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The Importance Of Keeping Your Credit Score Above 620
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Structured Sales Ease Tax Bite, but Returns Are Slim
The market for structured sales is still small. But Allstate Corp., which began offering structured sales in recent years, says it expects the overall market to grow to about $14 billion within five years from about $100 million last year. Another big insurer, Prudential Financial Inc., also offers structured sales. A host of small financial firms around the country typically act as brokers to arrange the deals with individual consumers. Critics say the strategy doesn’t make sense for many property sellers. Costs can add up: The broker putting the deal together earns a commission, which is usually 4%, and there are typically set-up fees of between $500 and $1,500, plus legal and accounting fees. What’s more, the seller’s proceeds are essentially locked up in an annuity that currently pays about 4% to 5% (which is net of the commission). (more…)
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Mistakes You Don’t Want To Make On This Year’s Return
| It’s not surprising that some homeowners consider selling without the help of a real estate agent. Online information and even free listing services have made it easier for homeowners to circumvent the owner / agent relationship. The biggest advantage of the for-sale-by-owner strategy is saving commission. But those taking on the job themselves need to prepare for a little work to get the home sold, understanding that they will be the ones taking care of tasks ranging from marketing to showing the property to interested buyers. Here is a list of items to consider for the FSBO homeowner. | |
Should lenders be liable for mismatched home loans?
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The United States Congress is re-visiting the mortgage banking laws, with the idea of further regulation of the lending industry. Consumers are experiencing financial problems from excess borrowing. Should lenders not allow borrowers to take mortgages that aren’t suitable for them? Should lenders who do allow it held liable? This series of articles from Mortgage 101 will attempt to answer the question “should lenders be liable for mismatched home loans?” |
Loan Loser: Home-Financing a Car
It also has become popular as lenders hype the fact that interest on a home loan is tax-deductible, unlike interest on a vehicle loan. In 2006, about 24 percent of homeowners used a home equity line of credit to purchase a car or truck, according to Synergistics Research, a financial services market research company based in Chamblee, Ga. About 8 percent of homeowners took out a second mortgage specifically to buy a vehicle, says William H. McCracken, chief executive of Synergistics. But is buying a car or paying off your remaining auto loan balance with the borrowed equity from your home a good financial move? (more…)
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The Wall Street Journal Prime Rate
I was asked by my friends at The Wall Street Journal Prime Rate to review their website.
A first look shows that the site concentrates on displaying the current Wall Street Journal Prime Rate, which is explained by the site as the “interest rate charged by banks when they lend money to other banks, or to their prime business customers”.
Further discussion informs me of the history of the prime rate since December 1, 1947, which is table of facts that I did not readily know.
After reading a portion of the site’s discussion concerning the financial term “prime rate”, my interest was piqued to the extent that I did some research on the subject.
From early times, “prime rate” has been the interest charged by banks to their most credit worthy customers. Although the “prime rate” itself is now a rate of return that bears little relationship to the creditworthiness of the banks’ commercial borrowers, the “prime rate” still varies little among banks. Adjustments are usually made by most all North American banks at the same time. The frequency of change normally happens on a quarterly or semi-annually basis.
So, if banks no longer base their “prime rate” on commercial lending data, just how do banks set their lending rate? Since the mid 1950’s, banks have been advertising their lending rate as a function of the “prime rate” which is technically “The Federal Funds Rate”. That data point is decided at Federal Open Market Committee (FOMC) meetings by the Board of Governors of the Federal Reserve.
Jay
Multiple mortgages can spell financial disaster
The smaller of the two mortgages didn’t worry them. The terms were fixed for 30 years at 10.7 percent, and the monthly payment of $538 was something they felt they could handle. But the larger loan was fixed for just two years. After that, the rate would adjust every six months, which is typical for subprime borrowers. “I worried about how we would make payments when they increased,” said Jemima, a medical assistant. “The mortgage broker [at New Century] told us we could refinance.” A spokeswoman for New Century declined to comment on the specifics of the Sanon’s case citing privacy issues, but she did issue this statement: “New Century is offering special programs that are designed exclusively for current New Century borrowers who are most susceptible to payment shock at the reset of their loans.” (more…)
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