Types of Caps for Adjustable Mortgages

a couple looking at documentsThe two primary categories of mortgages on the market are adjustable and fixed mortgages. While the interest rates of a fixed mortgage remain unchanged, those of an ARM (adjustable rate mortgage) are periodically adjusted. Most home-buyers avoid an ARM because they want to cushion themselves against much interest in the future.

However, different regulations control the interest charged on an ARM. You can be confident that your ARM will have the best mortgage rate available in Utah at any one time with the right lender. Here are caps that control your interest rate’s adjustment:

Initial Adjustment Cap

When getting an ARM, you have an initial fixed-rate period that ranges from one month to five years. The initial adjustment cap controls how much your rate can increase after the expiry of your loan’s fixed rate period. The cap is typically 2-5%. This means that your mortgage’s interest rate cannot exceed 2-5% of the fixed rate that expired.

Subsequent Adjustment Cap

This controls how much your interest rate increases in the period following your first adjustment. The subsequent adjustment cap is generally 2%. This means that your new rates cannot exceed 2% of the previous one.

Lifetime Adjustment Cap

This limits how much your mortgage’s rates can increase cumulatively over the loan’s term. The lifetime adjustment cap usually is 5%. This means that your total mortgage rate will not exceed 5% of your initial price. Some mortgage lenders might have a higher lifetime adjustment cap.

The exact percentages of the given caps differ from one lender to another. When comparing an ARM, it is prudent to base your choice on these caps rather than the initial fixed interest rate a lender offers. This way, you will be well protected from exorbitant rates further down in your ARM repayment.

How to Avoid Costly Hospital Bills

Hospital BillMillions of people are still uninsured or under-insured even after the implementation of the Affordable Care Act (ACA). Unemployment, temporary work, low wages and high co-pays prevent people from enrolling for the ACA, but if a medical emergency happened, could they afford the bill?

The ACA was introduced to give access to medicine for those least able to afford it. The act outlawed the practice of refusing coverage to people with pre-existing conditions.

Most people received aid from the ACA, but some have still fallen through the cracks. The unemployed, ill or disabled may not be able to afford even the cheapest policy. Sadly, policies with the most affordable premiums also have a greater number of out-of-pocket expenses.

Patients Drowning in Bills They Can’t Pay

A hard-working nurse faced a $100,000 medical bill when she had mini-strokes, migraines, and trips to the ER. The hospital reduced it to $32,000 because of her low income – but she already had a previous $22,000 bill that she was paying off at $650 a month.

Despite working three 12 hour shifts a week, one employer told her she hadn’t worked enough to qualify for insurance.

In another case, a 60-year-old man faced a $2,691.50 bill for a two-mile ambulance ride when he passed out at the doctor’s office. Even with insurance, his out-of-pocket charges were more than $770.

Situations like this lead some people to conclude they’d rather avoid medical care and not take out insurance. But what would they do in a life-threatening emergency?

Ways to Save Money on Healthcare

  • The ACA Marketplace – Patients can get help with affordable care act enrollment to find the right policy for their needs. Low premiums are attractive but don’t always offer the best coverage.
  • Medicaid – Depending on location and income, patients may be entitled to Medicaid.
  • Charity applications – Some charities and hospitals have a fund they can tap into to help patients in financial need.

Medical care is expensive but going without insurance can be a costly mistake. Assistance is available for patients who can’t afford the bill.

What are the Types of Fixed-Rate Mortgages?

Mortgage contractWithout a mortgage, owning a home would not be a reality for a vast majority. There are many factors you will consider when evaluating the best home loan for you. One of the crucial ones is the interest rate.

fixed rate home loan is the most popular choice for most homebuyers. This is because buyers already know their monthly payments. In an uncertain economy, this is the type of mortgage you may choose as it brings some measure of security. Its predictability allows you to plan your payments efficiently.

Here are the common types of fixed-rate mortgages you can select.

7-, 15-, 30-, and 40-Year Mortgages

The 40-year fixed-rate mortgage is the longest in the market though not very common. It has the lowest interest rates and monthly payments because of its extended payback time. The 15- and 30-year residential property mortgages, however, have lower costs in the long run compared to the 40-year one. Seven-year mortgages are generally for commercial properties.

Convertible Mortgage

This fixed-rate home loan allows you to convert your mortgage to one with a lower interest rate if the market rates decrease once your loan is in effect. Before converting, however, your lender has setup fees that you need to pay. If you are considering changing to a lower interest loan, therefore, you should be sure the rate you are going for warrants this extra upfront fee.

Balloon Mortgage

This loan allows you to make small repayments monthly for the first five to seven years of your loan. After this period, you are required to pay off your remaining balance in a lump sum. Balloon mortgages, however, have a contingency that if you are unable to pay the lump sum, your loan is converted into a fixed-rate loan.

The above mortgage options are the best for manageable homeownership. But your choice of lender is very crucial since you will be dealing with the professional for years. Ensure you choose one who will have your best interests at heart and one who is willing to guide you through the process.

How to Make the Most of a 1031 Property Exchange

people working at the officeSurprising as it might seem, the IRS can give you a leg up when playing the real estate market, explains an expert in 1031 exchange services here in Nevada. Under the section 1031 of the US tax code, you can hold on to the capital gains of a property you hold for productive use or investment.

Such properties include industrial warehouses, office complexes, apartment blocks, rental houses, and any property with an income. However, you need to play by a few rules to enjoy this support.

Designate the replacement property

Tax on capital gains can be anywhere from 15 to 30 percent of the profits you realize from a sale. Therefore, deferring the tax will amount to considerable savings. To realize these benefits, you need to identify the replacement property when making a sale.

Ideally, the property should be an equivalent value if not higher. The earlier you do, the better your chances of success as you have 45 days to identify the target property. Meanwhile, you need to appoint a qualified intermediary to handle the cash from the sale of your original property.

At no point during the exchange does the money find its way to your possession.

Avoid boot

Ideally, you shouldn’t make any financial gains from a 1031 exchange except for the new property. For further gains, commonly known as boot, are taxable. As such, you need to approach the process with a great deal of care. Otherwise, this is money out of your pocket.

Sometimes, working out the boot might prove tricky as it involves other issues that the selling and buying price.

You need to account for mortgage and other debts. Failing to balance your liabilities on both properties can lead to serious headwinds. Even if you don’t receive any cash back, a decrease in liabilities on the acquired property is considered a gain and as such, taxable.

Get Your Mortgage Loan Approved in 3 Easy Ways

approved mortgage loan applicationAs a potential homeowner, getting approval for your mortgage is a significant step towards owning your dream house. However, most home loan applicants end up sabotaging their applications by not doing certain things essential for a successful process.

Below are some ways through which you can boost the chances of getting your mortgage loan approved.

Keep your job

Your loan officer here in Clarksville will tell you that most lenders are so much interested in the work history of the loan applicant. In fact, it’s best if you have worked for your current employer for a minimum of two years. Remember, your lender will need assurance that you’re secure in your employment. Therefore, during the entire process, avoid shifting jobs as this could have detrimental effects on your loan process.

Honesty is the best policy

This isn’t the time to take chances when it comes to past credit mishaps. Sitting and hoping that your lender won’t discover some of the credit skeletons in your closet is a big blunder. Instead, come clean as early as possible and have the matters addressed.

Remember, your lender has myriad of ways of uncovering information about your past dealings. If they discover that you weren’t honest from the start, you could end up having your application rejected.

Know your credit report

With the current technology in place, it will literally take minutes to pull your credit report. Being well-versed with your credit report will not only give you a chance to spot any error that might appear on it, but you will have an opportunity to put your statement in order before your lender gets their hands on it.

Getting your mortgage approved is a significant step towards owning that dream house. The above tips and tricks can enlighten you as well as set you up for a successful loan application process.

3 Advantages of Mobile Banking

a man checking his bank accountA survey found that 4 out of 10 Americans use the internet to manage their accounts. And among them, about 26 percent often use their smartphones and other mobile devices to do so. Among age groups, people aged between 18 and 29 years old use mobile banking most often.

Based on the findings, it seems that when it comes to mobile banking, it’s the millennials who are using it the most. Regardless of age, here are the benefits you might be missing out on if you don’t open an account for mobile banking.

You have the easiest, instant and 24/7 access to your account

Most people these days never leave without their smartphones or other mobile devices. If you do mobile banking, it’s safe to say that you also have instant, 24/7 access to your bank account all the time.

With mobile banking, it’s not just about checking your deposits, you can also transfer and receive payments. It’s like having a virtual wallet 24/7.

You don’t have to pay extra fees

Most of the banks with mobile banking services do not charge fees when you use this service. Of course, you still have to pay for your data plan.

But this is minimal charge compared to what you would normally pay if you need to use your car or take public transport just to go to the bank and make some transactions. Mobile banking is also the most convenient for people on the go.

You are always in control of your accounts

Say you need to make a deposit in the middle of the night and the banks are now closed. No problem, you can use mobile banking to do the transaction. Let’s say you need to check your deposits when the weather is bad, and the banks are closed, you can use mobile banking for that.

With this type of bank service, you are always in control.

Do not resist technology. It is here to help make your life easier. If you still don’t have a mobile banking account, open one soon and enjoy the convenience of banking using your mobile devices soon.

The Top Five Best Ways To Invest Your Money

a woman posing with a piggy bankWith a stash of cash on hand, you now want to invest. The problem is, you don’t have a clue on what kind of venture you want to get into. However, you want to make that money grow if you don’t have immediate needs you want to spend it on. Fortunately, there are ways to invest your money and make it grow.

1. Get a Financial Management Help

If the amount is substantial, you can enlist the services of fiduciary investment advisors such as Shoreline Financial Advisors. They could provide you with options on where to invest your money. Many take this route, especially if they don’t deal with stocks and bonds on their own. They get a percentage of your earnings, so make sure you’re dealing with a reputable group.

2. Invest and Trade in Stocks

If you have an appetite for risk, try your luck in the stock market. Trading is relatively easy since you can buy and sell online. You need to find a trading platform and online brokers suited to your trading style.

3. Peer-to-Peer Lending

Only those with a high tolerance for risk put their money in this kind of venture. This system allows lenders to provide loans to borrowers through an online service. Lenders can set up requirements to pre-qualify the prospective borrowers. You get to choose which loan has the best terms. Both the lender and borrower are the ones carrying out the transaction, which makes it more personal.

4. Set Up a College Fund

It’s never too early to set up a college fund for your young children. Studies show that college tuition fees will continue to rise in the foreseeable future. You could set aside some money on your own or avail of a college savings plan. These state-sponsored plans even provide tax breaks as an added incentive.

5. Consider Settling Your Debts

Many people wouldn’t call debt payment as an investment. In their view, they give up any chance of earning interest or income once they pay debts. This is true, but debts incur an interest that is double or triple any rate you may earn from the stock market. Remember, early payment of debt also spares you from paying higher interests.

If you have extra money that would like to put to good use, you can use these tips to make your money grow. Hiring a professional you trust who can grow your money is also a wise choice. With these tips, you are on your way to gaining more money and securing your future.

Five Preparation Tips for Buying a Home

A couple buying a houseBuying your first house is an exciting experience. However, along with it comes risks. You have to carefully plan your approach to ensure things will run smoothly until the time you acquire your property. If you are one of the first-time homebuyers looking for the best mortgage rates in Utah, read this guide first before making any decisions.

Here is a guide on how and what to prepare when buying a house.

1. Be financially prepared

You can tell that you are ready to buy a new house when you have the means to pay for all the expenses associated with homeownership. Make a list of these costs, including but not limited to taxes, insurance, homeowners’ association fees, utility bills, maintenance, and repair. After that, figure out whether you can afford these expenses. Find ways to get extra income if you have to and save money.

2. Apply for a loan

Unless you have enough cash to pay for a new home, applying for a loan should be your next step. Before you look for the best mortgage rates, remember to work on your credit standing first. Having good credit score increases your chances of getting loan approval.

3. Find the right house

Once your loan is approved, you can start looking for a house. Remember that there are several things to consider when buying a house, like location and size. A real estate agent can help you find the right home in an ideal location.

4. Prepare money for initial costs

Before you can move in, you first have to settle the downpayment and closing fees. Some businesses offer financial assistance which you can use to settle initial costs. You can also check out government options or apply to an Employer Assisted Housing program.

5. Attend home inspection

Never close the deal until you have seen and checked the property yourself. The least you’d want is a home requiring expensive repairs here and there. According to Investopedia, a home inspection helps you identify slight defects, major repairs, and safety issues.

The preparation before you buy a home may be a little daunting, but it is the best way to avoid problems in the future.

What Should Small Business Owners Consider Before Applying for a Loan?

Approved small business loan application and dollar billsThe U.S. Small Business Administration (SBA) recently determined that small retailers have been “undercapitalized” during the holiday season as they compete with large players in the market. Cash flow is the lifeblood of any business and it should be maintained until it can stand on its own. There are several options available for business owners to refinance their venture until it becomes stable, and one of the most common and fastest ways is to apply for a loan.

Below are the usual steps of applying for a business loan:

  1. Entrepreneurs either want to expand or replenish their losses when they apply for a loan, and it’s important to define why they apply for a loan and how much they will need. Banks like American Bank & Trust often require such information from loan applicants.
  2. For entrepreneurs who have started in less than three years, they’ll be evaluated based on their business and personal credit history. Errors are sometimes inevitable, so it’s important that loan applicants review their credit scores and history. Entrepreneurs are likely eligible for a loan if they have a score of around 700 points.
  3. Consider looking for local commercial banks or other regional financial institutions, as national banks may deny a loan to small businesses that are only starting out.
  4. Banks and other financial outfits depend on the loan amount of how entrepreneurs prepare their business plan. At this point, entrepreneurs should consider crafting a well-rounded business plan, including their projections in the following years. It’s important that market analysis and entrepreneurs’ profile are part of the plan, as well.
  5. Lastly, to make a promising impression, entrepreneurs may want to have a compelling presentation. Creating visuals and data presentation may convince a loan officer to grant the loan. One good consideration is to have a well-written executive summary, as it will be the first document in the presentation they will submit.

Applying for a loan is worth considering if small business owners strongly believe that their venture will prosper after coming up with a new plan and fresh supply of cash flow.


Financing Home Improvements Through Second Mortgages

A couple planning for home improvementsAs recent news revealed that residential investments are expected to accelerate next year in the U.S., you might realize that it has been a while since the last time you made home improvements. Since the latest survey revealed that consumers have a strong support in the housing market, you might decide to take a second mortgage to welcome the new year with a newly improved home.

Mortgages are “sweeter the second time around”

Depending on the state where your home is located, you could get a relatively higher lump sum, unlike the first mortgage loan you avail when your home was protected by a lien. Second mortgage interest cost could vary in some states like Oregon, but mortgage rates in Portland are worth considering the amount of loan you can take. Second mortgage takers could also avail of some tax deductions as they start paying for the interests.

Unlike other debts, second mortgage interest rates are considerably lower and you could get a loan amount for as much as 80% of your home value. Keep in mind that it is important that you plan your finances when taking a second mortgage because your lender, usually a bank, could foreclose your home once you stop paying your monthly dues.

Other ways second mortgages are considered

Also called Home Equity Lines of Credit (HELOC), second mortgages could be your financial assistance other than home improvements. You could use it to finance your children’s college education if you are having difficulty in securing a student loan. Second mortgages are also worth considering consolidating all of your debts to lower your interest rates.

Second mortgages are worth considering when you plan to improve your home. However, if you are going to avail such loan, it is important that you have a solid plan on how you will repay the second mortgage you take.