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Best rates on 30-Year Mortgages

victoria — Mon, 26 Jul 2010 20:55:15 +0000

The most favorable interest rates on 30-year fixed rate mortgages at this time are from AimLoan.com. You can now get a 30-year mortgage for as low as 4.375% with only $1,995 in fees and 1.973 discount points (prepaid interest equal to 1% of the amount borrowed).

If you prefer a loan with no points or fees, the rate is 4.75%, and a monthly payment of $521. The figure may not seem too attractive, but the San Diego based on-line lender’s fees are much better than the national average of 5.12% for 30- year fixed rate mortgages with no fees or points.

AimLoan mortgages are available in all but five states (New York, New Jersey, Nevada, Kansas and Pennsylvania).

Those with credit scores lower than 700 points are not eligible. The load should be a conforming loan, which means it has to be for less than $417,000 to $729,500 (the amount varies from market to market).

Decode and Understand Your Paycheck

victoria — Mon, 19 Jul 2010 16:12:24 +0000

The first paycheck always comes with a mix of excitement and disillusion: excitement over the milestone of taking that first step towards independence; and disillusion with the realization that the government really does take a big bite out of our earnings.

There aren’t many people who understand their first pay stub, there are those who go through life without ever understanding quite how a paycheck works. To the uninitiated, a pay stub is something that looks like it was actually written in a secret code. If you take the time to really look your pay stub over though, you’ll find that a big amount goes to federal taxes and then to state taxes. Apart from taxes and what you eventually take home though, some other things might be confusing.

Deciphering Your Pay Stub
Your pay stub is not as complicated as it seems. Yes, there are a lot of factors that affect how much money you actually take home, but these factors fit into two main categories: earnings and deductions.

The earnings portion lists your gross pay and everything that went into arriving at the final number: your hourly rate, the number of hours you worked; any overtime work you rendered and your corresponding overtime rate; any work you rendered during holidays and the corresponding rate for those hours; and finally, money for paid sick or vacation leave days that you consumed.

The deductions section can be divided further into two sections: Statutory deductions and other deductions. Statutory deductions are required and are regulated by the government. Other deductions are usually for company provided benefits.

The bulk of your statutory deductions will go to taxes, federal and state taxes can be reduced if you take the time to study your W-4 form. You can greatly reduce what you need to pay in taxes if you declare all allowances you are eligible for. You should consult a CPA to be sure you don’t miss any possible tax breaks. Take care though to not give any false information just to get a deduction. This could get you into serious trouble.

There will also be smaller deductions listed under FICA (Federal Insurance Contributions Act). These will be for Medicare and Social Security. These deductions cannot be manipulated in any way. In 2010, the Social Security deduction is 6.2% of your salary, or up to $106,800 a year; for Medicare it’s 1.45%.

Other Deductions
The other deductions portions is for your heath plans, dental plans, loan payments for company sponsored loans, and contributions to retirement funds. These can be tweaked as well, you can kick up or lessen your retirement contributions, some companies give you the option to downgrade your health plan. Bear in mind though that for the most part, contributions to retirement funds and HRAs (bank accounts for health related emergencies) are not taxed. So despite the fact that getting access to cash now may seem more attractive, you are actually getting less money in total in the long run. All tax exempted contributions in the other deductions portion are designated by an asterisk (*).

Non-Monetary Benefits
Most pay stubs will also list the non-monetary benefits you get from your company. Regular employees at all companies must be given paid time away from work. Some companies call it sick leave and vacation leave, other simply call is paid time off. These are days when you don’t go to work, due to illness or simply to relax, and your company still needs to pay your salary. Your pay stub will usually give you a running total of how much paid time off you are entitled to.

Age-Weighted Retirement Plan

The Lowdown on Health Insurance

victoria — Thu, 15 Jul 2010 13:59:38 +0000

Jargon and acronyms are one of the most annoyingly confusing aspects of a new job. Some of the terms you will need to remember will be specific to the company you are working for. While these will of course be important, you are likely to hear them so often, that you will absorb them simply through “osmosis”, but health insurance related terms are another matter, you may need to go out of your way to memorize them, and memorize them you must, because they could have bearing on your long term future. Having good health insurance is of the utmost importance in these times.

Some firms will offer a single health plan, while more progressive firms with more resources will often offer a few options. Whatever situation you find yourself in, you need to review your health plan or your health plan’s alternatives carefully, to maximize benefits.

On the off chance that you are self-employed, or the company you work for does not offer insurance, you really should look into enrolling yourself in a plan in your private capacity. Recent legislation has made private health care much more attractive to individual consumers.

Health insurance is a form of insurance you really don’t want to be without. While it may be tempting to use the money for more fun things, not having proper health insurance can leave you dead in the water when a health crisis does occur.

Health Insurance Facts
Health insurance companies are given discounted rates at virtually every well known hospital. They have the leverage to negotiate for such rates because of the number of plan holders they represent.

There are two basic types of health insurance companies: HMOs (health maintenance organizations) and PPOs (preferred provider organizations), they are both similar and different. Both setups give you access to a pool of doctors covering a variety of specializations. Both are given special discounted rates by hospitals, typically bigger companies are given more favorable rates, but as the consumer, this shouldn’t matter to you unless in means more affordable premiums.

Under the HMO setup, you are assigned to a primary care physician, your primary physician determines the direction of your treatment, and if additional specialists are required, the primary physician needs to make the call and the referral.

With PPOs you have more freedom to select physicians. It simply eliminates the need for a primary care physician; you are free to deal with specialists directly with no referrals. Specialists may also refer you to other specialists if they feel the need for it. Both setups have pros and cons.

While it is true that there are other types of health insurance providers, every available model closely resembles one of these two main types.

How to tailor fit your plan:
If you happen to be in a position to choose what sort of health coverage you get, you should try to tailor fit your plan to suit your needs. For instance if you are a young, reasonably healthy person, you may want a high deductible plan so that you can save money for other things. You may also already have relationships with certain doctors that you are comfortable with, if so, you should find out which health insurance companies they deal with. Some health insurance companies provide generous coverage, but not for those with “pre-existing” conditions. If you have such a condition, you should shop around for a provider that will accommodate you best.

Your circumstances are always unique, and when selecting a plan for yourself, you should consider everything that is relevant to your choice. With all the options available, customization possibilities are limitless, and making an objective choice is pretty clear cut.

30 Year Mortgages Beginning at 4.35 Percent

admin — Wed, 14 Jul 2010 16:17:54 +0000

The best deals on 30 year fixed rate mortgages in the US these days can be found at AimLoan.com. You can get a 30 year fixed mortgage rate for as low 4.375% with 1.973 discount points and $1,995 in fees. Each point is equivalent to 1% of the total amount borrowed, and is regarded as prepaid interest.

No point loans are also available from AimLoan.com at 4.75% interest, and a monthly payment of $521.

While the rates may not seem particularly low, considering the national average of 5.12% for the same type of mortgage, they really are quite attractive.

AimLoan.com mortgages are available to borrowers in most states; New Jersey, New York, Nevada, Pennsylvania and Kansas are the exceptions.

The rates apply to those borrowing between $417,000 to $729,500 and who have a credit score of at least 700.

3 Ways to Revive Your Credit Score

victoria — Thu, 08 Jul 2010 17:57:04 +0000

A credit score can’t be rebuilt overnight. If you’ve encountered tough times and have seen your credit score drop in recent years, the sad reality is it will take some doing to get it to where it’s respectable again. All the more reason to start rebuilding as soon a possible, here’s how:

Find and correct errors- Credit reports are extremely complicated to compile, even if you know yourself to be in debt, don’t ever assume that a credit report is accurate. There may be errors on it that add to your problem. Often there are debts listed as outstanding when in fact you have paid them. These days, identity theft is also a real threat, there may be debts on your credit report that you didn’t incur at all.

Your credit report is the basis of your credit score, the last thing you want when you are in debt is to have a credit report that is errant to your detriment. Should you find errors on your credit report, you will need to file a written complaint with all of your supporting documents attached. The Federal Trade Commission will investigate the issue and rule within 30 days. Should they find in your favor you could get a boost from between 50 to 100 points.

Settle your balances- It’s a simple and obvious enough tip, but not many realize the actual impact. Your credit utilization ratio comprises 30% of your credit score. This is the ratio between the amount of credit you’ve used, and the amount you’re entitled to. A ratio higher than 30% can really damage your credit score.

Automate all your loan payments- In this day and age, there are few institutions that can lend you a substantial amount of money that don’t provide a means to settle your debt automatically. If you have a lot of bills and debts to pay, it’s easy to lose track of what needs to be settled and when. Set up electronic payments for all your debts, this should prevent you from incurring any additional penalties due to late payment.

Should you manage to follow these tips religiously, you will have a perceptibly better credit score before you know it.

What Exactly is an Insurance Premium?

victoria — Tue, 22 Jun 2010 19:43:29 +0000

An insurance premium is a calculation made by an insurance company based upon a specific business model or type of insurance that considers the likelihood of claims filed in order to properly price their products for purposes of generating profits. The calculation uses actuarial tables and methods to make assumptions and quantify associated risks. The process consists of underwriting and investment returns.

The underwriting process.
The first and most complicated determination of premium is derived from the underwriting process. This process involves the use of actuarial science that analyzes a wide assortment of data based on the product offered and the risk factors of the insured such as age, health. experience, education or other factors that are specifically related to the type of insurance offered. Insurers must determine the amount of risk that they are willing to assume and the price that they should charge. This computation also must take into account the probability of risks and overall exposures that the insurance company is willing to accommodate. An insured underwriting performance is measured by dividing claims and underwriting expenses by premiums. A ratio of 100% indicates a profit while anything over 100% indicates a loss. However, the inclusion of investment return discussed below will impact these ratios and can turn a loss into a profit. Nevertheless a ratio over 100% requires a good hard look at the underwriting assumptions.

The investment return.
The investment profits are based upon float which represents available reserves of money at hand that have been collected but not paid out as claims. These funds earn interest until they are needed. This represents an important aspect of the insurance premium computation.

Determination of profit for insurance premium computation.
The insurance business model for determining profitability and premium amounts is reduced to a simple formula, as follows: Profitability = collected premium + investment return – claims paid out – underwriting costs.

Final Determination of Insurance Premium.
Underwriting standards need to be constantly reviewed and adjusted. During periods of low interest rates, investment income may not offset losses from the underwriting ratio. Therefore, premiums and the amount of risk exposure that insurance companies are willing to accept may require an increase in premium as well as a reduction in the type of insurance product offered. For example, during the hurricane season in the U.S., many insurance companies lost a lot of money because the insurance premiums were too low.

Guide to Employee Stock Options

victoria — Fri, 18 Jun 2010 15:51:26 +0000

Some companies will offer their employees stock options on a contractual basis. Usually, employers will provide these stock options to employees privately, and they comprise a portion of the employee’s contract. Employers choose between vested or non-vested stock options for their employees, and employees have to agree to certain conditions regarding stock options.

Long Term Incentives
Employees can’t immediately sell their stock options, rather, they have to retain ownership of the stock options for a set period of time. Employers will usually require that their employees’ stock options be non-transferable. Normally, stock purchases are transferable, but the company has an incentive in creating investors whose stocks are non-transferable.

If employees perform exceedingly well, some companies will offer extended stock options. Some companies will even offer a variety of different stock options to top employees. The company will generally establish the strike price of the stock before offering employee stock options.

Some Advantages of Employee Stock Options
The established strike price allows employees to exercise stock options once specific pricing occurs. This means that employees of the company have a competitive advantage over some other stockholders. The initial stock offering usually determines the strike price of the stock, although different sized companies will usually offer relatively different strike prices on stocks.

Both large, well-established companies and smaller companies offer stock options to employees. Sometimes, small companies will offer stock options to employees so that they don’t have to pay them such high salaries. More established companies generally offer stock options to their favorite employees. They provide stock options as an incentive to keep these employees working at the company.

Extending Your Investment
Long duration periods distinguish employee stocks from traditional stocks. Some companies have built stipulations so that employees can extend their stocks for up to ten years. Standard stocks expire after thirty months. The majority of employee stock options are taxable, although this depends on how the stock options are structured by the issuing company.

Employee stock ownership differs markedly from employee stock options. Companies that offer stock ownership to employees are basically offering a form of a retirement plan to their employees by giving them stock ownership in the company. These terms mean very different things, but are often confused. As an employee, you should carefully analyze stock options so that you are sure about the deal that you are getting.

Increase Home Value with Open-End Mortgages

victoria — Tue, 15 Jun 2010 13:25:08 +0000

Borrowers who want to use mortgage funds to improve their homes can do so through open-end mortgages. Open-end mortgages with mortgage rates give borrowers the ability to borrow additional money through the main mortgage, as long as the borrower fulfills some specific criteria.

Apply For Open-End Mortgages at the Outset
You have to apply for an open-end mortgage when you initially apply for your loan. If you wish to convert to an open-end mortgage in the middle of your contract, you’ll need to refinance.

In traditional mortgages, the principal refers to the amount of money that the borrower takes out to pay for the home. Then, the lender and borrower agree on a repayment plan so that the borrower can pay back the principal with interest.

The Freedom to Access More Principal
However, in open-ended mortgages, borrowers have the ability to take out more principal incrementally. This means that the borrower can effectively increase the principal owed on the home. Borrowers do this usually to improve upon the home.

This works very similarly to home equity loans, except that in this case, the lender issues the additional principal rather than the bank.

Keep A Good Ratio
Borrowers must establish a strong ratio between the principal owed on the home to the value of the home. Lenders will often impose restrictions on open-ended loans based on these criteria.

Many people like open-end loans because it allows them to quickly tap into money and use it to improve upon the home. So, if you want to fix your floors, you can utilize these funds to do so.

Choose open-ended mortgages if you have a strong credit history and you are good at estimating your financial obligation to lenders.

Capitalize On High CD Rates With Bump Up CDs

victoria — Thu, 10 Jun 2010 17:54:25 +0000

Nowadays, traditional CD rates aren’t hooking in as many customers. In order to capitalize on appropriate CD rates, most investors are looking for more flexible investment options.

Play the Market with Variable CDs
As a result, many banks and financial institutions are now offering CDs that have fluctuating interest rates and flexible maturity dates. You often have to give up a little bit of yield in order to gain flexibility with your CD. However, many CDs offer benefits that are just too good to pass up.

Bump-up CDs have become all the rage in banking institutions. These CDs give investors crucial freedom regarding interest rates. In fact, if interest rates rise while you own a lower-interest CD, the bump up CD allows you to take advantage of the higher interest rates.

For example, let’s say you have bought a five year bump up CD at 1.34% APY. However, two years into your purchase, the bank is now offering 1.5% APY on five year CDs. If you own a bump-up CD, you can upgrade your CD to the higher interest rate and earn more interest as a result.

According to Dan Edwards of Wells Fargo, “Bump-up CDs increase assets because they’re directly tied to the prevalent interest rate climate.”

Realities of Bump-Up CDs
Keep in mind, some banks will only offer bump-up CDs for shorter term CDs such as two year CDs. The starting yield on bump-up CDs is usually set a bit lower than on traditional CDs, simply because the bank has to assume that interest rates will rise.

When you buy a bump-up CD, you are basically betting that interest rates will rise over the duration of your CD. You are taking a risk here, because if interest rates do not rise, then you’ll be stuck with a low-yield CD.

So, here’s one way to decide whether a bump-up CD will pay off. If you see that the bank is offering a three year CD with a bump up option, and a three year CD without a bump up option but at a quarter percent higher interest rate, then only purchase the bump up CD if you believe rates will rise by more than a quarter of a percent.
Also, the length of time that it takes for interest rates to rise will determine whether your investment pays off. If it takes a long time for interest rates to rise, then it’s likely that the extra time you spend waiting will not have paid off the lower interest that you received during the waiting period.

Know the Rules
You also need to make sure that you know how many times you are permitted to bump up your CD. Many banks will place restrictions on the number of times you can bump up. Some banks may even require that you extend the term of your CD before you bump up.

You should do your own research before buying bump up CDs. Only purchase these CDs if you strongly believe that interest rates will significantly rise during the term of your CD. Otherwise, it is smarter to go with a conservative investment such as a CD.

The Drawbacks in Avoiding Giant Stock Losses

victoria — Mon, 07 Jun 2010 20:31:50 +0000

It is possible to avoid Giant Stock losses but as with everything, there are pros and cons.
Examining “what if” scenarios in retrospect can only serve to prevent you falling in the same mistake in the future. Most stock market investors will be asking themselves if there is a way to avoid being crushed in the future by a situation similar to Thursday’s one thousand point flash crash.

The answer is yes, it is possible but each scenario has its drawbacks.
Setting an asset allocation which is reasonable protects you from potential market meltdowns. Your exposure to stocks is the best way to defend yourself from becoming a casualty in a giant stock loss situation.

If, for example you had invested $100,000 in a large core fund company at the end of April, you’d have experienced a 6.6% loss by the end of Thursday, or in other words you would have suffered a loss of $6580. Large company core funds are stocks in companies who have market values in excess of $10 billion. Companies that are growing yet selling at reasonable prices in relation to earnings are coveted by managers.

Investing in money market funds or bonds can also help protect your losses drastically. Diversifying your investments goes a long way in ultimately protecting you. In the previous example, if you had invested 60% into a large company core fund and 40% into government bond fund, your losses would have been reduced to less than half or in other words only 3.2%.

A proven way of determining how much of your portfolio should be invested in stocks is to deduct your age from 100 to get a percentage. This percentage is indicative of how much your retirement portfolio should be invested in stocks. For example a 40 year old person should have 40% of their portfolio in bonds with the remaining 60% invested in stocks.

This does have its drawbacks though and just as a 30 year old person may not need 20% of their assets in bonds, a 70 year old individual may not need 20% of their portfolio in stocks. Nonetheless this process is a good way to start.

The next factor in avoiding giant stock losses is your level of tolerance to sustain short term losses. If you were financially ruined on Thursday this could be an indication that you overinvested in stocks. If you were in the process of buying stocks when the market plunged this would indicate you didn’t invest enough.

Another thing you should consider if you want to avoid giant losses is a stop loss order. Stop loss orders are basically instructs your broker to sell when your stock reaches a certain percentage in loss, for example if you’re training a stock at $100 and you don’t want to lose more than 10%, your stop loss order would instruct your broker to sell if the stock reached $90.

Stop loss orders have a big drawback: As soon as a stop loss order becomes a market order when it reaches its trigger point. It will be sold for whatever it can get on the open market. What this means to you as an investor is that in a chaotic market environment your stock may sell for far less that your stop loss price, e.g. if your stop loss price was $90 your stock may sell at $85 depending on the market.

As stock increases in value, you should set your stop loss order accordingly. ExitPoint.com and SmartStops.net are two online sites that offer valuable resources and advice on how to set your stop loss orders.

Last but not least, a good way to defend yourself from giant stock losses is to avoid investing in inverse ETFs, or stocks that rise when there’s a fall in the market and vice versa.

It is wise to avoid these stocks because not many investors are adept enough to trade in these funds quickly enough in a chaotic market. As long term investments they do very poorly, especially the ones that claim you will get double and triple inverse returns on them. A good example of this would be the Direxion Large Cap Bear which rose to 9.7% on Thursday but was down 59.9% for the past year.