Online Financial Tips

Archive for August, 2010

So the happy days of having achieved home ownership have long gone from you. Now it is about keeping your head above water and with this, that, or the other, a financial booster from a company that does private mortgages sounds like just what the doctor ordered. Or does it? Of course to really know, you first have to determine if you have enough equity in your home for private investor to offer a loan to you.

Most of us are familiar with the public conventional prime and sub-prime loans made to borrowers as mortgages through banks and financial institutions. Such loans are scrutinized from the borrower’s income-to-debt ratios, one’s creditworthiness, and the home’s value. Such loans also take quite a while to process, typically 60 to 90 days.

The alternative to a conventional mortgage comes from a private mortgages company or individual that issues loan to you and mortgage so long as there is sufficient equity in your home. In this way, your home is collateralized such that in the event you default on paying the mortgage, the lender will be paid back their investment and interest. Loans of this nature are determined rapidly; in literally 24 hours you would have an answer on getting the loan or not.

A private mortgages company charges a premium interest rate since they are not bound by regulation and do issue loans quickly. Interest rates between 11 and 18% are industry standard and apparently accepted as just by the fact that the loan is not bogged down by conventional time-lines and scrutiny of the individual needing the loan and the home’s value. Such scrutiny can result of denial of the loan based on one’s credit history alone. Private mortgages are granted outside of the consideration of one’s credit; they are wholly related to the home’s equity. If equity is not in the home, this type of loan will not work.

One thing to be aware of for a private mortgage is that the payback is demanded in a very short time frame than a conventional loan, typically as little as six months up to two years.

Considering these factors, long-term care insurance may be the most important purchase you ever make.

Unfortunately, long-term care insurance policies are complex, and seemingly minor details can make a tremendous difference in the level of care you eventually receive. You’ll need to sample a variety of policies, ask lots of questions and have your broker or agent explain the intricacies of the policy in detail because what may seem minor now could mean the difference between being covered or not at a crucial time.

The following 12 questions will help unravel the complexities and gather the information hou need in shopping for a long-term care policy, including whether you should be shopping for one at all.

Why buy long-term care insurance?

There are many elderly people who, due to some physical or cognitive disease, are unable to care for themselves. Long-term care insurance could potentially cover nursing homes, assisted living facilities, adult day care, in-home care and other functions that help us get through everyday life. It is NOT medical insurance; it is simply for everyday life functions and living.

It is also not, however, just for the elderly. If a person in his 30s were to purchase long-term care insurance, and soon after become paralyzed in an accident, or be diagnosed with a degenerative disease, he could then be covered for life as far as functioning care — depending on the individual policy.

What happens if I get sick and don’t have this insurance?

If a person is in need of, let’s say, a nursing home, and is without insurance, the home would need to be paid for out of the person’s assets. Government assistance would usually not kick in until not only that person’s assets were virtually depleted, but the assets of their spouse as well, if that assistance were available at all. Therefore, anyone with assets to protect may want to consider this insurance.

At what age should long-term care insurance be purchased?

It is sometimes advised that people 60 and over should be looking at this insurance. However, there are a few reasons to reconsider this advice, and instead think about purchasing it as early as possible.

Reason one is that, as stated above, a life-changing occurrence can occur at any age. If you are left paralyzed at 30, you could conceivably need life assistance of some sort for the next 60 years. If you’re covered, you could be set. If not, it’s too late.

But the second and less-obvious reason is that purchasing the policy at a younger age may cost less overall than purchasing it when older, even accounting for inflation. If you’re shopping for this policy at a younger age, ask your financial adviser to compare your purchase now with a purchase at 60. You may find the numbers work more favorably if you purchase now.

Where should I shop?

Once you make the decision to purchase long-term care insurance, you need to go shopping. While there are several big insurance companies that offer the insurance, you should also consider working with an independent broker.

Clay Cotton is a former broker, and founded the National Advisory Council for Long Term Care Insurance in late 1996. Ironically, Cotton, now 53, hadn’t yet purchased this insurance for himself, but was preparing to in 1997 when he was diagnosed with multiple sclerosis. Now, he’s ineligible. He did however, purchase a policy for his wife Suzanne, who was soon after diagnosed with hepatitis C.

Cotton is a strong advocate of using independent brokers to purchase insurance (and has a list of them on his Web site), as opposed to agents bound to one company, who he calls “captive” agents.

“Avoid a captive agent,” advises Cotton. “They can only sell you their company’s party line. If that company doesn’t have favorable wording on things like the deductible, that’s all that agent has to offer.”

Cotton also recommends consumers read the National Association of Insurance Commissioners’ “Shopper’s Guide to Long Term Care Insurance,” a booklet that most insurance agents and brokers who sell that insurance will carry.

How expensive is long term care insurance?
Of course, this number can vary wildly depending on numerous factors, age being the most important. For people in their 30s, the insurance may cost in the $400-per-year range, while that can increase closer to $1,000 per year for those in their 50s and 60s.

What type of setting for coverage does the policy provide?

While the wording may differ per policy, there are three basic categories into which care may fall: home settings, assisted living and skilled nursing facility. The ideal policy will cover all three, since you never know which you’ll need. You could wind up with a condition that could be cared for at home, but if your policy covers only nursing home care, you may be out of luck, or maybe prematurely forced into a nursing home.

Conversely, if you’re only covered for home and assisted living care, you’re out of luck if your condition worsens to the point where you need the full-time skilled care only a home can provide.

How long will the policy pay out once it’s triggered?

The best is an unlimited payout, but there are policies that cover smaller increments of time, such as four years or six years. You’ll need to weigh what you can afford against how much you’re willing to gamble you’ll need. Obviously, the longer coverage is provided, the better.

What triggers the policy?

Different policies dictate different reasons for the policy to kick in, such as cognitive impairment, failure of ability to perform daily activities, and medical impairment. But not all policies allow for all reasons, and some policies even refuse to consider medical necessity as a trigger. Make sure you understand the policy’s trigger, and try to find one that will include medical necessity.

Also, certain policies require you to be hospitalized before any nursing home or home health care benefits kick in. Try to find a policy without this restriction.

How much will it pay out every day?

Some policies may cover expenses totaling more than $50 or $75 per day, and others may cover $200 and up. All are different. Make sure you fully understand the payout policy on any coverage you’re considering. In doing so, take into account the difference in potential nursing home costs where you are. For example, the cost of a nursing home in New York may run $300 to $400 per day, while a home in the Midwest may be less than $100.

What is the deductible?

This part gets especially complex. These policies can measure the deductible not in dollars, but in days. A policy’s deductible may run 30 days, 60 or 120. And, the length may mean different things, depending on the policy’s wording. The days may be consecutive, or not. The deductible that’s right for you will depend on your ability to cover your own costs until the policy kicks in.

Be sure you fully understand the implications of the deductible before signing on, and weigh it against your projected assets at age 70 or 80. This is one topic you should definitely discuss with your financial adviser.

Does the policy have inflation protection?

Many policies include a clause that increases your benefit with inflation, without raising your premium. Be sure to ask about it.

Does your policy allow for shared care?

Some policies allow you to link your policy with your spouse’s, so that if your coverage runs out, you can draw on your spouse’s coverage. Discuss with your spouse if this is something you want to have.

Make sure you fully understand every aspect of a policy before signing on, as any detail could make a big difference come redemption time.

If you are a doctor, lawyer, or other related professional, you know that there is a certain level of risk you undertake in your career. You may be very good at what you do and have a stellar record, but that doesn’t mean there isn’t a chance that a mistake could happen. That’s why protecting yourself with malpractice insurance is important for your career.

When it comes to buying malpractice insurance, it’s important that you have the right amount of liability coverage. However, it’s also equally as important that you purchase it from an insurance broker whom you trust.

Below is a guideline with tips to help make the process of purchasing malpractice insurance much easier.

1. The first thing you’ll want to do when buying malpractice insurance is to find an insurance agent or broker who understands your specific needs.

2. Make sure you feel comfortable dealing and communicating with an insurance broker. Remember that you will be giving them your private information, so you want someone who is very trustworthy and makes client service a priority.

3. The insurance provider you get should have a stable background and have a history of paying out claims.

4. If a broker recommends a particular type of coverage, make sure to study the policy. Read the fine print and ask questions if are not clear about what is or what is not covered. There are many types of insurance coverage, so it’s important that you know what you’re getting into.

5. Don’t buy a policy just because it’s cheap. Keep in mind that you get what you pay for. It’s possible that you could be settling for insufficient coverage or inferior service.

If you follow this simple guideline, you should have no problem getting the insurance coverage you need for your situation.

Credit card processing is very important in doing business online. Whether you are buying or selling, you require a reliable form for making or taking payments, a system you can trust to safe guard your hard earned money from internet thieves.

There are different modes of making and receiving payments online, but the favourite option for most online customers and sellers is the credit card, which necessitated the need for credit card processing companies, the very reason why people have overcome the fear of identity thieves.

Yes, in recent years, reliable credit card processing companies, also called payment gateways, have developed robust systems for receiving payments on behalf of clients 24/7 with minimal problems, providing a secured path between a customer’s credit card account and the merchant account of an online business.

However, An online business should be careful while choosing a Credit Card Processing company as a payment gateway between it and its online customers, because business success online will greatly depend on the efficiency of their payment gateway companies.

In making a decision on which credit card processor to use, it is a first-rate strategy to utilize canvassing strategies, which comprises interviewing each credit processor so that only the best credit processor will be picked. Ask them about their fees, rates, and other special services that they provide their clients. Let them tell you why you should employ their services so that you can compare and choose the best amongst them.

The Online Buyer

The online buyer should also ensure that the credit card processor of the online business he or she intends to buy from is a reliable one on a secured server. The popular processing companies are usually the best.

Always reconcile your credit card account every month, the same way you would your bank account. Go over bills settled with your credit card and receipts, and query any charges for which you don’t have a receipt or don’t recognize.

For a while now I’ve written about the latest “change” in commercial lending: “The Small Balance Commercial Lender.” These guys are re-writing the rules on commercial loans that are less than $3 Million. While this might not impact your business immediately if you are dealing with larger properties, it will eventually affect you because of something else they are doing:

Stated Income or EZ Document Loans

Commercial lending, with the exception of private money loans, has been strictly a “full document” underwriting proposition. This meant that the borrower had to show up with a mountain of paperwork including personal tax returns, business tax returns, and financial statements in addition to the documents related to the property such as the leases, rent roll, and income and expense history. And in the end, the lender would underwrite the loan based entirely on the property’s cash flow, ignoring the borrower’s income, anyway!

These new lenders are willing to take into account the borrower’s free cash flow on a stated basis, and make their underwriting decision using the borrower’s credit score, the property’s cash flow, and the borrower’s reserve liquidity. This is unprecedented in commercial lending and will most likely force conventional lenders to come up with competing programs in the near future or they will lose too much loan volume.

Another consideration is that the investors who buy these loans will most likely increase their loan amounts in the future if they have a good experience with the smaller loans. Why wouldn’t they? It costs as much to underwrite and fund a $5 Million loan as it does a $500K one, yet the return is 10 times as much. This will put even more pressure on conventional lenders to create some kind of competing program or sell the same programs from the same investors.

So my personal take on the situation is that there will be some significant changes in the loan marketplace if the Small Balance Commercial Lender has a winning formula. They are too new to have any real experience in a down market and I’m sure that the conventional lenders will be watching them closely.

Disadvantages of Credit Card Processing

The benefits of credit card processing online usually outweigh the disadvantages. Unfortunately there are some pitfalls involved with credit card processing you should be aware of. The more knowledge you have going into a situation the more likely you are to come out of it ahead.

One of the biggest pitfalls associated with credit card processing is refunds or charge backs. Of these charge backs are potentially the most damaging. Most merchant account providers charge a hefty fee for any chargebacks they have to process. Some will close your account if you have too many so it is best you avoid them altogether.

There are ways you can reduce refunds or chargebacks. One you should make sure you have a clearly defined refund policy. You could for example limit the amount of time a customer has to request a refund. You should also ensure that your customers have a legitimate reason to ask for a refund. You can minimize refund requests by offering special bonuses to encourage better customer satisfaction.

Another way to limit chargebacks is by being open and up front about your business. If you use a third party processor for example to handle credit card payments you better let your customers know. Otherwise they may not recognize the third parties name when they receive their credit card statement and ask for a refund. This is an honest but also costly mistake.

You should also make sure you have adequate customer service which may help you iron out kinks with customers before a refund is requested. Good customer service goes a long way to preventing future problems with credit card processing.