Online Financial Tips

Archive for August, 2010

One of my jobs for a very long time included working very closely with a financial advisor and an elder law attorney. I learned a lot from both of them. The most important thing I learned is that long-term care isn’t just about picking a nursing home or a home care agency. Long-term care is also about the legal and financial matters that almost always come up when families are trying to help an aging loved one make choices.

Most families cannot afford to privately pay for nursing home care or in-home care for very long. This wasn’t planned for or budgeted for prior to retirement. Planning ahead is getting more popular, but for our older generations, it wasn’t an option for various reasons.

Because of this I try to make sure I know what all of the financial options are for seniors and their family members. One of them is something that not many of us understand very well- a reverse mortgage.

Reverse mortgages have received a lot of press lately. NBC Nightly news, ABC, CBS….they have all run stories. Of course there are pros and cons to reverse mortgages, but interestingly enough, two large organizations support and advocate them, especially for seniors who need long-term care. The National Council on Aging and AARP both support the use of reverse mortgages in certain circumstances.

A study released by The National Council on the Aging (NCOA) shows that reverse mortgages can be used by over 13 million Americans to pay for long-term care expenses at home, allowing many to remain independent and in their homes longer.
The “Use Your Home to Stay at Home: Expanding the Use of Reverse Mortgages to Pay for Long Term Care” report, funded by the Centers for Medicare and Medicaid Services and the Robert Wood Johnson Foundation, also shows how reverse mortgages can alleviate financial pressure not only for individuals and families, but also for state Medicaid programs and the federal government. Increasing the market for reverse mortgages could save Medicaid $3.3 billion (with a four percent take up rate) annually by 2010.

A reverse mortgage is also called a home equity conversion mortgage. These loans are backed by the federal government (HUD and FHA). Seniors 62 and older are eligible to use this federal program. This is a “non-recourse loan”, which means that the heirs of the seniors are not responsible for repaying the loan. In fact, a reverse mortgage is a loan that does not have to be repaid unless both homeowners (assuming a couple) leave the home permanently, or pass away. No monthly payments are required. The senior is the one who gets paid.

Finally, the money seniors receive from a reverse mortgage is tax free, and does not interfere with SSI or Medicare benefits.
As with any financial transaction, there are other things to consider, and reverse mortgages aren’t for everyone.

However, for the senior or couple who are having trouble making ends meet, this can be a life saver. Some seniors are using the extra cash flow to pay for in-home care, adult day care, pay for prescription drugs, pay off credit card debt, and make much needed home repairs so that they can live safely and more comfortably.

Find a reverse mortgage specialist in your area, and network with them. They might be able to help a senior you know pay privately for care much longer than expected.
For more information visit http://www.aarp.com , http://www.ncoa.org , or http://www.reversemortgagenation.com .

If you would like a FREE REPORT on reverse mortgages, I would be happy to send you one. Just email me at valerie@nextgenfinser.com and I will email or snail mail your report.

Getting an auto loan with bad credit is extremely difficult, right? Actually, getting bad credit auto loans is as easy as getting personal loans with perfect credit. For those in need of a new vehicle, bad credit auto loans can be just the answer they’ve been looking for.

If you’re looking for bad credit auto loans, you need to bypass the traditional neighborhood banks and find an auto loan broker, especially one that specializes in bad credit auto loans. While banks and other financial institutions offer vehicle loans with great rates, they are not eager to lend money to people with bad credit. So looking for a company that offers bad credit auto loans is important for someone with flawed credit.

There are typically two types of lenders that offer bad credit auto loans: subprime lenders and hard money lenders. Subprime lenders are willing and eager to help people with bad credit get the loan that’s right for them. While interest rates on bad credit auto loans are higher than traditional loans, a subprime lender does not charge an excessively high rate in order to increase profits.

On the other hand, a hard money lender requires less information from an applicant than a subprime lender. However, because of their more lenient guidelines, hard money lenders typically charge insanely high interest rates.

Bad credit auto loans can help people with less than perfect credit get a new or used vehicle – something they never thought possible. Bad credit auto loans can also help to re-establish credit, which is ideal for those individuals who have recently filed for bankruptcy and are looking to boost their credit score. If your credit isn’t flawless and you’re in need of a new car, finding a reputable lender that specializes in bad credit auto loans may just give you all the help you need.

The lowest home equity loan has been used by many banks to serve as an easy way for people to have the ability to purchase their own homes without significant problems and disruptions with their financial capabilities. The lowest home equity loan is made to stretch the payments terms as long as decades which would allow people to pay in very light monthly terms. Many of the people undergoing financial terms would then be freed form the troubles coming from the current recession since only a small part of their income would be deducted. In this way the quality of lives of the people involved would not be disrupted due to the payment terms.

The lowest home equity loan has been emulated by thousands of companies and lending institutions who seek to establish a long term but fruitful relationships with their clients. This is because the payments would not serve as hindrances with their lives. Statistics have shown that most people who have availed of the lowest home equity loan were able to finish their payments. The good thing equity is that it would allow early payments that would deduct from the overall interest. This would promote and inspire the borrowers to pay early and avoid being late with their financial responsibilities. It has also given them the support that would allow them to attain the basic necessities including a home for their family and relatives. This is the main reason that the lowest equity loan has flourished through out the years.

Now that your new business is up and running, you need to take care of a few of the basics. One of the most important features of a successful business in this internet driven climate is ability to accept a credit card online. If you do not offer credit card processing, you will deny yourself a significant portion of sales available out there, especially online. So it is essential that you begin looking into setting up a credit card merchant account that can handle your business needs.

How to set up credit card processing

Several reputable companies offer a credit card merchant account with features that are suited to various business types and sizes. You will need one of these accounts if you want to accept credit card online. A wide variety companies and offers can be found online. You might search for either credit card processing or credit card merchant services from your internet browser to see the variety of results available. Once you see a long list, visit some of the sites and look for a program that appeals to you.

Different companies offer different versions of a merchant account with varying features, fees, and perks. But in general, you will sign a contract and pay a regular fee to use the services provided in the agreement. The company will ideally provide you with all the equipment and software necessary to successfully accept credit card online. If they do not, keep looking for a company that does.

Merchant accounts

Among the wide array of offers you find online, you should look for a reputable company that has been doing business with internet companies for a number of years. You will want to establish a good working relationship with this company, so be sure you feel comfortable with their history, references, and customer service options. Read the testimonials that are offered. You can always check the references of the company you choose. Take down the company name from the information page or the bottom of each web page and investigate their history with the Better Business Bureau before you sign anything. You can also find a good company by asking for referrals from friends or fellow business owners. Make sure that all your questions and concerns are addressed either on the website or by a customer service representative.

There may be set up fees or programming fees that you have to pay before you can get your credit card processing started, so be sure that you budget the money necessary for this cost. When it comes to fees for services, it is important to also compare each credit card merchant account side by side. If a company waives certain fees during your active account, it may due to a high set up fee. Or if there is no charge for set up, you may discover hidden fees that you will be charged at a later date. Try to set up a comparison chart for yourself that includes all the major features you are looking for and what each company offers.

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You may have heard that Long Term Care insurance is expensive. Well it is. A typical LTC premium is going to be $1,000 to $3,000 per year. We happen to think that paying a controlled amount annually is better than risking an unpredictable and potentially devastating cost in the future. But still, there are ways to keep those LTC premiums affordable.

1. Buy Early
Well yes, of course we would say that, but don’t be so suspicious. Premiums are based on age. For those of you who purchase inflation protection (and this should be all of you) the cumulative costs of the premiums is going to be lower the earlier you buy. You do not “save” premiums by waiting. Because Long Term Care Insurance premiums rise substantially with age, the earlier you buy LTC insurance the lower your cumulative insurance premiums will be. You never save money by waiting, but you do lose benefits.

In reality, most people’s health declines with age which adversely affects premiums and even the ability to obtain insurance. Additionally, every year that you wait is a year you remain uninsured. If you have assets to protect and can afford the premium without changing your lifestyle, now is the best age to buy Long Term Care Insurance.

2. Good Health Discounts
Your health history can also affect premiums by as much as 150%. So if you are in good health, it can pay to purchase early to lock in advantageous rates. Yes, we know we said this earlier but its bears repeating don’t you think? On the other hand, if you have a serious medical condition, you may be unable to find coverage at any price.

3. Spousal Discounts
Married people can get discounts of 10 to 35% annually. For many couples these discounts will also apply to committed couples that are cohabiting. These discounts can even apply to brother & sisters.

4. Tax Deductions
LTC insurance premiums on tax-qualified policies are considered medical expenses under current IRS guidelines. If your total medical expenses exceed 7.5% of your adjusted gross income, you can write off the excess as an itemized deduction on Schedule A.

Even Better Tax Deductions
If you’re a sole proprietor, partner or LLC owner, you can deduct all of the premiums for a qualified long-term-care policy whether or not you itemize.

5. Group Discounts
If you work for a company that offers Long Term Care insurance, you may be able to get lower priced group coverage. Although be aware that many of these group policies have significantly reduced benefits or non-standard qualification criteria. Better yet, if you are an executive or owner of a business it is possible to provide Long Term Care insurance as to a subset of employees. These “executive carve-out” policies are exactly the same as standard individual policies but with 10-15% premium discounts and often with significantly lower underwriting requirements.

6. Plan Design – Smaller Policy
By opting to co-insure part of the cost of care you can significantly reduce your premiums. For instance, lowering your daily benefit by 20% will provide you with a 20% lower premium. Opting for a 4 year policy rather than 6 year can reduce costs 15-30% annually.

7. Plan Design – Longer Elimination Period
The elimination period is essentially a deductible for Long Term Care insurance. It is the amount of time that you pay out of pocket (or from an alternative source like Medicare or your health insurance) before the policy starts to pay. Increasing your elimination period from 0 to 90 days can save you 10 to 15% annually.

8. Annual Premium Payments
You can save 8% a year just by sending your payment in one lump sum on your anniversary date. Don’t worry, this is an anniversary you won’t forget as the carrier will kindly send you a premium notice.

An insurance agent can help you find a policy that’s both affordable and represents the best value for someone of your age and situation.

Credit tenant lease (CTL) financing is a unique and highly specialized type of lending designed to fund the purchase, refinance or construction of real estate that is triple net leased (NNN) to a single investment grade tenant.

The CTL process is quite different from traditional commercial mortgage lending. The lease rather than the real estate itself is the primary collateral that backs the loan and the lending process is in reality an investment banking transaction.

Qualifying the Tenant

The fist step in the CTL process is to determine whether or not a given tenant will qualify. The company that backs the lease is required to be “investment grade”. This simply means that they need a good credit rating by one of the major rating agencies. For example any company rated BBB+ or higher by Standard & Poors should be eligible. The drug store chain Walgreen’s is an example of a typical credit tenant, Walmart and Home depot also credit worthy firms that are big in the NNN space.

Analyzing the Lease

Next the banker will want to do a comprehensive analysis of the lease. They must understand the exact extent of the landlord’s responsibilities (if any) and calculate the value of the building based on the income it will generate. They will also check to make sure the length of the lease period conforms to their CTL criteria. They will scour the document for any provisions or clauses that might undermine their ability to perfect a security interest in the property.

Executing an Application

Only after the tenant and the lease pass muster will the borrower formally apply for a CTL mortgage. The application details the loan amount, the interest rate, the term of the loan and makes a good faith effort at estimating loan expenses. If everything is in order the borrower signs the application and places a deposit with the bank.

Underwriting the Loan

After the application and deposit are received the banker will begin underwriting the loan. Third party reports such as appraisals, environmental reports and title work are ordered and the numbers are crunched. The borrower’s finances are also scrutinized during underwriting. CTL loans are non-recourse but the bank will verify that the sponsor has the financial wherewithal to get the deal done.

Issuing a Private Placement Mortgage Bond to Fund the Loan

The investment bank will issue a new private placement mortgage backed bond and link it to the target property. They fund the loan by selling the bond to fixed income investors.

Issuing the Loan Commitment

Once the mortgage bond is sold the loan is fully funded and the banker will issue a formal and binding loan commitment. Exact and final terms will be spelled out and locked in. The borrower will be asked to accept or decline the loan.

Closing

If the commitment is signed by the borrower, the closing and dispersing of the funds can happen as fast as lawyers can draw up documents and schedule a closing date. All the paperwork is reviewed and signed, the mortgage is recorded and the deal is wrapped up.

CTL loans can be completed from-start-to-finish in as little as 45 days, but 60 days is the typical time frame.