you throughout the complicated process and will help you avoid trouble.
Applying for home loans
Home loan EMIs can be a nightmare. While you do have the satisfaction of knowing you will eventually own your home, you also have to grapple with having to spend less money, with fewer treats, with giving up on luxuries that you would otherwise have enjoyed.
Important things to consider when going for a home loan
Different types of home loans
While the different choices may seem overwhelming at first, the overall goal is really quite simple: you want to find a loan that fits both your current financial situation and your future plans.
Most loans fall into three major categories: fixed-rate, adjustable-rate, and hybrid loans that combine features of both.
• Fixed-Rate Mortgages
As the name implies, a fixed-rate mortgage carries the same interest rate for the life of the loan. Traditionally, fixed-rate mortgages have been the most popular choice among homeowners, because the fixed monthly payment is easy to plan and budget for, and can help protect against inflation.
Fixed-rate mortgages are most common in 30-year and 15-year terms, but recently more lenders have begun offering even 40-year loans.
• Adjustable-Rate Mortgages (ARM)
Adjustable-rate mortgages differ from fixed-rate mortgages in that the interest rate and monthly payment can change over the life of the loan. This is because the interest rate is tied to an index (such as Treasury Securities) that may rise or fall over time. In order to protect against dramatic increases in the rate, ARM loans usually have caps that limit the rate from rising above a certain amount between adjustments (i.e. no more than 3 percent a year), as well as a ceiling on how much the rate can go up during the life of the loan (i.e. no more than 6 percent).
With these protections and low introductory rates, ARM loans have become the most widely accepted alternative to fixed-rate mortgages.
• Other Terms Relating To Adjustable-Rate Mortgages:
• Hybrid loans
Hybrid loans combine features of both fixed-rate and adjustable-rate mortgages. Typically, a hybrid loan may start with a fixed-rate for a certain length of time, and then later convert to an adjustable-rate mortgage. However, be sure to check with your lender and find out how much the rate may increase after the conversion, as some hybrid loans do not have interest rate caps for the first adjustment period.
Personal loans allow people to borrow money from credit bureaus, banks, and other agencies. After borrowing a lump sum, people must repay the amount, with interest, within a specified time frame. Repayment plans can span a time period that ranges from several months to several decades.
How It Works
You can pay off your loan by making minimum monthly payments, or you can make payments that are higher than the minimum in order to limit accrued interest repay the lender more quickly. It is advisable for people to make payments that are higher than the monthly minimum. If you can afford to make payments, you should try to pay off your loans as soon as possible.
Several factors contribute to a lending agency’s decision to grant a loan. When evaluating applicants, a committee may review your credit score, employment record, and payment history. You might need to include a personal reference who can attest to your character. Using this information, an agency will approve or deny your application. If your application is denied, you may be eligible to reapply at a later date. If your application is approved, the lending institution will give you an interest rate. In general, people who are considered high credit risks must borrow money at a higher interest rate than people who are considered low credit risks.
If your credit score is low or if your application is denied, you can ask someone with a higher income and credit score to cosign your loan. A cosigner shares responsibility for the total amount owed. If you default on your loan, the cosigner is equally liable and responsible for making payments.
A social loan is another type of personal loan. The concept of a social loan is a borrower who can obtain money from a lender at an interest rate. While the deciding factors for bank loans are based on credit scored and business objectives, social loans are more flexible. For example, a person might want to lend his or her niece money. With social loans, the borrower and lender can negotiate their own terms and interest rates. You don’t even need to specify a repayment term or interest rate if you prefer to arrange another payment plan.
Benefits of Personal Loans
If this is your first time applying, you find that your options are plentiful. You will have to borrow money and make sure you get the most benefits and features available, regardless of the amount you need to borrow. Note that you should be able to repay the loan, and if you can not apply.
There are two main types of personal loans:
Secured Personal Loan
As this suggests, a secured personal loan is backed by collateral. This may be a home, a boat, a car or another financial asset. Lack of repayment will result in repossession of the property. If you secure a loan with a home and can’t repay, you could lose your home to foreclosure.
An Unsecured Personal Loan
An unsecured personal loan is not secured by anything other than the signature of the recipient. It’s usually based on general creditworthiness. Because it’s unsecured, the lender will charge a higher interest rate because of the additional risk. If not repaid, the lender would resort to legal claims to make good on the loss.
Secured or unsecured personal loans can be obtained via banks, credit unions, loan companies at brick and mortar places or online.
Following are eight personal loans you might be able to obtain on a secured or unsecured basis:
Home Equity Personal Loan
If you have enough equity on your home, you might be able to get a personal loan secured by your home equity.
Advantages of a home equity loan are:
A major disadvantage of using your home’s equity as a personal loan, of course, is that if you cannot repay, you could lose your home to foreclosure.
Home Equity Line of Credit
Again, if you have enough equity in your home and don’t want or need all the money at once, you might want to consider a personal line of credit secured by your home.
Major advantages of this approach are:
If you can’t repay the line of credit, you could lose your home to foreclosure.
Short Term Personal Loans
Short term personal loans have the following two characteristics:
An example of a short term personal loan is a title loan where you borrow an amount secured by the title to a vehicle you own. If you don’t repay, the car will be repossessed.
Fast Cash Advance Loan
A cash advance or payday loan might be useful to take care of an unexpected expense. Characteristics of these loans are:
No Credit Personal Loan
These loans have the following characteristics:
A student loan is designed to help students pay for university tuition, books, and living expenses. It may differ from other types of loans in that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in education. It also differs in many countries in the strict laws regulating re-negotiating and bankruptcy.
Income Based Repayment
The Income Based Repayment plan is an alternative to paying back student loans, which allow the borrower to pay back the loan, based on how much he/she makes, and not based how much money is actually owed. However, income based repayment does not apply to private loans.
Most college students in the United States qualify for some type of student loan, although the amount they can borrow may vary based on several factors. Income level, parents’ income level, and other financial considerations are all weighed to determine the amount they are eligible to borrow under the federal student loan program.
A student loan has major differences over conventional loans – 6% interest rates (higher than most home loans) and inability to negotiate. The interest rate on a student loan will generally be at least two percentage points lower than the going market rate for conventional loans, but this will vary somewhat.
Repayment typically begins anywhere from six to twelve months after a student leaves school, regardless of whether or not they complete their degree program. In some cases, repayment begins if course load drops to half time or less, so it is important to check the exact terms and conditions of any student loan.
The student may have multiple options for extending the repayment period, although an extension of the loan term will likely reduce the monthly payment, it will also increase the amount of total interest paid on the principle balance during the life of the loan. Extension options include extended payment periods offered by the original lender and federal loan consolidation. There are also other extension options including income sensitive repayment plans and hardship deferments. Extensions and consolidation will also add to the principal, many times unpaid interest and penalties become capitalized.
The Master Promissory Note is an agreement between the lender and the borrower that promises to repay the loan. It is a binding legal contract. Direct student loans can be obtained by filling out the government FAFSA form, and each school will determine eligibility of a student for direct federal loans.
Types of Student Loans
There are two main types of student loans: Federal student loans and private student loans. There are several types of federal loans, so let’s explore the options:
Federal Student Loans
Federal student loans have more favorable terms than private loans. The government sets a low, fixed interest rate, nearly all students are eligible to receive federal student loan money, and they feature a grace period after school during which no payments are due.
Stafford Loans: These loans are available to almost anyone who submitted a FAFSA, has a financial need as determined by the school, is enrolled at least half time.
There are two types of Stafford loans:
The fixed interest rates on subsidized Stafford loans first disbursed between July 1, 2009 and June 30, 2010 is 5.6%. For the following 3 years, interest rates will be 4.5%, 3.4%, and 6.8%, respectively. All unsubsidized Stafford loans have a fixed interest rate of 6.8%.
Federal Perkins Loans: These types of loans are for students with the greatest financial need. It has a low fixed interest rate of just 5% and they share many of the characteristics of subsidized Stafford loans. In addition, they also include the advantages of not having fees and having a longer grace period.
Federal Parent PLUS loans: These loans are for parents of undergraduate, dependent students and can be used to fund the entire cost of a child’s education. The interest rates are a fixed 8.5%, so the other types of loans would be preferable, if available.
In addition to the federal loans, private loans may be available to cover the rest of the education costs for students. Those who will be taking responsibility for their loans without the help of their parents are the most likely candidates for private loans.
There are many companies that offer private student loans, with the major ones being Sallie Mae and Citi. Interest rates vary based on many factors, and lower rates go to those:
Tips about Student Loans
The cost of going to college is getting more expensive each year and many young adults are taking out student loans to pay for their education. Before you sign any papers for a student loan, here are some quick tips to keep in mind:
Complete the Free Application for Student Aid (FAFSA).
Completing a FAFSA helps determine for which federal assistance programs you qualify. Some federal assistance programs, such as grants, give money that does not need to be repaid to students to pay for college, while federally guaranteed loans are low interest rate loans that must be repaid. It is wise to borrow as much of your needed amount from federal sources first before borrowing from private lenders. Learn about the benefits of federal student loans
Shop around and compare loan features.
If you need to take out a private loan, compare agreements offered by lenders to see which one best fits your needs. Questions to ask include:
Check the loan amount to see if it’s right for you.
Many lenders factor in tuition and the cost of education expenses (books, school supplies, lab fees, etc.) to determine the loan amount. Many times they will offer you a loan that is much more than you need to pay for a college education. Work out a budget for yourself to determine how much of a loan you need, because borrowing too much means you’ll be paying more in interest in the long term.
Getting a cosigner may offer you a better interest rate.
Most people’s first major loan is their student loan and they usually have little or no credit established yet. This means that the rates you would get for the loan are higher than for a person with a good credit rating. One way to get a better rate on your student loan is to find a cosigner with a good credit rating (such as a parent or close relative). A cosigner shares responsibility for the loan with you, and both of your credit histories will be impacted. Please keep in mind that your cosigner is responsible to pay the debt if you fail to pay the loan.
Avoid “free money” from organizations you don’t know.
Many scam artists prey on students and parents with little or no credit with offers of loan money without a credit check. Please remember: “If it sounds too good to be true, it probably is.” If a company offers to give you money for college but you didn’t request the information or you’re unfamiliar with the company, it could be a scam to steal your money.
What is Business Insurance?
You will not find a successful business that doesn’t carry business insurance. In today’s society, it is absolutely mandatory to carry some form of it, regardless of size or location. It doesn’t matter if you’re performing out of your basement, or if you’re a large corporation in a high-rise building.
The range of business insurance coverage is huge, with issues from lawsuits to disgruntled employees. Everyday practices can backfire with enough force to cause a disabling blow to the company. Case in point: You send an employee, in his or her own vehicle, to make some deliveries at a post office down the street. In route, they are involved in an accident. Guess where the finger may, and often times points? If an incident occurs, and they are covered by auto insurance, the best coverage you get is equivalent to their range of coverage. If they do not carry any auto insurance, then it can be a world of hurt for the employer.
How to Buy the Right Business Insurance
Your business faces plenty of threats — from fire to fraud, from dishonest employees to discontented customers to disconnected utilities. And yet for nearly every peril, some insurance company somewhere is willing to underwrite protection. Therein lies your dilemma: You can go broke keeping your company secure.
So before shopping for coverage, investigate what perils a company in your industry is most likely to face and which could threaten your company’s survival. Ask for any risk assessment tools for, papers on, or expert opinions about your particular industry.
These pages will walk you through some of the most common types of coverage. You probably won’t need them all; some you likely already have. Even if you think you’re covered, however, you may be mistaken. Companies much larger than yours have gone to the mat with their insurers and come up empty-handed. Your task when buying insurance is to steel yourself for the mind-numbing language of the policy — and to know precisely what’s covered and what’s not. If you don’t see the coverage you’re looking for, or you don’t understand some of the terms, seek clarification from your agent.
Insuring Your Business
1. What Everyone Needs
* Workers’ compensation insurance is required virtually everywhere. For injuries sustained on the job, workers’ comp covers medical expenses, lost income, and rehabilitation. If an employee dies, it pays death benefits to the heirs. Though it’s not mandatory, be sure to cover yourself as well as your employees, something many owners neglect to do even though.
* Property insurance, which protects buildings and their contents, such as equipment, furnishings, and inventory, is the most popular kind of protection for small businesses. But it may also be an area in which you are over insured: Companies with little invested in premises and little inventory can sometimes forgo it. For everyone else, it’s as essential as homeowner’s coverage. Be aware that basic policies may exclude certain perils and limit certain claims; for instance, losses from water, earthquakes, boiler problems, and utility failures are often excluded unless you add a rider.
* General liability coverage is less common than property insurance among small companies but arguably more important, because a claim for serious injury could easily wipe you out. Liability insurance covers any injury or damage your company might cause other people, their reputation, or their property. Any company with premises that other people (customers, suppliers, etc.) can enter, or with a product whose failure could hurt or destroy, should have it. Most standard policies provide $1 million of coverage per claim. You may need more to do business with certain companies, and that’s typically purchased under an umbrella policy.
* Business owner’s policies combine property and general liability coverage. Business owner’s coverage is usually available to companies with up to $3 million in revenue, though sometimes larger companies can get it. It’s less expensive than buying separate policies, and insurers usually throw in other coverage, such as business interruption for a nominal cost.
2. For Growing Companies
* Business vehicle insurance can be configured to cover cars and trucks your company owns, leases, rents, or simply uses. Experts recommend this coverage even when an owner or employee uses a personal car for work, because while personal auto insurance normally permits some business use, when an accident occurs, the insurer will defend only the car owner, not the business.
* Employment practice liability insurance is a relatively new coverage that’s widely recommended. The fact is, behaving decently to employees sometimes isn’t enough to avoid a lawsuit these days. The median jury award in employment suits has grown by half in the past decade, but the big exposure is the cost of your legal defense.
* Business interruption insurance. Hurricane Katrina taught small companies that it’s not just the catastrophe you need to worry about; it’s what comes after. Business interruption insurance can solve the problem of seeing you through while you rebuild your business by replacing lost income and paying normal expenses. It will also cover extra expenses you incur in getting back into the market quickly. In practice, however, insurers have successfully defended narrow interpretations of these policies. Among the terms you must negotiate with your agent are the waiting period before you can collect and the period for which you’ll be covered after business resumes but before it regains full strength. Most important, unless otherwise agreed, basic business interruption kicks in only after a physical loss of property shuts you down. A business owner’s policy usually includes business interruption coverage.
What does Travel Insurance Cover?
Travel insurance can protect you in the case of lost or stolen luggage and personal effects, trip cancellation, personal liability, funeral expenses (without wanting to sound morbid, dying overseas can be very expensive), emergency dental treatment and evacuation back to your country of residence.
While you’re battling your way through the small print, keep in mind the following potential pitfalls of Travel Insurance.
Pros & Cons of Travel Insurance
Simply put, the pros of travel insurance are complete coverage and peace of mind. The cons of travel insurance are the high costs that may turn out to be unnecessary. There are also a few other technicalities which we will consider.
Who can deny that holidays and vacation evoke excitement? The very idea of traveling away from home and the hunger to feast one’s eyes on beautiful scenery, new foods, different cultures and places of interest is exciting! Use the data that follows to determine if travel insurance will make your trip a stress free vacation, or simply drain funds from your travel trough.
Pros: Basic Travel Insurance Coverage
The pros of travel insurance are in the basic and additional protection you can receive when things go awry away from home. However, the decision to travel also requires important decision-making. Hindsight is 20/20, but foresight is often lacking.
Therefore, it’s important to give attention to the safety side of your care-free trip. The most basic coverage options of travel insurance involve medical coverage as well as quick transport back to your country of origin. (You definitely don’t want to pay cash for an emergency helicopter ride!) Some policies may also include protection against trip cancellation, lost baggage and other possible casualties.
If you are investing tens of thousands in a cruise that would be ruined by illness, or traveling overseas, medical travel insurance coverage is considered a wise investment. Most health insurance plans will not cover out of the country medical care.
You must also consider:
Cons: What is Not Included in Travel Insurance Coverage.
There is no shortage of insurance companies offering travel insurance products. Travel agencies usually do offer insurance policies, but many believe it is best to shop around ahead of time to compare prices and coverage. Yes, these contracts can be lengthy but it’s important to know what is covered and what isn’t. You might get a little discouraged at first when contemplating the “cons” of getting travel insurance. Besides the cost of travel insurance, the following technicalities are concerning to some travelers.
There are definite items for which you will not be covered:
Unfortunately for many travel insurance policies, pre-existing medical conditions are not covered. Some insurance companies will make exceptions but with stipulations attached; for example, the insured must be declared symptom-free for a certain amount of time.
Why Get Home Insurance?
Think about what you have invested in your home and all your personal belongings. The financial investment alone is enormous, the biggest an average person will ever make, but also consider the time and effort you’ve put into your home. Leaving the security of that investment to chance is a risk you can’t afford to make. All it takes is one disaster to wipe out your home and your belongings. That is why you should get homeowners insurance and safeguard your financial security. Perils might befall your home, but if you get home insurance, you will have the peace of mind of knowing you will have the funds to make it right again.
Get Home Insurance Online
The online home insurance marketplace is a competitive one, which presents both benefits and challenges to you as a consumer. Of course, the more competitive the market is, the less you will pay when you get house insurance. On the other hand, trying to navigate dozens of different carriers to find the right one may prove difficult. But we’ve made your quest to get homeowners insurance much easier by serving as a free intermediary between our visitors and home insurance companies.
How to Get House Insurance
Add up all your monthly expenses to determine how much you can afford to pay for monthly insurance payments. But make sure that the deductible is within your financial means.
Obtain three or more referrals. Ask family and friends who own homes about their coverage and any experience they have had with the claims process. Your real estate agent can also provide a dependable referral.
Use Internet sites to obtain free quotes from local homeowners insurance companies. Try to narrow your search to three home insurance agents.
Meet with insurance agents in person to discuss their rates and any special discounts they may offer.
Apply for your insurance once you have chosen an agent. If the cost of the policy ends up being is different from the initial quote, consult with your agent before you make a final commitment.
How to Reduce Your Insurance Costs
With the cost of insuring homes on the rise in recent years, now is a good time to examine your policy and look for ways to save money.
The Insurance Information Institute, a non-profit organization supported by the property and casualty insurance business, attributes the increases to the mounting number of catastrophes, the high cost of home repairs, and the emergence of mold claims.
So what can you do to help keep your rates reasonable? Check out the following suggestions:
Do’s & Don’ts to Insure your House
Shopping for health insurance?
To make sense of what works for you, you’ll need to understand how your own medical spending patterns interact with the details of the different plans for which you qualify.
1. Understand your options.
If you’ve recently left your job or been laid off, COBRA is the simplest option. It allows you to stay on your employer’s plan. But because it requires you to pay the full cost, it may not be the least expensive. That’s because many employers subsidize the premiums for employees who never see the full bill. If you’re healthy and see the doctor rarely, you may be able to find a high-deductible plan with less coverage at a lower cost.
On the other hand, if you have medical issues, COBRA may be a better deal overall. “The central issue of COBRA, which is critical for people to examine if they or their family have a pre-existing condition, is that you don’t have to worry about qualifying for it.
When you are looking for health insurance, the variables are what do you need, what does it cost and how does it compare with other options. Paying for the richer coverage if you are in a situation where you are not going to use it is throwing money down the fireplace. One option worth looking into for those who are between jobs is the discounted state-run programs.
2. Shop around.
Insurance is complicated and the cost savings from finding the right plan can be dramatic, so you’ll want to shop around and understand what you’re buying. You simply plug in your information and get quotes, the way that you would for auto insurance or a credit card.
Another way to shop around is to hire an insurance broker who can lead you through the maze. Not all brokers are equally good, to say the least. It’s best to get a referral from a trusted friend or family member. Either way, you’ll want to get multiple quotes and you’ll want to compare the plan details as well as the top-line monthly premium costs.
3. Consider affiliating with a group.
Group insurance is typically cheaper than getting it yourself. When you’re on staff, your employer automatically gets group rates. When you’re on your own, one way to go is to find or create a group. Trade groups, alumni associations and other organization may offer association plans, which allow you to be in the group for insurance purposes.
4. Don’t forget that health insurance is tax deductible.
When you’re self-employed, you can deduct your insurance premiums for tax purposes. They’re taken as a so-called “above-the-line deduction, meaning they’ll reduce your adjusted gross income regardless of whether you itemize.
Medical expenses, on the other hand, are a Schedule A deduction, meaning you can only take them if you itemize and you can only deduct them after they exceed 7.5% of your adjusted gross income. The upshot is that the net cost to you of a dollar spent on health insurance will generally be less than the net cost of a dollar spent on medical care.
5. Cost out different plans.
It’s not necessarily the case that the cheaper health insurance will prove less expensive in the long run. It depends on what your health spending runs, what the details are about your in-network vs. out-of-network usage, what’s excluded from the coverage and a host of other factors. Before you start shopping, try to understand your family’s medical spending and patterns, what doctors do you see? What medical services have you used in the past few years? Do you travel often, meaning you may be outside the coverage area for a particular plan just when you need it?
Once you understand your health issues, then you can move on to the financial ones. Premiums are important, but the other fees you’ll face (such as the co-insurance for doctor visits or the cost of going out-of-network to your longstanding doctor) are equally important. Watch especially for benefit limits and exclusions. Understanding your own health spending patterns will help you know whether it’s better for you in the long term to pay a cheaper amount per month for a plan with a higher deductible vs. paying more in premiums for a plan with a lower deductible.
What Health Insurers Don’t Want You to Know
You need to make sure that you are always on the same page as your health insurance provider. The both of you need to come to a conclusion that works out. This does not mean that the health insurance company is going to be completely honest with you. There are some things that they do not want you to know because that could give you an advantage over them.
As the buyer you should always be looking for an advantage over the health insurance company. Take your time and read through some of these tips, because they aim to help you do the best that you can with your health insurance.
Challenge the Fine Print
This is the first thing that health insurance providers do not want you to know. When you are discussing a plan with them they will go over all of the details with you before you sign on. This will seem like they are describing everything for you in great detail. Unfortunately there is still fine print that you need to read. This is something that should be reading while you are still talking to the health insurance provider. Most insurance companies want you to wait to read the fine print until you have signed up, but by then it might be too late. Read early and challenge often.
What States Says Insurance is Require to Cover
Every state will have a mandate of the things that health insurance must cover. Certain treatments will be covered and certain things need to be provided. This is something that you need to check on before you go to get health insurance. You also need to keep the provider in line and make sure these things are provided. Sometime health providers will try to sidestep things that need to be done because it will save them money. This is why they might not tell you about this. It is your job to make sure that you are following the state laws and getting what is required. It is up to you to keep them in line.
How You Can Appeal
No decision is final. If you get denied a claim on your health insurance then you should not just sit there and take it. You can appeal the decision and see if you can get the ruling overcharged. This is not something that the health insurance provider wants to be up front about because it could cost them more money. This is why you need to ask them about the appeal process and how you can partake in it. They probably will not tell you until you really need it, so make sure you get a head start on them and find out about it right away. You never know when you might have to appeal and you need to be prepared.
Major Types of Life Insurance
If insurance terms leave you dazed and confused, here’s a quick t for four major types of policies. Keep in mind that definitions may vary slightly from company to company and from state to state:
Advantages & Disadvantages of Life Insurance
Both cash value life and term life insurance has their benefits. The most significant benefit of cash value life insurance is its ability to offer coverage for the entire life of the policyholder. Many people take advantage of buying this type of insurance when they are young when they need it most. Cash value accounts may also be borrowed against or drawn from during the life of the policy. Policyholders are also not required to pay taxes on any interest or earnings attached to cash value accounts.
Individuals and corporations also benefit from term life insurance. The biggest advantage of term life is the often very cheap premiums, especially when a person is young and healthy. It is possible, in many situations, to purchase significantly large face value amounts for monthly costs of $20 to $30. Term life is good for covering financial obligations that will eventually end, such as mortgages, automobile loans and education costs.
With the benefits of both cash value and term life insurance comes a few disadvantages. The most significant disadvantage of cash value life insurance is the inconsistency in premiums. Most cash value policies contain required premiums that can increase over time. This can make the policy quite expensive for people on a budget who wish to purchase enough coverage to benefit their family in the event of their death.
Although many policies contain riders in which dividends from cash accounts can be used to pay premiums, such an instance almost always results in taking funds away from the cash value or investment account. There is also never a guarantee that sufficient funds will be available to cover missed premiums in the event a policyholder falls short.
There are also several disadvantages of term insurance, the first being that it is not permanent. Although a policyholder may enjoy extremely cheap premiums when he or she is young, term products expire after a certain number of years, or when the insured reaches a certain age. When a policy expires, a new one must be purchased. This means that a person must qualify for a new program based on his or her current age and health in order for coverage to continue. Many times, this results in much higher premiums or insurability. Some term insurance does, however, contain “re-up” or “renewal” options that may not require proof that the customer is insurable to continue coverage.
When you think of life insurance, you think of a death benefit being paid to a beneficiary upon the death of a policyholder. Although this is true, it is important to know that with some insurance, especially many cash value policies, it’s often not that simple.
With many cash value life policies, only a single payout is made upon a policyholder’s death, regardless of what the cash value account is worth when he dies. For example, if an individual owns a whole life policy with a death benefit of $100,000 and a cash value account worth $25,000, it is common for beneficiaries to expect a payout of $125,000. This is commonly not the case. In this example, a beneficiary would commonly only receive a total of $100,000. Because the cash value account is worth $25,000, the insurance company would only pay $75,000 as a death benefit, with the other $25,000 coming from the cash value account.
With some products, however, beneficiaries are, in fact, entitled to receive death benefits in addition to cash value accounts when their loved one dies. However, usually an amount equal to the policy’s face value is paid upon death. It is important to know this information before purchasing cash value life insurance.
It is recommended that you consult with an experienced insurance agent before buying life insurance. It is important to find a life product that is tailored to the specific needs of the individual policyholder and his or her family.
Consider whether using life insurance policies as investment vehicles is a wise move for you. Long term, it may be more profitable to buy term insurance and take advantage of low premiums, and then invest in mutual funds or stocks that are not attached to insurance policies.
Tips for buying life insurance
Honestly, how often do you hear about rates dropping for anything these days? The following tips can help you secure good coverage without spending too much.
Things You Should Know About Buying Auto Insurance
How is Your Insurance Rate Determined?
Two factors determine what you pay for auto insurance. The first factor is underwriting and the second factor is rating. Insurance companies underwrite to assess the risk associated with an applicant, group the applicant with other similar risks and decide if the company will accept the application. Based on the results of the underwriting process, the rating assigns a price based on what the insurer believes it will cost to assume the financial responsibility for the applicant’s potential claim.
Each company adopts its own rating system, although there are general guidelines that all companies follow.
The single greatest influence on the rating process is claim frequency. This does not mean how many times you specifically have made an insurance claim, although that will have an additional effect. Claim frequency measures how often an insured event occurs within a group relative to the number of policies contained in that group. Persons sharing characteristics with high claims groups will be charged more for insurance coverage.
Ask Your Agent About Discounts.
Discounts are awarded because the insurance company sees you as a “better risk.” Here are some discounts you should look for: multiple vehicles, driver education courses, good student, safety devices, anti-theft devices, low mileage, good driver/renewal, auto/home package and dividends. Not all states offer all discounts, so check with your agent to see if you qualify.
Tort System vs. No-Fault System.
Each state must implement either a tort system or a no-fault system. The system your state has implemented will determine what kind of insurance is available to you. The three basic coverage’s sold under the tort system are bodily injury liability insurance, property damage liability insurance and uninsured motorist’s coverage. In a no-fault state, coverage’s will vary, but under a no-fault system your insurance company pays you directly for your losses as a result of injuries sustained in an accident, regardless of who is at fault. Check with your state insurance department for questions concerning tort or no-fault state systems.
Check into Optional Coverage.
The most commonly recognized coverage’s, in addition to the basic liability package, are collision and comprehensive coverage’s. Collision coverage pays for physical damage to your car as a result of your auto colliding with an object such as a tree or another car. This is relatively expensive coverage and is not required by law. Comprehensive coverage pays for damage to your auto from almost all other causes, including fire, severe weather, vandalism, floods and theft. This coverage will also cover broken glass and windshield damage. Comprehensive coverage is less expensive than collision, but is also optional. Other optional coverage’s include medical payments coverage, rental reimbursement coverage and towing and labor coverage.
Where to Go for More Information.
Information is available to consumers from a number of unbiased sources. These sources include public libraries, state insurance departments, online resources, consumer groups and consumer publications. Every state insurance department has personnel available to answer questions regarding auto insurance coverage and many departments publish premium comparisons to make shopping around easier.
Shop around before you buy.
When shopping for auto insurance, premium quotations are a useful tool for comparison of different companies’ products. When asking for price quotations, it is crucial that you provide the same information to each agent or company. The agent will usually request the following information: description of your vehicle, its use, your driver’s license number, the number of drivers in your household, the coverage’s and limits you want.
Where to Shop.
Check the newspaper and yellow pages of the telephone directory for companies and agents in your area. In addition, ask your neighbors, relatives and friends for recommendations on insurance companies and agents. In particular, ask them what kind of claim service they have received from the companies they recommend. Remember to shop around to get the best price and service.
For Your Protection.
Once you have selected the insurance coverage’s you need and an insurance agent or company, there are steps you can take to make certain you get your money’s worth. Before signing an application for any insurance coverage, call you state insurance department and verify that the company and the agent are licensed to do business in your state. It is illegal for unlicensed insurers to sell insurance, and if you buy from an unlicensed insurer, you have no guarantee that the coverage you pay for will ever be honored.
Read Your Policy Carefully.
You should be aware that an auto insurance policy is a legal contract. It is written so your rights and responsibilities, as well as those of the insurance company, are clearly stated. When you purchase auto insurance, you will receive a policy. You should read that policy and make certain you understand its contents. If you have questions about your insurance policy, contact your insurance agent for clarification. If you still have questions, turn to your state insurance department.
Change you Current Car Insurance into a Cheaper Insurance:
What Are Housing Grants?
Housing grants are grants that enable people that are in a low income situation to afford either an apartment or a house. One of the most prominent organizations responsible for issuing these grants is the United States Department of Housing and Urban Development (often called HUD for short). This is a federal department that is oversees the task of making affordable housing available to low income individuals and families.
The United States Department of Housing and Urban Development was created in 1965 under the Johnson administration when the president signed the Department of Housing and Urban Development Act. This act was a part of Lydon Johnson’s Great Society agenda. The act among other things stipulates that low income families should have to pay no more than 30% of their income as rent.
Types of Housing Grants
Getting a housing grant can be easy especially if you are a first time home buyer. With these types of grants, you often have no obligation to repay the grant, which makes getting your own house a reality.
However, not everyone can get one. These grants are awarded based on a set of criteria which often includes financial need and income qualifications. So if you are thinking of applying for one simply because you don’t want to pay for a house even if you can afford one, then it might be a waste of time to try. Likewise, it would be more difficult to get one if you already own several houses to your name.
There are many different types of housing grants available. They are available even if you only want to improve or repair your current house. Below are the usual types of housing grants:
In the aim to reduce energy wastage and human impact on the environment, grants are given to address energy problems at home. This particular type of housing grants is often used to repair or improve the way the house consumes energy or receives energy from the power companies as well as the surroundings.
Home Improvement Assistance Programs
For costs regarding home renovations and repairs, housing grants called home improvement assistance programs are available. These include grant programs for elderly, low-income, rural, veterans, and special needs populations.
For qualified citizens who do not have enough income to purchase a house of their own, home ownership grants provide financial aid programs. Home Ownership grants may be used for aid in down payments and closing costs as well as mortgage insurance.
If you already have an existing loan on your house, there are many refinancing programs that will help you save money through mortgage refinancing, mortgage insurance and homeowners’ grants.
Low-income, elderly and special needs populations are targeted more specifically by rental help programs. These rental help programs not only provide affordable housing to these populations, some of these programs may also provide discounts on utility bills.
Low-income rural Americans can take advantage of rural housing grant programs. The purpose of rural housing programs is often for home renovation and/or repair or to help a disabled person stay in their home.
Qualifications for HUD Housing Grants
The primary qualifications for housing under the programs offered by the United States Department of Housing and Urban Development (HUD) are the applicant’s level of income and citizenship status. Among the additional factors considered in the qualifications for HUD housing are whether an individual is elderly or disabled and the size of his or her family. After the initial determination is made of an individual or family meeting the qualifications for HUD housing, the character of the applicant also is taken into account.
HUD offers two programs to provide housing assistance. They are the public housing program and the Section 8 program. The income aspect of the qualifications for HUD housing under each of these programs varies according to the area in which the housing is located. The limits are determined annually by HUD based on that area’s median income.
The housing programs offered by HUD are administered by local authorities. The public housing program consists of multi-family rental units managed by the local housing authority, which rents directly to the tenant at a reduced rate of rent. To be eligible for this type of public housing, the tenant’s income level cannot exceed a certain percentage of the median income for that area. As of 2011, this percentage was set at 80 percent.
Under the Section 8 program, a rental voucher is issued to the eligible tenant that can be used to rent available housing on the open market. This program also is administered by the local housing authority. The landlord must agree to participate in the Section 8 program for the property to be eligible, and the level of rent charged cannot exceed a fair rental amount as determined by HUD. Under this program, the income level of the applicant’s household must be less than a certain percentage of the area’s median income — 50 percent, as of 2011.
The other principal factor in the qualifications for HUD housing involves citizenship. For either of the HUD housing programs, the applicant must be a U.S. citizen or be an eligible immigrant. A non-citizen who is a legal resident alien would qualify for the programs.
After the income and citizenship qualifications for HUD housing have been satisfied, the local housing authority is charged with verifying the character of the proposed tenant. A local housing authority can deny an application for HUD housing if it determines that the applicant will not be a suitable occupant. The applicant will often be required to provide personal references for this purpose.
In today’s economy, it might seem a little risky to start your own small business. If you are like most entrepreneurs and small business owners, however, you are not going to let risk stop you from fulfilling your dreams and ambitions. Besides, the truth is that there are resources out there that are designed to help people like you. Small business grants are offered every year to people just like you who have goals and a plan and who are only missing the access to cash. Cash flow is a key factor in any business’s operation. Without access to a line of credit, you cannot purchase equipment and pay labor. This is why the government offers affordable services and funding to help small business owners.
How to Apply for Small Business Grants
If you are ready to go through the process of getting small business grants, your first step should be to get your business registered officially. This is a relatively simply process. You will need to have all of your financial statements in order. You may also need to have a financial accountant organize papers regarding workforce and investments if you have reached this point in growth. Once you have received confirmation that your business has been registered, it’s a good idea to begin exploring the opportunities.
You will find that green initiatives are among the most popular. There also is much funding for business owners who would to build in communities that are week. Strong small businesses help challenged communities to recover.
Note that Small business loans and small business grants may be awarded to companies that meet the size standards that the U.S. Small Business Administration (SBA) has established for most industries in the economy. The most common size standards are as follows:
* 500 employees for most manufacturing and mining industries
* 100 employees for all wholesale trade industries
* $6 million for most retail and service industries
* $28.5 million for most general & heavy construction industries
* $12 million for all special trade contractors
* $0.75 million for most agricultural industries
Here is a listing that can help one to get started with his/her business
Research Grants for Small Businesses. This page contains a listing of agencies that give research grants as part of the Small Business Innovation Research (SBIR) program and Small Business Technology Transfer (STTR) Program.
Grants.gov . Through the Grants.gov website, you can search for and obtain updated listings of federal grant opportunities. You can do keyword searches, or you can search by a wide range of grant categories including business and commerce.
Government Agency Websites. Although most agencies and their divisions/departments announce their grant opportunities through grants.gov, you can sometimes also find these announcements on individual agency/division websites.
Business.gov. This website has an easy checklist tool that can help you search for business grants (as well as loans and other types of financing). Basically, you check off what you are looking for and the site returns a listing of possible grant and other sources of financing.
State Agencies. It is worth checking your own state’s website to see if there are any business grants or other types of financing available to small businesses. These might include, for example, grants for programs and activities related to tourism, daycare, energy, and exporting.
Disadvantages of a Small Business Complying with Government Regulations
Overall, small businesses suffer greater losses from complying with government regulations than large companies. Small businesses usually do not have an adequate amount of staff to keep up with rapidly changing laws, but the government does try to mitigate the lopsided effects that regulations tend to have on small companies.
Small businesses pay $2,830 more, per employee, than larger firms to comply with government regulations, according to a September 2010 report by the Office of Advocacy of the U.S. Small Business Administration (SBA). This amounts to a 36 percent difference, and in the eyes of Winslow Sargeant, SBA Chief Counsel for Advocacy, an injustice to America’s small business.
Why Regulations Hit Small Businesses Hard
Government regulations often hurt small business disproportionately because many carry a fixed cost. For instance, if all companies pay $1,000 to comply with a certain regulation, the costs per employee for a firm with 10 people are much higher than an organization with 1,000 people.
The larger percentage of costs burdened on small businesses hinders their growth. In the industrial-cleaning sector–comprised mostly of small firms–83 percent of these companies claim that government regulations prevent them from expanding their operations.
Legislators often exempt extremely small businesses from having to comply with government regulations. This, however, may have the unintended effect of discouraging very small businesses from hiring more workers in order to skirt regulation. One of the biggest burdens on small businesses are health regulations. In 1996, Congress passed the Small Business Regulatory Enforcement Fairness Act (SBREFA) in response to concerns about the impact of the costs of regulation on small business. This bill reduces the fees for violations of government regulations and makes information more accessible to small businesses.
If you own a small business, do not ignore government regulations. You may get hit with fees or regulators might temporarily close the business. You can also voice your concerns over government regulations.
The United States government and all U.S. state governments provide merit- and need-based student aid including grants, work-study, and loans.
As of 2010 there are nine federal and 605 state student aid programs and many of the nearly 7,000 post-secondary institutions provide merit aid. Major federal grants include the Pell Grants, Federal SEOG Grants, SMART Grants, Academic Competitiveness Grants (ACG Grant), Federal Work-Study Program, federal Stafford Loans (in subsidized and unsubsidized forms), state student incentive grants and Federal PLUS Loans.
State governments also typically provide some types of need- and non-need-based aid, consisting of grants, loans, work-study programs, tuition waivers, and scholarships.
To apply for most students aid, a student must first complete the Free Application for Federal Student Aid (FAFSA) by submitting the application electronically to the U.S. Department of Education’s using the Department of Education’s website, mailing a paper form or, as the law also authorizes, by getting professional assistance from a fee-based preparer.
Types of College Grants.
Merit based aid:
Merit-based grants or scholarships include scholarships awarded by the college or university and those awarded by outside organizations.
Merit-based scholarships are typically awarded for outstanding academic achievements and maximum SAT or ACT scores.
Scholarships may be given because of group affiliation (such as YMCA, Boys Club, etc.).
Merit scholarships are sometimes awarded without regard for the financial need of the applicant.
At many colleges, every admitted student is automatically considered for merit scholarships.
At other institutions, a separate application process is required. Scholarships do not need to be repaid as long as all requirements are met.
Need based aid:
Need-based financial aid is awarded on the basis of the financial need of the student.
• The Free Application for Federal Student Aid application (FAFSA) is generally used for determining federal, state, and institutional need-based aid eligibility. These scholarships usually have more generous financial qualification criteria, and many are endowed specifically for the student who wants to attend college, but whose parents make too much money for him to qualify for most federal programs. A need based scholarship may pay partial or full tuition, housing costs, and sometimes a books stipend.
• Some have more specific criteria than others, but they all attempt to ease the burden of affording college and to make it easier for intelligent or economically/demographically disadvantaged students to get much needed educational opportunities. For private endowments, a supplemental application may be necessary for institutional need-based aid.
College scholarships are not always based on academic achievement or financial need. These are scholarships where applicants must initially qualify by race, gender, religion, family and medical history, or many other student-specific factors.
There are scholarships available on the basis of –
a) Women or Minorities
b) International Students
c) Students returning to college after a long hiatus
d) Someone beating a tough illness
e) Students actively involved in the community etc.
Make a list of what makes you special, and investigate the major organizations, local groups and private corporations that may have funding set aside for education for student specific grants you may not have come across otherwise.
These are scholarships awarded by a college or university to students planning to pursue a specific field of study. Science, Technology, Engineering and Math—STEM subjects—have been the focus of intense diversification efforts in the last decade. You can expect to find abundant scholarships in any of these fields. Also, Nursing and Teaching are two of the leading subject-specific scholarship areas that are also popular. Health-care, law, arts and other studies too have career specific scholarships available.
If other scholarships mentioned above do not fit your purpose, focusing the scholarship lens on ‘Career’ will definitely help.
How to Apply for College Grant.
The government wants to do more than just provide college grants. While it is true that funding is an important part of any education initiative, it also is true that education and policy are equally important. Because this is the case, many students go to government grant resources to find out how to choose schools and how to prepare for college. The government is offering you money to go to college. It only follows that the government wants to educate you so that you can spend that money wisely.
If you want to make sure that you are successful when you apply for college grants, you are going to want to get started as soon as possible. Your first step should be to get registered in the system. There are a number of qualifications that people need in order to get awarded grants, including income and residency factors. You can find out immediately if you are eligible to go through the grant application process.
Once you have received confirmation that you are in the system and eligible to apply for college grants, your next step will be to find the grants from which you can benefit. If you have a particular area of interest and you have already demonstrated proficiency in that field, you should feel encouraged to research grants for students who are working in particular fields.
Students who need college grants in order to apply for grants awarded to students who are economically disadvantaged are going to need to provide all requested financial information. This can take time, so you should plan accordingly.
Women, while the majority in the United States, are still under-represented in many areas. The federal government is aware of this under-appreciation and offers many federal grants designed to help self-sufficient women start or increase a business, earn an education that will lead to the common good, or use their talents to help others. With 10.1 million firms in the United States owned by women earning $1.9 trillion in sales, the federal government also realizes that women are a terrific investment.
Federal grants for women are spread out into many different categories. While, business and education are among the most prominently known grant opportunities, there are in fact several categories of programs that closely apply to women. Among the categories of federal grants available, there are grants in:
There is a common misconception about federal grants. Federal grants are often advertised as “free money” or money to be spent on debt payments and vacations. This is not the exact truth, however, for most grant programs. While some grant funds might be used for more frivolous means, the great majority of grant programs are funds earmarked for a purpose – not just a gender.
In order to receive the funds, you must demonstrate your desire to carry out the function associated with the grant. The grants are not distributed based on ethnicity or gender, per se. Federal grants are given to those who want to start a women’s shelter or work on research in biofuels. They are given as educational grants in certain fields, such as education, that will help better communities and other citizens.
Many of them, however, do have a caveat that gives precedent to women applicants.
Grant funds can and do provide a substantial amount of funds that can better your business and life, but it is not as simple as filling out a form and getting a check in the mail. Government grants are a complex entity, and even the most skilled individuals can struggle to find the programs that fit their business, educational plans or heritages.
Assistance with Federal Grants
Types of Women Grants
– Federal Grants
Regardless of the country that you live in, federal grant money is usually available. Women can apply for federal student grants to fund their education at an undergraduate or graduate level and give themselves the ability to get a professional career.
Other agencies in a country’s federal government offer grant money to organizations for public purposes, including the betterment of the status of women in business, the arts, or in the fields of science and technology. These organizations then develop programs which women can use. Either kind of federal grant requires an application, along with a stated goal and a promise that the funding will be used solely for the purpose for which the grant was created.
Government agencies in the United States, Canada, UK, Australia, and South Africa that usually offer such federal grants include the Department/Ministry of Health, the Department/Ministry of Education, the Department/Ministry of Agriculture, the Department/Ministry of Social Services, the Small Business Administration, and more. Many times, public service agencies such as the Medicare Payment Advisory Commission (or your country’s rendition of this) will also offer grants.
– Private Grants
Private grants are funded by an individual who have a personal interest in promoting certain kinds of activities through their generosity. Sometimes a private organization is set up as a foundation with a board of directors and possibly a committee that handles grants and awards. Private funding may be available for women in the form of grants or scholarships.
– Corporate Grants
Corporate grants are developed and administered by companies who wish to fund projects that either enhance their reputations or have a reasonable chance of producing benefits to the funding company. Some companies and organizations have a history of making grants available for women to use for education or career advancement.
– Professional Grants
Professional grants are usually made by non-profit organizations and universities within a given profession to advance the status of individual members of the profession and the status of the profession itself. Many professional women’s organizations offer career development or advancement grants for use by members of the profession for travel, education or counseling.
Primary aim of mortgage insurance is to protect the lenders in the event of home loan default. Borrowers purchase this insurance and pay the premiums; in turn, insurance companies promise to make the remaining mortgage payment in case of loan default. In other words, the lender becomes the beneficiary of mortgage insurance policies.
Types of Mortgage Insurance
All the mortgage insurance policies can be broadly categorized into 2 types, namely, (1) Private Mortgage Insurance and (2) Mortgage Protection Insurance.
Private Mortgage Insurance (PMI)
If you’re not able to afford 20% down payment on your mortgage loan, then you may require purchasing a Private Mortgage Insurance or PMI. This insurance policy protects your lender against loss if you default on your loan repayment.
There are 2 types of PMI, which are described below.
(i) Borrower-paid PMI: It is a type of PMI wherein the borrower pays the insurance premium. Usually, you’ll have to purchase it if you’re unable to make the required down payment on your home loan. It is also referred to as ‘Traditional Mortgage Insurance’ or BPMI (Borrower-Paid Private Mortgage Insurance).
(ii) Lender-paid PMI: When lender pays for PMI, then it is referred to as LPMI (Lender-Paid Private Mortgage Insurance). However, lender recovers the premium cost by adding it to the mortgage loan interest. Usually, this insurance is purchased by a lender in case of high loan-to-value mortgage.
Mortgage Protection Insurance
Mortgage protection insurance covers your home loan payments when you’re unable to make your monthly mortgage installments. Owing to its coverage, this insurance is sometimes referred to as mortgage payment protection insurance. Mortgage protection insurance can be divided into 3 types, which are discussed below.
(i) Mortgage Life Insurance: The benefits of mortgage life insurance are somewhat similar to any other life insurance policies. This mortgage insurance is meant to pay off your remaining mortgage loan in the event of your death. If you purchase this insurance, then it’ll save your family members from losing their home.
(ii) Mortgage Disability Insurance: Mortgage disability insurance promises to make your monthly home loan payments in the event of your physical disability. However, you can avoid purchasing this insurance if you have other types of disability insurance policies. The amount of coverage is usually dependent upon your salary at the time you become disabled; usually, the coverage amount varies between 50-70 % of your salary.
(iii) Mortgage Unemployment Insurance: It is quite obvious that you’ll face difficulty in making your monthly mortgage payments in the event of your sudden job loss. You can have mortgage unemployment insurance that can cover your monthly home loan payments if you suddenly become unemployed.
Some insurance companies may offer combined mortgage protection insurance, wherein you get the benefits of both mortgage unemployment insurance and mortgage disability insurance. Sometimes, mortgage disability insurance is offered as a rider with mortgage life insurance. Therefore, it is advisable that you clearly understand the types of coverage before purchasing your mortgage insurance.
The 8 Benefits of Mortgage Insurance
1. Home ownership on your terms. With the right preparation and resources, you can buy a home that best suits your lifestyle. Mortgage insurance provides you with innovative options to help get you into home ownership.
2. Be eligible for a better interest rate. Mortgage insurance provides a lender with the flexibility to offer you the same competitive mortgage interest rates available to home buyers with a larger down payment.
3. More down payment options. Don’t let the down payment be the barrier to your home ownership dreams. There are many mortgage insurance products that will help you to achieve home ownership.
4. Buy, instead of renting. If you’re paying rent right now, it can be a good move to consider buying a home that has similar monthly carrying costs. You’ll enjoy the freedom of making your living space into your own home with your personal touch.
5. Overcome traditional barriers to financing. More and more homebuyers who may not have qualified for a mortgage are benefiting from mortgage insurance.
6. Own and enjoy a vacation property. If your financial situation is in good standing and you are thinking about buying a vacation property, there are mortgage insurance options that will allow you to do so.
7. Save on household purchases. When buying your first home, you’ll find expenses can add up quickly.
8. Get help when you need it. Whether from a job loss, a serious illness, or a marriage breakup, financial difficulties can arise when you least expect them.
Mortgage Insurance Tax Deduction
The Mortgage Forgiveness Debt Relief Act of 2007 also extended a tax deduction for private mortgage insurance (PMI) that was set to expire in 2007. The extension allows eligible homeowners to deduct the cost of their mortgage insurance premiums through 2013.
Who qualifies for the deduction? Home-owning families with an adjusted gross income of $100,000 or less qualify for the deduction. Families with incomes up to $109,000 are eligible for a partial deduction.
Second-Home Tax-Break Loophole Closed
Under current law, homeowners can exclude from taxation a certain amount of the gains from a home sale, provided the property was the primary residence for two out of the previous five years. The maximum exclusion is $250,000 for a single person and $500,000 for a married couple filing jointly.
Vacation and rental property owners figured out that they could legally double dip the exclusion by first selling their primary residence and avoiding tax on the capital gain. Then, after moving into the second home for two years to qualify it as their primary residence, they could sell the home and avoid paying taxes on the full amount of the capital gains earned on the second home.
This legal means to double dip ended on January 1, 2009, however. After that date, if you live in a home that you’ve also used as a vacation or rental home, you do not get tax relief on the capital gains earned while you did not live in the home. You can, however, get tax relief on the capital gains earned while you are using that home as your primary residence.
You need have a repayment mortgage plan in case you have defaulted on the mortgage. With this plan in place, you can start repaying a part of the defaulted amount each month when you make your monthly payments.
Usually lenders are quite understanding if you inform them that you are having a temporary financial problem. They will work with you to help resolve the matter as most lenders do not want to go for a foreclosure. Therefore, if you have defaulted, instead of avoiding the lender’s call or email, it is best to talk to them and explain your situation. Of course, the lender will ask you to submit everything in writing by way of a hardship letter, and details of your total income and total debt.
You can then come to an understanding where you will have to negotiate with the lender to spread the defaulted amount over a specified period of time, which usually ranges from 18 months to 24 months. However, even then the lender will ask you to pay a certain amount up front, usually around 25 percent to 50 percent, and the balance will be spread over the agreed number of months.
Usually lenders are willing to accept this arrangement as long as you give all the details that they ask for. The lenders would like to know and be assured that you will be able to make the partial payment along with your regular monthly mortgage payment.
3 Repayment plans to pay off your mortgage loan
While taking out a mortgage loan, you should calculate your affordability and decide how to pay it off within the stipulated time period. It is advisable that you choose a mortgage repayment plan that fits comfortably in your budget so that you’ve no difficulty in making the home loan payments on time.
3 Ways to repay your mortgage
Go through the following to know about mortgage repayment plans.
1. Monthly mortgage payment
2. Biweekly mortgage payment plan
3. Graduated payment mortgage
Disadvantages Of Repayment Mortgages
What is Mortgage Short-Sale?
With the foreclosure rates jumping across the nation, more and more homeowners are faced with quickly selling their home in order to avoid foreclosure. Yet, the housing market is so flooded in some areas that houses can sit on the market for several months, and sometimes years, before they sell.
If you are an individual looking to sell your home to avoid foreclosure, what options do you have?
Home Short Sale: A process by which you sell your home for less than you owe on it.
In recent years, the popularity of the short sale has increased due to rising loan defaults. A short sale is a process by which you can sell your home for less money than you owe on it. Although still not a common way to avoid foreclosure, the short sale can work if the mortgage company is willing and your buyer is committed.
Negotiate with Your Mortgage Lender to Work out favorable Short Sales Terms
Your mortgage company will consider several factors before approving a short sale. And, ultimately, the decision to approve the sale is completely up to them, so you and your buyer will want to be as cooperative as possible. Short sales often take longer to implement than a standard home purchase, so you’ll also need to be patient.
The mortgage lender will want to know the circumstances that caused you to fall behind on your mortgage payments and what your future financial prospects for repayment may be. They will also do their own assessment of whether it is more profitable to approve the short sale or repossess the property and put it on the market themselves. Although most mortgage companies are helpful, their goal is to make money so they can ultimately decide to proceed with foreclosure.
Don’t Drag Your Co-signer Down With You!
If you have a cosigner on your home loan, the lender will want to investigate the chances of obtaining payment from the other party and they will also look to see if you have any other properties currently in default before approving a short sale.
Pros & Cons of a Mortgage Short-Sale
Other than requesting a loan modification when becoming delinquent, a mortgage short sale is one of the most common routes for a homeowner to avoid foreclosure on their property. By doing this you will be able to avoid the terrible effects of foreclosure and make your life much less stressful as well. But there are still many people out there who do not know what this is.
This event takes place when your current mortgage holder allows you to sell your property for less than what is owed on the mortgage balance. Usually lenders will only agree to this if the homeowner is in default and at serious risk of foreclosure.
But there may be some consequences that come along with this process. Below are the common pros and cons of a short sale.
Before pursuing a short sale it would be very wise of you to first get in contact with a local real estate agent or lawyer who is known for their experience in this field.
Typically you do not have to pay fees for their assistance because once the process is successfully negotiated; they will be paid by your mortgage lender.
HAMP – Home Affordable Modification Program
If you’re not unemployed, but you’re still struggling to make your mortgage payments, you may be eligible for the Home Affordable Modification Program (HAMP).
HAMP can lower your monthly mortgage payment to 31 percent of your verified monthly gross (pre-tax) income, which usually provides savings of hundreds of dollars per month.
You may be eligible for HAMP if you meet all of the following criteria:
Loan Modification Terms & Procedures
HARP – Home Affordable Refinance Program
If you’re not behind on your mortgage payments but have been unable to get traditional refinancing because the value of your home has declined, you may be eligible to refinance through MHA’s Home Affordable Refinance Program (HARP).
HARP is designed to help you get a new, more affordable, more stable mortgage. HARP refinance loans require a loan application and underwriting process, and refinance fees will apply.
How the Home Affordable Refinance program works
Lenders usually require homeowners to have a substantial amount of equity in their homes — at least 20% to refinance. That’s an insurmountable problem for many people who desperately need to get out of an adjustable-rate loan but can’t because home values have fallen so much during the last few years.
But the Home Affordable Refinance program, part of President Obama’s Making Home Affordable foreclosure prevention program, is supposed to help borrowers overcome that. It lets homeowners refinance a first mortgage worth up to 125% of the property’s market value. That’s the case even if you have a second mortgage that puts you even further upside down on your home.
It means homeowners who owe more than 125% of their home’s value will be able to qualify for the program even if that debt is split between two or more loans.
Let’s say your home is worth $300,000 and you owe $375,000 on your first mortgage. You can borrow up to $375,000 to repay and refinance your first loan. You can do that even if you have a second mortgage for $40,000, putting your total mortgage debt at $415,000, or 138% of the value of the home.
Many second mortgage holders have blocked that kind of refinancing. However, some of the biggest banks, including Bank of America, Citi, Chase and Wells Fargo, have agreed to participate in the Home Affordable program’s second-mortgage program. That ensures that they’ll accept a refinancing of your primary mortgage and help you afford the new payments by reducing the interest rate on your home equity loan to as little as 1% for five years.
The new primary mortgage will charge the prevailing interest rate for a 30-year, fixed-rate mortgage. Lenders are going easy on requirements for minimum credit scores and suspending the usual requirement to have private mortgage insurance, even if you have less than 20% equity in your home, as long as the original mortgage didn’t require mortgage insurance.
To qualify, you must be current on your mortgage, meaning no payments were more than 30 days late in the past year. And you must be able to document that you have enough income to support the new payments. You do not have to live in the house. This is the first government program that will help you refinance vacation and investment properties.
HAFA – Home Affordable Foreclosure Alternatives
In 2009, the Treasury Department introduced the HAFA program to provide a viable option for homeowners who are unable to keep their homes through the existing Home Affordable Modification Program (HAMP). The HAFA program took effect on April 5, 2010 and sunsets on December 31, 2013.
If you can’t afford your mortgage payment and it’s time for you to transition to more affordable housing, the Home Affordable Foreclosure Alternatives (HAFA) program is designed for you. HAFA provides two options for transitioning out of your mortgage: a short sale or a Deed-in-Lieu (DIL) of foreclosure.
In a short sale, the mortgage company lets you sell your house for an amount that falls “short” of the amount you still owe. In a DIL, the mortgage company lets you give the title back, transferring ownership back to them.
In either case, HAFA offers benefits that make the transition as favorable as possible:
What are the steps for evaluating a Loan?
Facing a Foreclosure can be very stressful and depressing. For many a foreclosure is the beginning of financial devastation for themselves and their family. Many people still have a chance to come out of a foreclosure process with piece of mind.
Learn how you can possibly prevent foreclosure or come out of the process with your head still above the water.
* One of the ways you can save yourself from going into foreclosure all together is to set up a home equity line of credit. With a home equity line of credit you just write yourself a check when an emergency arises such as a missed mortgage payment. Whenever you get yourself back in order you pay the amount back.
* Enter into a forbearance agreement. For a temporary hardship, lenders might grant a forbearance agreement to lower or eliminate payments for a limited time.
* Consider loan modification. A loan modification seeks a permanent change to the loan, such as lowering the payment and extending the loan’s term.
* Another thing you can do is talk to your bank if you start receiving letters about missed payments. Contrary to popular belief the banks want you to be able to make a payment. Banks hate having to recapture a property because it is more work for them and they lose money.
* It may be possible to refinance your mortgage for a lower interest rate and/or lower monthly payment. However, if you already have had late payments on your mortgage, the interest rate offered to you may be too high to lower your monthly payment.
* The faster you contact the bank the more option you have during a foreclosure. Just because the process started does not mean if you don’t come up with the back payments you will lose your home. In some cases you may not even have to repay the full amount. The top way many people lose their home is bye waiting too long to start negotiating with the bank.
* Obtain a “deed in lieu” of foreclosure. A “deed in lieu” essentially allows the borrower to return the title or deed of the property – giving the home back – to the mortgage holder to avoid foreclosure.
* Just knowing how to slowdown the foreclosure process and knowing who to talk to will practically save you time, money, and energy.
In many states, foreclosure rates have already started to increase, especially impacting the segment of the population that carries adjustable-rate mortgage loans, whose payments climb upward with every interest-rate increase. However, homeowners can make choices – ideally, before they purchase a home, but even after problems arise – that will help them keep a home, or at least minimize the damage a foreclosure could have on their futures.
Government Mortgage Relief Programs
The new foreclosure prevention initiative, called FHA Secure, is administered by the Federal Housing Administration (FHA) and is a mortgage insurance program for borrowers who have good credit but have still fallen behind in monthly payments due to resetting interest rates that increased those payments significantly.
Under the terms of this initiative, the FHA can offer homeowners and affordable option that permits them to refinance their existing mortgages and make payments. This program, along with other FHA programs, will provide important help to more than 240,000 families. The target for the initiative is families who could have a foreclosed home due to the unavailability of refinancing options.