You Might Still Want to Refinance
Even though rates are on the rise, that doesn’t mean you shouldn’t refinance.
Practically everyone has refinanced or thought about it at one point in time. We’ve seen the dozens of commercials that urge us to do it. With rates at record lows over the past few years, refinancing has helped many borrowers lower their monthly payments.
But rates are now on the rise. Refinancing applications have fallen slightly. Most people don’t think you should refinance when rates are going up. However, many refinancings are “cash-out” refinancing. That means that equity is handed over to the homeowner in return for a larger mortgage. Many people need that cash.
Some people are refinancing their homes for a “cash-out” because they have a significant home-equity line of credit balance. This line of credit has an adjustable-interest rate, which is going up on them. They refinance it in with their first mortgage at a fixed rate. They aren’t eliminating the debt, just fixing the interest rate and monthly payment. If you don’t need the revolving line of credit, you should probably take advantage of the fixed rate.
There are many homeowners that piggyback their mortgages when they are buying. They end up with one mortgage for 80% of the value of the home and a second mortgage for 10%. They put the remaining 10% down on the home. Since the first mortgage is only for 80% of the purchase price, they avoid having to pay PMI.
Many piggybackers have a line of credit as the second loan. Others simply want to consolidate into one loan that would be easier to keep track of. Either way, refinancing into a fixed-rate isn’t a bad idea. And one payment is easier to make on time each month than two.
Those out there with adjustable-rate mortgages are starting to get a little nervous. Interest rates have been rising pretty fast. The gap between the rate of a adjustable mortgage and a fixed mortgage has narrowed so much that you really don’t save much by taking the adjustable mortgage. Many are looking to avoid rising interest rates by financing to fixed-rate mortgages.
Refinancing can be a good thing. You can get a fixed rate to counter the rising interest rates. You can use cash from a refinancing to consolidate your debt. You can improve your home. But you should be careful about taking too much equity out of your home.
Many advisors warn consumers not to use their homes as personal piggy banks. If home prices decline, you could owe more than your house would sell for. In a cooling, or slowing, real estate market, you do not want to be maxed out on the equity in your home. If something happened and you had to sell, you want to walk away from the closing table with money, not have to go to it with a check. Paying to sell your home isn’t how you want to do it.
Fixed-rate mortgages are always a good and solid financial choice. Anytime you are looking to refinance, your best option is to go with the shortest-term, fixed-rate mortgage you can afford.
Why you should Leave your Bank and Join a Credit
Why you should Leave your Bank and Join a Credit Union
So maybe you’ve had a savings account for a while or maybe you’ve taken out a mortgage for a house. Is your bank actually helping you, or it is doing more harm than good? If you’ve never looked into the benefits of a credit union, maybe now is a good time to switch. There are actually many benefits, many of which you’ve probably never even heard about.
Simply put, a bank is an establishment that is there to make money for itself. This isn’t necessarily a bad thing; it’s what every single business is in business for: to make its own money. So what’s so great about a credit union? What makes it different? A credit union is a non-profit organization that is there specifically for its members. Basically, it’s a group of people dedicated to their money. So instead of stockholders making decisions for the bank they have partial ownership of, you can literally own a portion of your credit union yourself and be able to vote and participate on different aspects of the company. It is completely Democratic and members even elect a volunteer Board of Directors. Sounds good, right?
Credit unions also offer higher rates of interest payout in savings accounts as well as having typically lower interest rates on loans and personal lines of credit. They also offer many free services such as checking accounts, debit and credit cards, and personalized service.
There are some people skeptical about credit unions because they believe that their money isn’t safe. This rumor is no longer true and all credit unions now legally have to be federally insured, just like a bank. So there really shouldn’t be any question in which establishment you should choose.
Now that you’re convinced, go a step further. What other corporations do you spend your money at? The grocery store, clothing venues at the local mall. Once you start saving your money wisely, try spending your money wisely, too. Everything you do can become more frugal and help you in life. Learn to shop around. Do your research on which credit unions offer the lowest interest rates and the highest interest payouts.
Why Bankruptcy May Not Always Be The Best Option When
Why Bankruptcy May Not Always Be The Best Option When In Trouble
It’s a sickening feeling when your debts start to stack up, your marketing strategy is failing, and it doesn’t look like you’ll ever be profitable. Your family is getting stressed, your business can’t pay its bills, and customers are starting to make angry phone calls asking why the things they paid for aren’t happening.
At this point, many people feel ready to throw in the towel. I’m here to tell you why you shouldn’t be one of those people.
A Proverb.
There’s an old Chinese proverb I’d like to share with you: the temptation to quit will be greatest just before you are about to succeed. Nowhere is this more true than in home business. You might feel like you’re failing over and over again, until you feel like giving up. The paradox, though, is this: you haven’t really failed until you’ve given up.
Never Fear.
If you really want to, there will always be ways to raise money for your company. You probably have all sorts of bills for things you don’t use, not to mention possessions that could be sold or downgraded. Did you know that the average person has thousands of dollars worth of random stuff just lying around in their home? In other words, you can always find the money if you’re really determined and not afraid of losing everything.
The only thing you should really try to protect is your house and some money for basic food — everything else is expendable. Never forget that the worst thing that can really happen to you is that you’ll have to go out and get a job. Would that really be so tragic?
Fear is your enemy in business. You cannot give in to your fear and give up before you’ve given it your all — the real reason why so many home and small businesses fail is that their owners chicken out and run away at the first sign of trouble.
The Captain Goes Down with His Ship.
When the chips are down, the only thing to do is to stake your personal success on the success of your business. After all, what’s the point in bailing out before you have to? You’re guaranteed to lose money that way.
Someone once told me that the difference between an average Joe and an entrepreneur is this: the entrepreneur will not give up on a business until his creditors come and take everything he owns. And even then he might try to hide from them and keep things going from his friend’s basement.
Don’t Tell Customers.
It might seem dishonest, but for goodness’ sake do not tell any of your customers that things are going wrong because your business is in trouble. They will immediately run a mile, putting your business in a far worse situation than it was before. You must always try to make it look like everything is going just fine — admitting problems will put the final nail in your business’ coffin.
Try a Voluntary Agreement.
If your creditors are at the point of knocking on your door, you should try to get a voluntary agreement with them before you even consider declaring bankruptcy. This is when you negotiate your debts down to a lower level using the threat of bankruptcy, and your creditors sign an agreement with you to say that they will leave you alone once you’ve paid that money.
The Absolute Last Resort.
I simply cannot get across to you how much you should not consider bankruptcy as a viable option, ever, until you are absolutely forced into it. Think of it as being like suicide: the absolute last resort. Would you commit suicide because your business was going badly? I hope you answered no — which means that you shouldn’t consider bankruptcy either.
Having had a bankrupt company stays with you for a long time in everything you do: your credit rating, your employment history, and even just in the way you think of yourself day-to-day. It’s better to have everything wrestled from your hands than to give it up voluntarily — otherwise you’ll always be tortured by wondering what would have happened if you’d kept going just a little longer.
What Is Your Bank Charging You? A Guide To Bank
What Is Your Bank Charging You? A Guide To Bank Charges
When you’re shopping around for a bank account there are a lot of factors to consider. Many people go for up-front incentives, such as money paid into the bank account, vouchers or a gift. However, it is worth looking at bank accounts in more depth to find out what you might be paying for various transactions. Here are some of the transactions that banks might charge you for.
Authorised Overdraft
An overdraft is like a short term loan. The bank gives you permission to spend more than the funds you have in your account. This amount is usually fixed in consultation with the bank and may be reviewed at stated periods. Some banks have a free authorised overdraft up to a certain limit and charge for any balance over that limit. This is the best way to arrange an overdraft.
Unauthorised Overdraft
When customers spend more than they have in their accounts without arranging an overdraft limit, this is known as an unauthorised overdraft. Banks penalise customers heavily for this by charging an unauthorised overdraft fee of more than 35 in some cases. The excess spending will also be charged interest at a higher rate than normal.
Cheque Services
Some banks charge for clearing cheques more quickly than the standard period (this can range from three to seven days depending on the banks involved and the day of the week). There may also be fees for processing cheques in a foreign currency.
Taking Money Out
Sometimes customers need to set up direct debits, where companies take certain sums from a bank account each month. They may also wish to set up standing orders, where they arrange to pay a certain amount to another bank account or company each month. Some banks charge a setup fee for these services. . It is also worth looking at the daily withdrawal limit on a current account. This can vary widely depending on the bank you choose.
Other Bank Charges
Banks may also charge for other services such as:
1. setting up a loan facility
2. changing or issuing foreign currency
3. writing cheques that exceed the cleared balance in an account
4. stopping a lost cheque
Banks will also charge customers if they have to write to them about an infraction of bank rules, such as exceeding the overdraft limit or defaulting on loan repayments. This means that defaulting customers have to repay the debt as well as the additional charges.
Doing some research could save consumers a small fortune in bank charges. In addition for looking for incentives, consumers should look for banks that keep their charges as low as possible. With a bit of digging, it is easy to find banks with:
5. an automatic overdraft limit for which there is no charge
6. free standing orders and direct debits
7. free transfers between banks
8. low unauthorised overdraft fees
9. low charges for other bank transactions
Choosing a bank that fits this profile will help with overall financial health.
What Is Insurance Premium Finance?
A premium finance transaction involves the borrowing of money from a bank or hedge fund to pay the premiums of a newly originated insurance policy. Premium finance is available to seniors age 65 and older. The majority of financed policies have a face amount of over $1,000,000. The senior will borrow the money for a predetermined length of time ranging from 2 years to life. The same banks and hedge funds involved in life settlements are also the lenders for premium finance transactions.
Senior citizens who qualify for premium finance are typically in good health with a high net worth. Financing is a great financial tool for senior citizens who need the coverage of an insurance policy for estate planning or wealth transfer. It allows these health seniors to purchase the policy at little to no out of pocket costs.
Many of the financing options available today are approved by the insurance carrier. These programs, called recourse financing, involves the client putting up a letter of credit or other form of collateral to offset the loan should there be a default. Non-recourse financing uses the policy as the only collateral requirement for the loan. Should the insured default on the loan the rights within the policy would revert to the lender. It should be noted that there are no documented incidences of a lender exercising the letter of credit or collateral in a recourse finance deal. The lender always takes over the policy as in a non-recourse program.
At the end of the loan term the insured can pay the total loan amount plus interest to the lender and keep the policy. If the coverage is no longer needed or wanted the policy can be marketed and sold in the secondary insurance market. The proceeds from the same will be used to pay back the lender with the remainder going to the insured. If the policy is no longer needed or wanted and not saleable the policy will revert to the lender.
Premium financing is the fastest growing sector of the secondary insurance market. Many baby boomers are asset rich and cash poor with a need for the protection provided by an insurance policy. All seniors who fit into this category should contact their financial advisor or life settlement and premium finance broker to discuss the options available to them.
Useful Tips For Carrying Out Online Banking Transactions
With the internet available in most homes and businesses across the globe, its understandable that consumers are presented with many opportunities such as online banking and even online shopping. In the United Kingdom,millions of people are now using the internet in accessing their bank accounts and millions also are regularly doing their shopping online. But on the other hand, most of these people are still concerned about the security of their accounts whenever they access it on the internet. Using a computer is said to be the safest way in either banking or shopping, but it is also advised not to let your guards down while you are making transactions online.
The possibilities of becoming a victim of online banking fraudulence are said to be very low,and online banks committed themselves in keeping it this way, because most online banks systems proved that they could not be easily attacked, instead most criminals turned most of their attention in gathering many of the information directly from online banking customers. Most often, these criminals are using Phishing where in they send e-mails at random, as if they have seem to be sent by a genuine online bank.
This is the attempt they make in order to convince customer to disclose their personal security information, a ,method seen more on websites run by scam artists. There are some usueful tips, however, on conducting safe banking transactions, the first being to know who you are dealing with. Always remember to type the banks web address into your browser. Never go to the site via a link from an email. Never divulge personal information requested through an email. Your bank would not ask for this information.
In case you are in doubt, try contacting the bank or the building society by dialing the given contact number. Always keep your passwords and PIN numbers safe. Be extremely cautious of unsolicited emails or phone calls asking you to give any information regarding your personal details or card numbers. Always keep this information a secret and be cautious of giving your information to someone whom you do not know.
Your online bank would never call or contact you just to ask you regarding your passwords, PINs, or any personal information. Third is always keep a hold of your money. Do not be fooled by certain convincing e-mails that offer you the chance of making easy money. If an e-mail looks too good to be true, the possibility for it to be fraud is there, and it is difficult to prove that the sender is who they say they are. And lastly always check your online banks website. If you are in doubt, check your online banks website since it is a good place for you to get help and guidance on every transaction on the internet that you make in a safest way. Also regularly look for specific information and guidance regarding on how to protect your PC and also yourself while making online transactions.
The most important thing to do in order to make your online banking transactions safe is by keeping your computer safe, because it is the most important tool in making your online banking transactions. Most internet security software is available for download or purchase on the internet, or you may purchase them at your local computer store. This is another and one of the most effective ways for you to protect your computer, your transactions, and also yourselves.
UK Finance and Auditing Regulatory bodies
The role of the regulatory bodies in the UK Financial dealings is very important. We cannot neglect their role in UK Finance. There are many regulatory bodies for UK Finance and Auditing. Some of them are mentioned here.
A non-governmental independent organization called the Financial Services Authority (FSA) is available in the UK. This UK Finance company is funded by the financial services industry. The policies, plans, and rules of the UK Finance company are transparent and open. It is funded by the companies that it regulates. The website of this organization has information for consumers on their rights and regulation. It also gives information on the financial products available. The financial services industry in the UK is regulated by FSA. They have enforcement powers and investigative powers. They have the power to regulate deposit taking, Insurance investments, and Mortgage lending and general insurance advice.
Financial Ombudsman Service is another organization the helps the customers to solve any UK Finance disputes with the financial firms in UK. Complaints about Banking services, credits cards, endowment policies, health and private medical insurance, mortgages, motor insurance, and National Savings & Investments can be done with the assistance of Financial Ombudsman Service. They also help you on complaints about savings plan and accounts, stocks and shares, and travel insurance. For more details on the types of coverage that is done by them you can visit their website. Before you approach them for resolving the issues it is better you complaint to the concerned organization first. If the problem is not solved by the organization then you can approach the Financial Ombudsman Service for assistance.
The public trust office is another regulatory body related to UK Finance that helps people to control their money and property. The audit commission is another independent regulatory body that is responsible for monitoring whether the public money is spent economically and efficiently. Effective spending is monitored in government services, housing and health services. Fire and rescue services and criminal justice services are also monitored for spending of the UK Finance. The audit commission works closely with the Deputy Prime Ministers office, Department of Health and the National Assembly for Wales. They aim is to achieve excellence in their work. They support local democracy and public accountability. You can reach this office in Millbank tower, Millbank, London. Visit their website for the latest news and events.
Bona Vacantia is an organization that is responsible for administering the estates of person who die without any heirs. The assets of companies and trusts that have failed are also collected by the Bona Vacantia. They also provide assistance to companies and estates. This division does these works with cost effective casework. This work is done within the legislative and legal constraints. They work in business like manner. The dealing is mostly open and informative all through the case.
The National Audit Office is another regulatory body that monitors the public spending on behalf of the Parliament. This office is lead by the Comptroller and Auditor General. The taxpayer is saved by their work.
Tips For Getting Finance After Bankruptcy
Unless you are willing to pay terribly high interest rates, you should try to raise your credit score as much as possible. The lower your credit score, the higher the risk for the lender to grant you a loan and the higher the risk, the higher the rate. This is unavoidable, of course there are special situations that may have caused your financial breakdown, but there are no means to avoid this and lenders cant take subjective facts into consideration when it comes to fixing the interest rate.
Repairing your credit
Repairing your credit may take some time, but here is the way to start. Open a savings account and start making regular deposits. You dont need to deposit large amounts, but the fact that you have an income that lets you put away an amount of money regularly will soon be recorded to your credit history and will highly contribute to raising your credit score and improving your credit history. This is just the first step but as a first step, the most important one.
Credit Cards
Once youve a reasonable amount of money in your savings account, use it to apply for a secured credit card. Secured Credit Cards are just like regular credit cards only that you can only borrow the money that youve previously transferred to an account. There is no risk for the card issuer so youll be able to get it even if your bankruptcy is close in time and your credit is not that good.
After using your secured credit card for a while you can apply (if you havent been offered one yet by that time) for an unsecured credit card. Your credit score improvement will most surely let you get approved without hassles. Make sure you use the card wisely, make small purchases pay the credit card balance always in full if possible, and never miss a payment nor make late payments.
Using your credit card wisely will help you skyrocket your credit score. Now is the time to start requesting small personal loans. Asking for small loan amounts will guarantee that youll get approved. Your regular monthly payments will do the rest, your credit score will soon reach a status where youll be able to request personal loans at very reasonable interest rates.
Final Steps
At this time you should have reached a good credit tag and youll be able to obtain any financial product that you need. Refinancing your home loan would be the next wise step to continue improving your credit score. Or you could request a home equity loan. Either of them will prove to future lenders that you are able to commit to repaying higher amount loans and that youve finally put behind your bankruptcy.
Think Before You File For Personal Bankruptcy
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 launched a new era: With limited exceptions, people who plan to file for bankruptcy protection must get credit counseling from a government-approved organization within 180 days before they file. They also must complete a debtor education course to have their debts discharged.
The Department of Justices U.S. Trustee Program approves organizations to provide the mandatory credit counseling and debtor education. Only the counselors and educators that appear on the U.S. Trustee Programs lists can advertise that they are, indeed, approved to provide the required counseling and debtor education. By law, the U.S. Trustee Program does not operate in Alabama and North Carolina; in these states, court officials called Bankruptcy Administrators approve pre-bankruptcy credit counseling organizations and pre-discharge debtor education course providers.
Counseling and Education Requirements
As a rule, pre-bankruptcy credit counseling and pre-discharge debtor education may not be provided at the same time. Credit counseling must take place before you file for bankruptcy; debtor education must take place after you file.
In general, you must file a certificate of credit counseling completion when you file for bankruptcy and evidence of completion of debtor education after you file for bankruptcy but before your debts are discharged. Only credit counseling organizations and debtor education course providers that have been approved by the U.S. Trustee Program may issue these certificates. To protect against fraud, the certificates are produced through a central automated system and are numbered.
Pre-bankruptcy Counseling
A pre-bankruptcy counseling session with an approved credit counseling organization should include an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. A typical counseling session should last about 60 to 90 minutes, and can take place in person, on the phone, or online.
The counseling organization is required to provide the counseling free of charge for those consumers who cannot afford to pay. If you cannot afford to pay a fee for credit counseling, you should request a fee waiver from the counseling organization before the session begins. Otherwise, you may be charged a fee for the counseling, which will generally be about $50, depending on where you live, the types of services you receive, and other factors. The counseling organization is required to discuss any fees with you before starting the counseling session.
Once you have completed the required counseling, you must get a certificate as proof. Check the U.S. Trustees website to be sure that you receive the certificate from a counseling organization that is approved in the judicial district where you are filing bankruptcy. Credit counseling organizations may not charge an extra fee for the certificate.
The Untimely Demise of MFS Pacific Finance Limited
The Untimely Demise of MFS Pacific Finance Limited
Amongst the numerous investment funds and financial institutions falling victim to the global credit crunch, one that surely need not and should not have succumbed was New Zealand-based MFS Pacific Finance Limited.
Starting life in New Zealand in 1999 as a subsidiary of ASX-listed MFS Limited (now known as Octaviar Limited), an early venture saw the Company take over the name and management of several underperforming Waltus property funds, later followed by an offer of Debenture Stock and Unsecured Notes to the New Zealand public through a registered prospectus. From the outset the Company made clear that funds raised were primarily destined for lending in the broadly diversified Australian property market, with the same interest rates offered in either AUD or NZD reflecting a significant proportion of second or even third mortgage lending. Figures to 30 September 2007 show one third of such lending as lying behind first mortgage advances from MFS Limited’s own flagship Premium Income Fund, indicating a common interest between mortgagees. Cash raised in NZD but lent as AUD was hedged back to the New Zealand currency.
Over the next few years, MFS Pacific worked diligently to establish itself within the mainstream New Zealand finance company sector with restructuring in early 2007 placing MFS Pacific Finance under NZX listed MFS New Zealand Limited (38 of total assets as a fee in exchange, the Put Option became commercially as well as legally based.
This formal agreement effectively gave MFS Pacific Finance investors legal recourse to the full financial resources of MFS Limited, in support of both Secured Debenture Stock and Unsecured Notes. By mid 2007 the level of parent MFS Limited shareholder funds had reached a massive A$1.5 billion. No wonder the relatively generous fixed interest rates on offer of 9.25 unsecured, attracted widespread support.
MFS Pacific Finance became a significant partner and supporter of financial events around New Zealand, being on hand at major seminars and conferences. Company briefings were open and frank, personnel appeared well informed and competent.
The company seemed to take constructive criticisms on board – such as early disposal of the maligned Waltus name. Details of security type, missing from early communications, were added to later prospectuses. Early attempts to evaluate the Company’s liquidity were originally answered by production of a complicated combined line and bar chart purporting to show an excess of assets over liabilities spread over time but, which to this observer at least, seemed to indicate the opposite. However, later financial statements displayed the assets and liabilities maturity profile in the standard tabular format common in New Zealand registered prospectuses with an overall receivables excess over liabilities of about 2.6 from October 2007 to A$4 in early January 2008 but this was generally in line with the broad ASX losses over the same interval, so little justification for the ensuing rout can be found here. Markets don’t just suddenly react savagely to news that has already been widely known for months.
Further confusion seems to have been generated by suitor City Pacific first showing interest in merging with or acquiring certain financial assets from MFS Limited, then withdrawing, then showing renewed interest, only to withdraw again. City Pacific appears to have problems of its own.
Also, and although flagged in general terms earlier, a Board proposal in early January to address debt by raising A$550 million from shareholders while splitting the company in two must have contributed to dissatisfaction, it does not fully explain the sudden share price collapse.
No, what really hit out of left field in mid January – vital information unknown previously to the market – was that large shareholders, including Directors, were facing margin calls on shares effectively purchased on deposit, margin calls they were unable to meet. This news appears to have unnerved other substantial holders who quickly joined a rush for the exits. As every highly leveraged property owner knows, a modest fall in the market can wipe out ones equity. Margin traders of shares face the same fate but here the financier, or margin lender, usually demands immediate payment to make good any of the finance provider’s losses. Failure to meet such demand may result in immediate sale or confiscation of the leveraged security to limit losses, this being the norm rather than the exception. The decline of MFS Limited shares over several months, in line with market sentiment, was obviously sufficient to trigger margin calls. Dumping of huge volumes on the market, including notifiable directors’ holdings, did the rest.
CEO Michael King’s conference call on 18 January, following two days of trading halt, was intended to present the separation and cash raising issues but instead oversaw a massive volume of trades, approaching 120 million shares compared to normal volumes between one and five million, and a 69 sale of Stella Group for A$1.3 billion equivalent, effectively values that arm at just over $2 billion, compared to A$2.5 billion evaluated by analysts earlier. Hence total shareholders’ funds could take a half billion dollar hit from that one item alone. Nevertheless and even if remaining assets were all to be written down by 50 p.a. interest to debenture holders over the next 20 months.
Lessons
Unfortunately MFS Pacific Finance is beyond rescue as an operating unit in its original form and its passing is a genuine loss to the New Zealand finance company sector. In addition to offering investors currency diversification, MFS Pacific carried the potential to set a new benchmark of financial support for finance company borrowings through the “Put Option”. To date no other parent/subsidiary relationship of companies listed on the New Zealand Debentures Exchange has instigated a similar enforceable guarantee. Perhaps the new “Global Credit Crunch” reality will empower investors to demand just that.
In addition, as more intricate trading mechanisms such as margin trading, stock borrowing and short selling evolve, it becomes clear that disclosure of such potentially dangerous practices must become a mandatory requirement imposed by stock exchanges or legislation if markets are to be open and informed. Private investors have quite enough risks to contend with, without the secret avarice of their own company’s directors and executives exposing them to even more.
But while the mandatory objective may prove an optimistic goal in the short term, ordinary shareholders and fixed interest investors alike can take their own action immediately, wasting no time in sending the “totally unacceptable” message loud and clear to directors and executives where margin trading is concerned.