How to Calculate Loan Repayments

Calculating loan repayments may seem complicated, but with the right information, it's really quite simple. It's also crucial information when considering a loan, so that you will know exactly what you, and can't, afford. You can either use a loan payment calculator, a number of which are easily available online, or you can do the math yourself. To calculate the payments yourself, simply follow the instructions below.

The following example assumes you're borrowing $5,000 for a term of 5 years, at a 6 percent interest rate.

First, determine your total amount of interest by multiplying the loan amount by the interest rate, and then multiply that by the number of years for the loan. For this example, multiply $5000 x .06 x 5. Your total interest is $1500.

Next, add the total amount of interest to the principal to calculate the total repayment amount. This example is $5000 plus your interest of $1500, for a total of $6500. This is the total amount you'll pay.

Now determine the number of monthly payments, which is simply 12 (months) times 5 (years), making it 60 payments for our example. Finally, to figure the amount of your monthly payment, divide your total amount ($6500) by the number of payments (60). You can now see that your monthly payment for this example is $108.33 per month.

Now that you see how easy it is to calculate loan repayments, you can determine the impact that borrowing a different amount, over a different time, or at a different interest rate will have on your monthly payments. If you are handy with excel, this is a great tool to prevent you from doing the same calculations over and over again.

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What Are the Home Equity Loan Rules in Texas?

The state of Texas has some pretty interesting refinance rules. This is especially true when one wants to pull cash or equity out of their home.

There are two types of mortgage refinances. The first type is called a rate and term refinance. This is simply when someone wants to lower their rate or change the term of their original home loan. For example, someone with a 30 year mortgage at 7% may want to refinance to a 5.25%, 15 year mortgage.

In this instance they are not pulling cash out they are just changing the rate and/or the term of their original loan. During the "refinance boom" (2001-2004) many loan officer and mortgage brokers did dozens and dozens of rate and term refinances because mortgage rates dropped so low.

Most people refinance when their home loans when the market rate is much lower than their current mortgage rate. A good rule of thumb is when you can save about 1% it may make sense to refinance.

The second type of refinance is called a Texas Cash out Refinance. This is when someone wants to pull cash out of their home in addition to lowering or changing the rate or term.

Texas once outlawed the ability to pull cash out of one's home but now allow this as long as the loan meets these criteria:

80% Texas Cash Out Rule: This rule states one that the loan can not exceed 80% of the home's appraised value.

For example, if one's home is worth $100,000 and the current mortgage owed is $50,000 than an equity loan can go up to $80,000 (80% of 100k). Thereby netting the borrower $30,000, less closing costs.

3% rule: This rule state that the total fees can not exceed 3% of the loan's value. For example, if someone does a 100K equity loan the total fees can not exceed $3000. This means broker, title, survey, appraisal, underwriting, doc/prep (everything!) can't exceed 3%. This law was intended to protect borrowers but it actually penalizes lower loan amounts making it difficult for those with small loans to take advantage of their equity.

This is a great example of regulation doing the opposite than what it was intended. So for those with loan amounts under 100K, it's very difficult to do a home equity loan as state law also requires one to purchase a new title policy each time one refinance. Title policies usually run 1% of the loan amount.

However, it's important to note that the 3% law does not apply for those doing an investment cash out home equity. So it's actually easier to do a home equity loan on an investment property than on an owner occupied property in Texas!

12 Day rule: This is one of the more unique rules. Whenever you do a home equity loan your loan officer or mortgage broker will ask you to sign a 12 day form. This form states that the loan can't close until 12 days after the date of the application. I guess the state of Texas wants you to have 12 full days to think about your loan!

3 day rule: Then, after we wait 12 days, we are required to wait 3 days until we fund. Not to mention one is required to look and sign the final HUD (settlement statement) 24 hours before closing.

So to make things simple: The loan can't close for 12 days. Then, once the HUD is prepared by the title company the borrower(s) must review and sign the HUD 24 hours before we close. Then we can't fund the loan for 3 full business days.

These rules are why it often takes 30 full days to fund a Texas Cash out loan.

Oh, and by the way. The final rule...one must wait 12 full months between home equity loans. So if you do a Texas cash out one year and the price of your home goes up significantly you must wait a year before refinancing.

Because Texas home equity loans have so many rules it is important your mortgage professional truly know the rules so everything goes smoothly with your refinance.

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How to Calculate the Debt Service Coverage Ratio (DSCR)

Debt Service Coverage Ratio (DSCR)

Debt Service Coverage Ratio (DSCR) is a ratio to measure a property's amount of available cash remaining after servicing the loan payments. In addition to LTV, DSCR is the other loan constraint in any real estate transaction. It is calculated as:

DSCR = Net Operating Income

Annual Loan Payments

Example 1: Suppose an investor owns a property with an NOI of $500,000. The annual principal and interest payment for his loan is $370,000. The DSCR would be:

$500,000 = 1.35x

$370,000

This result means that the property produces a net operating income 35% greater than what is required to pay the loan.

$500,000 - $370,000 = $130,000

$130,000 = 0.35 x 100 = 35%

$370,000

This additional income can be used by the investor as a return on his equity investment or for additional investment into the property. When a loan has an NOI that is equal to the annual loan payment, it is considered to be at breakeven. This means that the property is operating only enough to cover its loan obligations. When a property has an NOI that is below the annual loan payment, it is considered to be operating below breakeven.

Example 2: Assume an investor has a property that has an NOI of $250,000. The annual principal and interest payment for her loan is $275,000. The DSCR would be:

$250,000 = 0.91x

$275,000

This result means that the property only covers 91% of the required debt service payments. It is important to understand why a property may have a low debt service. It may be due to a worse-than-expected performance from market conditions such as declining rent or higher vacancy. Alternatively, the owner may have expensed a roof replacement which artificially lowered the property's NOI and thus making it appear the property is not performing well. Regardless, the investor would be required to pay the bank the amount of money necessary to service the annual debt service or face foreclosure.

When evaluating property, it is important to understand why DSCR constraints vary from lender to lender and from market to market. The higher the DSCR greater equity is needed to purchase a property. And the lower the DSCR less equity is needed to purchase a property. DSCR is one of the restraints in any real estate transaction.

Shortcoming #1: DSCR is not the only loan constraint. Most loans have a minimum debt service coverage ratio (DSCR) and maximum LTV. Simply because a lender tells you they will loan up to a 1.25 DSCR (or whatever their parameter) of a property does not mean you will receive all of the loan proceeds.

Shortcoming #2: DSCR is a calculation of NOI. Care should be taken in understanding how each group determines an NOI. A borrower's pro forma NOI may vary greatly from a lender's NOI and thus both may have different expectations of the necessary equity required in the transaction.

Shortcoming #3: Lenders vary DSCR constraints to make loans less risky. The higher the DSCR the greater the cushion the property has to pay for unexpected expenses or to weather volatile market conditions. Since a higher DSCR requires a greater equity investment, the lender feels their loan is protected.

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Mortgage Loan Modification Assistance - How to Get My Loan Modified

The home loan industry has changed stated income loans requirements if you don't know yet. Most lenders now want full documentation loans and borrowers qualifying by using traditional debt to income ratio calculations. This directly affects the high cost housing markets like California, Florida, and the tri-state area of New York, New Jersey, Connecticut as well as parts of Maryland, Virginia, and Massachusetts. The reason is a lot of homeowners in these markets used adjustable rate mortgages and qualified by using stated income, stated assets and some instances no verification of employment.

The adjustments for adjustable rate mortgages (ARMs) will continue through 2010 and into 2011. Most homeowners will be unable to refinance due to loss of equity in their home, their job, or other hardship. So, their best option is to negotiate with their loan servicing company or let the home go into foreclosure. Homeowners need to understand that when they send in a payment to the lender or loan servicer, that is their primary business to collect debts not negotiate with the public to change terms or modify interest rates. Furthermore, in a majority of the cases the borrowers do not get through to the right person or worse yet call them back in a timely fashion until they are close to foreclosure.

If a borrower has a truthful hardship and the bank is slow to react or refuses to listen what happens is a foreclosure results and the borrowers credit is hurt for seven years. When you are facing this situation and getting nowhere with a business and you don't get the results you need in a timely manner, you should hire an attorney who specializes in foreclosures and loan modifications!

There are many stories from borrowers who say they most banks will not discuss your situation unless you are behind two to four months in payments. Once that occurs, your hard earned credit scores from years of being responsible are wiped out. Furthermore, you may never be eligible for a home loan at market rates for quite some time.

The solution is to use a loan modification company that actually does have an attorney on staff to get answers and responses quickly so your situation is resolved quickly. You end up keeping your home, getting a loan modification, reducing your interest rate to an affordable level, and in some cases reducing your loan principal but there's no guarantees. An experienced debt representative from the attorney backed loan modification company will call you to see if you do qualify based on certain criteria.

Although, some firms will take your money even if you don't qualify. Those are the ones you have to watch out for. They hit you when you're down. Work with a loan modification company that has success, years of experience, paralegals and an attorney on staff. You will feel more at ease knowing you have the best team working on a solution for you whether it be a short sale, a deed in lieu of foreclosure, tax ramifications of short sale, or a loan modification.

A lawyer who specializes in negotiating with lenders can achieve magical results especially if they find RESPA or TILA violations to use for leverage. A real estate attorney understands how to speak their language and get the lender to negotiate. When a homeowners uses an Attorney, the lender's loss mitigation and legal department become very receptive and responsive. Get a good legal team on your side to stop foreclosure and get a loan modification!

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Taxation of Forgiven Debt - The 1099C & You

Often people fall on hard times and stop paying on credit cards. After a while the account may go to an outside debt collector who might offer a settlement of the debt for 30-40% of the original sum. Once this is paid, the debtor often thinks the matter is closed, but it is not! It is very likely that the creditor will issue a 1099-C. This is a notice to IRS of the forgiven debt. If the debtor does not address this on his return he may get an IRS bill a year or two later with penalties and interest.

A foreclosure on a home may also result in a 1099-C from the mortgage lender if the property is sold for less than the amount of the loan. In this instance, a person loses their home and may also face a tax bill. Usually, the bill comes many months after the tax return was filed as a result of an IRS document matching program. This "under-reporter" notice brings grief to the taxpayer.

The key issue is whether or not the debtor was insolvent. If they were insolvent, it may not be taxable depending on the circumstances. There is an "Insolvency exclusion." You are insolvent when, and to the extent, your liabilities exceed the fair market value of your assets. So it is possible none of your forgiven debt is taxable or it is possible that all or only a portion of it is counted as income.

You may not have any taxable income from the 1099C, but you must account for it on your return. The issue is whether or not you were solvent at the time of the debt cancellation. You only owe tax on the forgiven debt to the extent you were solvent. For instance, if the forgiven debt was $10,000 but you are only worth $5,000; you would only be liable for income tax on that amount. A home foreclosure is complicated and you may have other legal arguments besides insolvency.

There are five situations where a cancelled debt does not have to be reported as income:

Bankruptcy - the debt was already discharged through a bankruptcy proceeding.

Insolvency - your total debts exceed your total assets at the time your debt was settled or deemed non-collectable.

Indebtedness is due to a qualified farm expense.

Indebtedness is due to certain real property business losses.

Discharge of your debt was treated as a gift (You owed Mom $10K and she said "Don't worry honey, consider it a gift").

If you are insolvent you need to explain this to the IRS on your tax return. You can fill out IRS Form 982: Reduction of Tax Attributes Due to Discharge of Indebtedness or attach a detailed letter to your tax return explaining the calculation of your total debts and assets.

Do not ignore a 1099-C! Failure to address the 1099C will result in a tax assessment by the IRS for any amount over $600 plus penalty and interest. This will likely occur 12-18 months after you file when IRS matches up the info reported to them with what is on your tax return. Have a tax professional do your return and they can help you determine how much of the 1099-C is taxable.

If you get a letter from IRS on a 1099-C you left off your return, get help ASAP. Otherwise, IRS might file a Federal Tax Lien and take action. Look for a CPA, Enrolled Agent, Accredited Tax Advisor, Accredited Tax Preparer, or Tax Attorney to help you with serious tax issue. You may call the IRS at 1-800-829-1040 for help as well.

Websites you can check out include:

http://www.irs.gov

http://www.naea.org

http://www.nsacct.org

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Government Grants For Women - Money You Don't Have to Pay Back

With the availability of government grants for women, single mothers, returning students and women business owners have the opportunity to obtain free grant money that never has to be repaid. See if you qualify for government grant money today.

What exactly are free government grants?

Grants are cash awards distributed by the government other private or charitable organizations to worthy applicants who can prove to put this funding to good and verifiable use. Once obtained, this free money never has to be repaid. By obtaining these funds, women can get the cash they need to go back to school, start a business, or obtain help with other expenses.

By searching a current grant database, individuals have an opportunity to find these available funding programs. Applying does not require a credit check, down payment or any kind of collateral. As long as you meet the minimum qualification requirements, any tax payer can apply for grants as long as they are at least 18 years old.

Women Business Owners Grants - Women who desire to establish a new business or expand an existing one are often able to acquire thousands of dollars in free government money to finance the costs of establishment or expansion.

Child Care Grants - Financial aid is offered to mothers to help afford quality child care services.

Housing Grants - Government grants can be used to help women obtain low-income housing or down payment assistance on the purchase of a new home.

While there are eligibility requirements and qualifications that must be met in order to get your grant request approved, there is no limit on the number of grants that can be applied for or received. By searching the grant database, individuals may be able to find multiple programs that can provide the funding needed to reach their goals.

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Should I Refinance my Car Loan?

There are mainly two condition why one would be willing to refinance a car loan: a) If one wants to steer clear of repossession and can't afford the loan's monthly payments. b) If one wants to take advantage of better market conditions and wants to lower the monthly payments by refinancing with a lower interest rate.

For both of these situations, car loan refinance seems to be the most comprehensive solution. However, refinancing won't always be advantageous and you might even spend thousands more due to an adverse financial transaction.

When Refinance is the only way to go

If you can't afford the monthly payments you might want to refinance your car loan in order to reduce the loan installments. A reduction can be obtained either by a reduction of the interest rate or by an extension on the loan's length. You can also combine these two factors and get a more significant reduction.

Chances are however, that if you need to refinance, you probably have a bad credit score and poor credit history. This will prevent you from getting a low interest rate and you'll probably have to agree to a higher interest rate. Thus, your only possibility of getting a reduction on the amount of the monthly payments is by extending the loan's length.

Do your research and find the best offer available. There are many lenders out there and even if you have to agree to a higher interest rate, it doesn't have to be the highest. So ask for loan quotes, compare what the lenders have to offer and choose the best deal so as to spend as little as possible.

Refinancing to save money on interests

If you just want to take advantage of better market conditions and you don't need to reduce your monthly payments due to an inability to repay the loan, you are in better conditions to negotiate enhanced loan terms. Find a lender willing to offer you a lower interest rate and extend or shorten you repayment schedule according to your needs.

Make sure the amount you save from the reduction on the interest rate is not secretly added to your loan in the form of administrative fees, closing fees, application fees, or any other euphemistic expression. Otherwise, you won't be saving any money and the refinance loan might end up being a useless financial transaction.

Refinancing a car loan is an overall simple financial operation but you need to be careful and pay special attention to the interest rate charged and any other costs and fees hidden in the small print. Either if you are forced to refinance or if you want to seize the benefits of better market conditions, doing your research, comparing and then deciding is the smart way to go.

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Mortgage Interest Rates - A Look at the Last 10 Years of Refinancing

Ten years ago, prospective home-buyers and existing homeowners looking to refinance were positively giddy about the interest rates. Hovering around 8%, the rates were a refreshing change from the double-digits of the 1980s. Who could have guessed that now, in 2006, even with interest rates on the rise, we are a far cry from the "high" interest rates of the late '90s.

With the exception of a spike in 2000, the last several years have seen historically low interest rates. Under the direction of Alan Greenspan, the Federal Reserve Board lowered rates from 2001 through 2005. According to Interest Dot Com, the rate of 5.2% in June 2003 was the lowest rate recorded since their print predecessors began weekly rate surveys in 1985. These low rates enabled many Americans, who previously could not afford to do so, to buy homes. They also led many existing homeowners to refinance their mortgages and cash-out a portion of their home equity for home improvements or other goods and services. As stated by the Homeownership Alliance, the housing sector has been "a pillar of strength for the U.S. economy in recent years, limiting the depth of the 2001 recession."

This is true even with rates slowly on the rise. Since October 2005, rates have not dipped below 6% and the current rate is 6.66% for a 30 year fixed mortgage. The rates on adjustable rate mortgages are rising more slowly, thus providing an attractive option for those beginning to think about refinancing or taking out a home equity loan or line of credit.

What is the outlook for the future? Some experts say that the increases will slow, while others disagree, saying that rates will continue to rise. It seems we'll just have to wait and see.

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Mortgage Fraud

Mortgage fraud has been on a steady rise in recent times and the Financial Services Authority (FSA) is currently looking into 200 scams that were all related to the mortgage industry.

The FSA believe that the fraud goes far beyond people exaggerating about their salaries in order to get the house they want, they believe that there are organised rings within the mortgage industry that are gaining huge profits from defrauding the mortgage and property industry.

The FSA are estimating that the current losses on each new build house connected to the mortgage fraud surge stands at £45,000 per property.

It has also been determined that these mortgage fraud crimes are committed by people who are involved in other criminal activities such as drugs and people smuggling. Money laundering is another, FSA have found that there are people who have realised that by being involved in mortgage fraud allows them to hide their stolen money in property whilst also making a profit.

In an attempt to solve this problem, the FSA are introducing an authority who will be in charge of trying to tackle this increasing problem. The National Fraud Strategic Authority (NFSA) will be implementing anti-fraud activity in an attempt to stop the current trouble.

The NFSA's main plan will be to create incentives that will make it easier for the lenders and the police to enforce the law when it comes to fraud cases. The encouraging thing is that the police have shown a great interest in investigating these fraud cases in an attempt to crack down on this increase.

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How is Depreciation Calculated in a Home Insurance Claim?

You may not be aware, but depreciation plays a very large role in the calculation of a home insurance claim. It is important for homeowners to be aware of who determines the calculations of depreciation and what method, exactly, is used in determining that rate of depreciation. With any home insurance policy, you should be aware of this information.

The entity responsible for determining the depreciation is ultimately the insurance company. Your insurance company will decide the amount of depreciation and will subtract that amount from the cost of your property. The rate will stand as they decide unless you challenge their calculations. Some homeowners do challenge their insurance companies when they make an insurance claim.

The way in which these rates are determined is through published depreciation tables. These tables list the useful life and depreciation of a wide variety of properties. Such depreciation tables can be accessed through your home insurance company or may even be found online. More often than not, home insurance adjusters and their claims departments; also have computer software that has the insurance depreciation tables factored in. Such software makes figuring depreciation very easy and almost error free. The insurance adjuster simply fills in the type of property, its condition and its age and the software figures the depreciation automatically.

One very dangerous, but frequent way that depreciation is calculated is when the insurance adjuster makes a guess. Often, insurance adjusters will make a guess based on their past experience. Sometimes, their guesses are correct but many times, they are not. If you think that your home insurance adjuster may be guessing at depreciation calculations when you file a claim, definitely do your homework.

Before making a home insurance claim, it is best to have a full understanding of what type of coverage you have. A standard home insurance plan will cover dwelling loss as well as contents (personal property) loss. It is very important to ensure that your home insurance plan also has coverage for the value of the contents of your home. If you do not have this coverage and experience a home loss, the insurance adjuster will depreciate every item in your home.

Recoverable depreciation is also worth understanding if you are going to make a home insurance claim. This type of depreciation will determine what conditions exist and how losses are settled. In most cases, the home insurance company will pay you the actual monetary value of the damaged or lost property until repair or replacements are completed. If depreciation is not calculated properly, you could stand to lose thousands.

In order to successfully file a home insurance claim and ensure that your depreciation is calculated accurately you must be informed. You should always require that your insurance adjuster provide copies of the exact depreciation tables that they use. When your claim is filed, if you find that the tables and actual estimate do not match, you can refuse the claim and demand that the claim be re-estimated.

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Upside Down Mortgage Loan - Tips to Refinance an Upside Down Home Loan

Many homeowners are struggling as they are not able to pay their loan on time and are facing foreclosure. This is because the value of their property has declined more than 50% than what they actually bought it for. Now they owe much more money to the lenders than the actual value of the property to the lenders.

Tips to Refinance Upside Down Home Loan Refinance

If you are upside down on your mortgage and it is creating difficulty for you, then you can refinance your loan. Borrower need not to worry much about it as they still have a hope and chances to save their homes by getting their upside down mortgage loan refinanced by the related lenders.

1. You can refinance your loan by lowering interest rates which will help you to stay in your home. Some homeowners are tempted in a myth that the rates are going to be decreased further because of the bad economic scenario but it is advised that you do not take risk and wait for the situation to get worse.

2. You can be offered for a fixed rate mortgage loan by the lender to refinance your upside down home loan easily.

3. You must keep in mind objectives that will help you to figure out what type of loan you want and whether it will fulfill your financial goals.

4. You can even stay with your existing home mortgage rates. They may be reduced some fees to help you refinance in better way.

5. A professional help can be taken by an agent. You can appoint him to take care of your situation professionally and understand your circumstances to work upon it further.

6. Do not pick calls of anyone unless you approach to the loss mitigation department. You are needed to call them to know how to refinance an upside down home loan mortgage.

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How To Pick The Best Home Insurance Company

Home insurance is a must, but there are a lot of options to choose from, just like in auto insurance. There are four main categories in home insurance: Structure of the house, personal assets, liability, and off-premises living expenses.

House Structure Coverage

Coverage for the structure of your home should anything happen is a must, but it is up to you how well covered you want to be. There is an option called extended-replacement value coverage which will replace your actual house 100% as opposed to a much lower percentage. Plus, an additional percentage is added for the event that the house would have to be re-built to help defray the costs of the current housing market prices. If you decide not to get the extended-replacement option, it is especially important that you take into account inflation in the housing market each time you renew your coverage amount, and any remodeling improvements you make to the house should be taken into account also when renewing coverage amounts.

Personal Assets Coverage

There is also an extended-replacement value coverage option for your assets as well. Basically, your assets can be defined as anything in the house that is non structural. Many people grossly underestimate what everything in their house would cost if it all had to be replaced. Therefore, it is suggested as good advice to literally take an inventory of everything in your house to get at least a rough estimate of what the cost would be to replace it all. If you had to replace it all, keep in mind however, that it would all be replaced with the new versions of what you currently own. Therefore, the cost to replace everything would be (most likely) much greater than their present worth. Also, be sure to know the time-frame for replacing your items, if any. And, when they would actually help pay, before or after the fact? Many insurance companies prefer to reimburse receipts as opposed to giving the money upfront. Would that work for you in a worst case scenario? Something to make note of when choosing insurance companies.

Floaters (also known as endorsements)

Floaters can be thought of as a way of floating more coverage over to your more valuable items. Coverage amounts are meant for insuring basic household items and so therefore, will be insufficient as a means for extravagant coverage on a particular item(s). That is when floaters come into play. You can purchase floater insurance for those items that are extremely valuable in price for sufficient coverage if anything should happen to them, even if they are lost.

Liability Coverage

Obviously, the more coverage you have for liability, the better. Liability costs has the potential to be more than anyone's wildest imagination, and therefore, the better protected you are, the better off you will be should a worst case scenario occur. Liability coverage will cover you for damage done to others and their property, which can get very expensive, especially if they take you to court. It will also, therefore, pay the court fees and whatever the judge makes you dish out at the end of the day for damage costs. If you have pets that like to get out and cause damage, beware! You may want to up your liability coverage even more!

Coverage For Off-Premises Living

If a natural disaster causes your home to be unlivable for a while, you would have to live and eat elsewhere for who knows how long. Coverage for off-premises living would cover basic living costs during the time that you are unable to live in your own home. This is especially important to have if you live in a high risk area for natural disasters to occur. Make sure you know which natural disasters your insurance covers you for! Don't assume it will be for all and any that occur. For example, most insurance companies do not cover for floods and earthquakes by default. You must pay extra coverage for them specifically if you want coverage for it.

Know What Your Coverages Contain

Coverages for each insurance company will be similar but the details will be different. For example, if you lose your purse at the store (that contained a lot of money) and you were unable to retrieve it, would your insurance cover it under your personal assets? A lot of homeowners insurance companies would because they cover all your assets, whether you keep them hidden or take them out with you, they are usually covered just the same. Many people horribly underestimate what their homeowners insurance company can and will do for them. So, it is good to know the details of the coverages as well as what they cover. What is the list of natural disasters? If a tree fell through your roof would you have coverage for that? Also, what is defined as "your house-structure"? If your unattached garage burned down to a stubble would you have coverage for that? The more you know about your coverages the better.

How Can I Save On My Homeowners Insurance?

Just like with auto insurance, the higher your deductible is (the amount you must pay before your insurance will help out), the lower your premiums will be (your monthly payment), which can save you a bundle of money. So, the highest amount you are willing to pay out of pocket for if anything happens should be your deductible. And, if you use a homeowners insurance company that also covers your auto insurance as well, chances are you will get the bulk, discounted rate.

Meeting Safety Standards

Fixing up the house to meet insurance standards will also decrease your monthly payments with most insurers. It is a good idea to have their check-off list, such as the certain kinds of alarms and locks needed. Sometimes even a housekeeper living with you can decrease your rates since that can be looked upon as a very good alarm system also!

Anything that poses as a hazard in the home will increase your rates, so to get rid of the hazardous stuff will really help with lowering rates. For example, smoking is a fire hazard (over 23,000 reported house fires a year come from smoking), the fenceless pool is a liability hazard, and the pet that scares the inspectors of your home will surely be the cause of higher rates as well.

Land

Unless you are worried that the very land your house sits on will be pulled out from under you like a big rug, leaving you with nothing but a hole in space, you probably don't need to insure it. However, insurance companies usually add your land into the value of your home by default. If you subtract the value of your land from the value of your house and just cover for that, then your rates will be less because there will be less expense to cover.

How Can I Make Sure An Insurance Company Is Good?

Believe it or not, there were homeowner insurances that tried to refuse payment to those insured when Katrina hit. Knowing the history of handled claims is a good indicator of how good a company is. Ratings online can be checked, which indicates how well they pay their claims. You can compare quotes online at http://www.foxquotes.com

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What You Should Know About Buying a Second Home

Buying a second home is similar to buying your primary residence. Lenders require the same financial documentation as would be provided on a primary home loan. However, buyers should note a few differences.

Learn what Lenders Say Comprises a Second House

A lender considers two factors to confirm that a property is a second residence. The first is that most second homes are smaller in price and size than a borrower's primary home. The second factor is the distance between the two properties. The two homes will typically be expected to be about 100 miles apart or so. If these 2 conditions are present, the loan will be considered a mortgage on a second home.

The down payment for a property deemed a second home is less than that of a property that does not meet the above criteria. Getting financing for a second home is easier than an investment property. Your down payment is likely to be between five and ten percent. Of course, the larger the down payment, the lower your rate and the lower your monthly payment will be.

Ask Your Lender About the Differences Between Financing Options

The same loan products are available for a second home mortgage as during the financing of a primary home. You may, however, want to consider other options for financing. Discuss your long- and short-term plans with your lender. If you plan on keeping your second home for a number of years, a fixed rate loan with a larger down payment would probably suit you best. On the other hand, if you consider this home a short-term investment, an adjustable rate mortgage or even a balloon might be a better option.

Do Your Research Before Purchasing a Vacation Home

The rate could be exactly the same as on a primary home. Many conventional lenders will offer the loans with the same rates and down payment requirements for second homes as primary. If the lender has some concerns about the borrower, they may charge slightly high interest rate. In most cases, it will only be an eighth-of-a-percent increase.

As you research your ability to buy a vacation home, use a mortgage calculator with a five percent down payment, you will be in the ball park of what the cost will be. Use the going interest rate, adding a quarter percent, to figure what your second home is likely to cost. Don't forget to account for the tax deduction the interest will give you.

If this looks affordable, take the plunge; it will be fun!

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Tax Deductible Capital Improvements On One's Home

Many home improvements are capital improvements. The Capital Improvements are tax deductible according to IRS if the home improvements meet a number of conditions. The home improvements are permanent addition to the home that increases the value of the home. Hence, the home improvements are substantial in which the value of home property appreciates, the life of home property prolongs, and the functionality of home property increases.

For example, placing a fence, adding a room, installing a driveway, implementing a swimming pool, installing a new roof, setting a new built-in heating systems are capital improvements.

The capital improvement increases the value of your home. For example, adding a new room increases the value of home. The new room increases the ability of the property to earn more income. Thereby, the value of home property increases as well.

Another example, adding a garage increases the value of home. Renters will pay extra for a parking space. And again, the new garage increases the ability of the property to earn more income. Thereby, the value of home property increases as well.

On the other hand, the home repairs are not home improvements according to the IRS. Repairs are expenses that keep the property in good repair. And, the rental property owner can claim the as expenses on the year that the expenses are made.

For example, repainting the walls, patching the roof, installing the wallpaper, replacing the carpet, sealing the links, and repairing the windows are home repairs.

To be able to claim capital improvement tax deductible, the homeowner needs to use the Depreciation Method. The Depreciation Method is a way to recover the cost of capital improvements through depreciating the expense over the life expectancy of property.

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Choosing the Best Subprime Mortgage Lenders

For those who have a poor credit history the dealing with any financial institute with regards to arranging a mortgage can prove very difficult. However there are now a number of subprime mortgage lenders who can provide you with a level of service that ensures that you get the best deal possible when you need to arrange a loan to purchase a house.

But with so many of these lenders now around how do you know which the best one to use is. Well to be honest the most effective way of finding a good subprime mortgage lender is to speak with a broker or to go online. Although brokers will charge a fee for helping you they will know most of the products that are on the market and will have a good working relationship with many of the lenders.

If however you would rather try and arrange a subprime mortgage yourself there are certain things that you should know about not only the lenders but also the products they offer. Below we take a look at just what some of these things are.

1. Have they included all their costs within the quote that they have provided to you. The fees that they should include along with of course the rates of interest being charged are set up, valuation and legal fees that often get charged in addition to the amount of capital that you originally borrowed. If they don't then look elsewhere to arrange your mortgage.

2. Another thing you need to be asking of any subprime mortgage lenders will you be charged should you be in a position to actually repay the loan before the term of it has expired. If you would then find exactly what sorts of charges will apply and also how long you would be locked into the mortgage before repaying it won't incur such costs.

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What Is Murabaha Financing

The Islamic Sharia Law prohibits the payment of interest. To use a mortgage is the most common form to purchase a home for many countries. On a conventional mortgage, the borrower needs to pay interest. So, the devoted Muslim avoids to purchasing a home.

A few years ago, only the very rich can really afford to purchase a home. Now, mainstream financial institutions are changing to accommodate the Muslim devotees. Financial products are created. So, the Muslims are able to purchase a home.

As many countries lack the knowledge and language of Quran (Islamic bible), the Muslim scholars is needed to review the financial products. This is to make sure that the financial products are halal (permissible). The Muslim scholars also look at the money that is use by financial institution. The money must come from permissible sources.

There are more and more Muslims that is living on a country with different predominantly religion. Naturally, the financial institutions are seeing the need to tap the Muslim market. It is believe to be worth in billions.

The Murabaha and Ijara are the two mortgage refinancing options that meet the Islamic Sharia Law. In English, the Murabaha means deferred sale finance. As for Ijara, it means lease to own in English.

In Murabaha, the borrower pays twenty percent as down payment. So, the borrower needs a substantial amount of capital in this option. First, the borrower shops for a home like the conventional mortgage. Next, the borrower pays the twenty percent down payment. Then, the financial institution purchases the home for the borrower. In return, the financial institution sells the home to borrower on a higher price. The higher price is determined by original price, repayment period, and down payment. Finally, the borrower agrees on the repayment amount and term agreement.

In Ijara, the borrower looks for a suitable home. After he found a suitable home, the borrower negotiates the price to the home owner. When the price is settled, the financial institution purchases the home to gain ownership. Then, the borrower agrees to the lease agreement. On top of the lease, the borrower pays additional to pay off the mortgage.

In any case, the borrower can pay off the mortgage without penalties. In reality, the Murabaha and Ijara are more expensive than the conventional mortgage. However, the Muslim devotees feel at ease. They rather pay more as long as it is permitted to their religion.

Technically, the home is sold two times. First, the financial institution purchases the home. Then, the borrower purchases the home from financial institution. So, the borrower pays the mortgage refinancing closing costs two times. Recently, the mainstream financial institution charges only one closing costs for equality.

Muslim communities in many countries are growing steadily. It is a dream to purchase a home someday. Nevertheless, there will be a few obstacles that will get in the way. It is just natural. Many devotees will feel guilty to take part that violates their religion. So, it is okay to pay extra. There are no complains. At first, many devotees think that conventional mortgage is the only way to proceed. Times are changing. Mainstream financial institutions bends toward their need and religion.

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Property Tax Valuation - How to Calculate

How exactly does your city come up with your property tax value? Are you concerned that your real estate taxes might be unfairly high and want to see if you are eligible for a reduction? That is what we discuss here.

First of all, no matter how confusing your property tax statement is, with all of the various terms, ratios, millage rates, etc calculating your real estate taxes really boils down to only a few factors: the market value of your property, your cities assessment ratio and the tax rate.

The market value is what your property would sell for on the open market, without any "undue influences," like being in a state of foreclosure, structural issues with the property, short sales time frame, etc. Again it's what your property sells for under a normal sale.

Property Tax Valuation

The assessment ratio is very important to calculating your real estate taxes and is what is sometimes referred to as your "property tax value". What cities do is multiple your market value, by the assessment ratio, the resulting number is the assessed value.

For example if your properties market value is $500,000 and your cities assessment ratio is 80% your property tax value would be: $500,000 x.80= $400,000 assesed value. Assessment ratios vary from state to state and from jurisdictions. Your assessment rate could be totaling different than your neighboring town.

Tax Rate

The tax rate is also known as a millage rate and is the actual rate that property owners pay in their given town. Like the assessment ratio the tax rate varies from town to town and also from building types. For example a commercial building will be taxed at a different rate than a single family home.

In addition, a single family home used as a rental property will normally be taxed at a high rate than a single family home that is occupied by the owner.

To figure out your annual taxes you multiple the tax rate by the assessed value. For example take the assessed value of $400,000 x.020 (tax rate/millage rate) = $8,000 in annual property taxes.

Property Tax Valuation

On a real estate tax appeal you can only debate the fair market value of your property. You cannot argue the tax rate or the assessment ratio (unless they made a mistake and recorded your property in the wrong category). But again, you can only argue the assessors opinion of your properties value. Keep in mind that most cities assessors are over worked and or under qualified, so they very often make outright mistakes. If you know of other similar properties in your area that sold for less than what they have recorded your property at, than you most likely have a case and could save a lot of money.

Don't be like the 98% of property owners that don't bother to appeal their real estate taxes. They are leaving thousands of dollars on the table for no reason. The process to appeal is really not complex and won't eat that much of your time.

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Houses For Sale in Jamaica - Transfer Tax and Stamp Duty

The transfer tax and stamp duty are fees that are attached to your cost when you are involved in a transaction for houses for sale in Jamaica is usually at a percentage value of the land. Normally the value is in line with the sale price.

The transfer act states that transfer tax is 7.5%. There is a relief an amount of $10,000.00 relief where the value of the land is $150,000.00 or less. The type of home does not matter. It is usually a misconception that Jamaica beachfront houses for sale attract a much higher transfer. This is simply not true. However there are some exemptions to these Jamaican property taxes.

Exemptions

1. Transfers of property by Jamaican Government and Local Authorities.

2. Transfers to government or Local Authorities of Jamaican land for purposes such as roadways and other reservations in sub-divisions.

3. Transfers by way of gifts to approved institutions of property to be used exclusively for charitable purposes.

4. The Principal place of dwelling of spouses (Joint Tenancy or Tenancy in Common) In the event of death only.

Stamp Duty - Payment of Stamp Duty is governed by the Stamp Duty Act. The stamp duty payable on land is approximately 5.5% of the full value of the land/dwelling.

Certification of title:

Once a property is registered it is given identification by way of Volume and Folio numbers in the Register Book of Titles. The original Title is kept at the Office of Titles and entries are made thereon whenever something affecting any interest in the land is brought to the attention of the Registrar of Titles. For example, a transfer, a mortgage, death of a part owner, grants of easement and so on. This is standard for all houses for sale in Jamaica.

The land owner gets the duplicate Certificate of Title on Registration. Duplicate Certificate of Title has to be submitted to the Registrar for endorsement of all transactions affecting the land.

The Conveyance or Transfer of Houses In Jamaica For Sale Exercise

This normally begins either between seller (vendor) and buyer (purchaser) or between either one of the aforementioned parties and a Jamaica real estate dealer or Jamaica property agent. Purchaser or an attorney should inspect the Duplicate Certificate of Title. This is vital as some homes in Jamaica for sale come without sale agreements and hence no transfer might have taken place. A title proves exactly who the owner of the land is.

The usual form of Purchase and Sale Agreement sets out inter alia:-

(1) The legal names, registered address and gainful occupation of the contracting parties.

(2) Full description of the house in Jamaica for sale - including size or actual dimensions, registered location, and the identifying folio and volume numbers of the Certificate of Title, in the case of both registered Jamaican buildings and land. In the case of land with a Common Law Title, the size, description, boundaries and other relevant details.

(3) Purchase Price - in words and figures to avoid mistakes and misunderstandings.

(4) Completion - the effective date when the final payment for transaction is anticipated to be collected and the full sale completed, that is, transfer effected, cheque and titles exchanged.

(5) Cost of transfer - unless otherwise agreed, this usually states that each party should bear half the cost of Stamp Duty, Registration Fee and Attorneys Costs.

Payment of Jamaica real estate agents commission - paid on the Completion of the transfer of title and the closing of the transaction.

Fees on sale and purchase of land

1. Transfer tax - 7.5% of market value (Vendor only)

2. Stamp duty - approximately 5.5% of Market Value

3. Registration fee - Approximately 2% of Market Value (or $2.00 per 1,000)

4. Attorney's costs - As per Scale - Jamaican Bar Association (effective 1st June 1991)

5. Surveyors Identification Fees:

(i) Values up to $500,000.00 = $1,500.00, thereafter, 0.1% up to 1 million, thereafter, $1,000 per million. Plus Research and Title fee/charge of $400.00.

(ii) Properties in excess of 1 acre or Irregular Boundaries a traversing fee is added. Fee depends on length of traverse.

(iii) If land is outside the corporate area $6.00 per mile.

6. Valuation Fees:

Kingston Jamaica Corporate Area

Corporate Area: Cost $3.00 per 1000 of the market value and $150.00 for travelling and incidental expenses. Minimum fee of $1,000.00 plus travelling and incidentals $1,150.00

Outside Corporate Area - (Beyond 15 miles from Kingston Jamaica) 3.50 per 1,000 of the market value plus travelling @ $3.50 per mile minimum fee of $1,500.00 plus travelling.

7. Mortgage Costs: (Building Societies)

(1) 1% application fee (Saver)

(2) 2% application fee (non Saver)

(3) Life Insurance - amount differs according to age.

NB. No longer will Compulsory Society take an assignment of Existing Policy.

(4) Mortgage Indemnity: 7% of sum being Insured applies when Mortgage in excess of the standard two thirds - 90% Mortgage.

(5) Stamp duty on Mortgage

(6) Registration Fees on the Mortgage

(7) Attorneys Costs

(8) Valuation Fee

(9) Surveyors Identification

(10) First Month Mortgage Payment

Mortgages: - $1.00 per 200 x 25% or 0.65%

These outline all the costs associated with buying houses for sale in Jamaica. It is important that both the vendor and purchaser understand the fees associated with this Jamaica real estate transaction.

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Yes, You Can Have Multiple VA Loans

Can a veteran get more than one loan with the VA Loan Guaranty Program?  Yes, in fact the VA loan program can be used over and over again as long as you have entitlement.  Entitlement is the amount of VA guarantee toward each loan under the Program. Only VA-eligible borrowers have entitlement. And, entitlement can vary from borrower to borrower depending on where he or she lives and past usage.  Generally, a qualified veteran can obtain a VA home loan of up to 4 times the amount of his or her available entitlement with no down payment.

Before we discuss multiple VA loans further, let's talk about how entitlement works.  VA loan entitlements can be broken down into two types: basic and bonus.  Each eligible veteran has basis entitlement of $36,000 for loans of $144,000 or less and bonus entitlement of at least $68,250 to use for loans over $144,000.  The amount of bonus entitlement is arrived at by taking the annual Freddie Mac conforming loan limit for your county, multiplying it by 25% and then subtracting basic entitlement of $36,000.  In 2009, most U.S. counties have a conforming loan limit of $417,000, and some counties are higher.

Calculating multiple VA loans is not difficult if you know how.  Having more than one VA loan at a time is rare, but possible. Most multiple loans involve the use of bonus entitlement. For instance, a veteran may be using his or her basic entitlement, but still have bonus entitlement available to purchase a home using the Program.  A borrower might have an open VA loan of $144,000, for example, but still have bonus entitlement of $68,250 unused.  In this situation, the borrower would be able to get a loan over $144,000 and up to $273,000 using bonus entitlement alone.  Remember, bonus entitlement can only be used for loans over $144,000.

In higher cost counties where conforming loan limits are more than $417,000, bonus entitlements are more than $68,250. Of course, a veteran must demonstrate ability to pay in order to borrow any amount including loans exceeding $417,000.  Conforming loan limits are what VA-approved lenders use to calculate how much a borrower is entitled to. Also, purchase price dictates what portion, if not all, of a veteran's entitlement must be used.

In general, the VA guarantees 25% of each additional loan amount over $144,000 up to the conforming loan limit for each VA-eligible borrower.  There are many factors to be considered. There is the purchase price, of course.  County loan limits must be taken into account.  A veteran's income and credit qualification are also factored in. Whether a VA borrower has used the VA Home Loan Guaranty Program before is also part of the equation.  Entitlement can be restored after a VA loan is paid in full.

Here are some sample calculations that might assist you in understanding how entitlements are figured for multiple VA mortgages: 

1) $36,000 of entitlement is currently being used on borrower's VA loan, and he is getting another VA loan in the amount of $470,000.  The conforming loan limit in his county is $625,000.

$625,000 x 25% = $156,250 Maximum entitlement

$156,250 - $36,000 = $120,250 Available entitlement

$120,250 x 4 = $481,000 Maximum loan amount this borrower can get

Since this borrower is seeking a loan of $470,000, which is under the allowed $481,000, he will only need entitlement of $117,500.  No down payment will be required.

2) A borrower has used $105,000 of her entitlement on a prior loan which has been repaid in full and entitlement restored. She is borrowing $395,000 with a new VA loan where the county limit is $815,000.

$815,000 x 25% = $203,750 Maximum entitlement

$395,000 x 25% = $98,750 entitlement needed for this loan

This borrower's full entitlement has been restored, and the proposed loan amount of $395,000 should get full 25% VA Guaranty with entitlement to spare, and no down payment is required.

3) A veteran is using $27,500 of his entitlement on a current loan, and is purchasing a home for $320,000 where the county limit is $417,000.

$417,000 x 25% = $104,250 Maximum entitlement

$104,250 - $27,500 = $76,750 entitlement available

$76,750 / $320,000 = 23.98% VA Guaranty on this loan

Since VA's Guaranty will be less than 25% of the loan amount, a down payment will be needed to meet lender requirements.

Sometimes a subsequent VA loan is not possible.  Here are two examples where the borrower would most likely benefit from another type of mortgage other than VA:

1) A veteran is using $36,000 of her entitlement on a current loan, and needs to borrow $120,000 for another home purchase where the county limit is $417,000.

 Since the loan amount is not over $144,000, this veteran's bonus entitlement   cannot be used.

2) A veteran already has a VA loan of $800,000 where the county limit is $729,750.  He wants another VA mortgage for $350,000.

$729,750 x 25% = $182,437.50 Maximum Guaranty

$800,000 x 25% = $200,000 exceeds entitlement and down payment was required

This borrower has maxed out his entitlement; therefore, he is not eligible for a subsequent VA loan.

With VA loans, a down payment is usually required by the lender if a borrower exceeds his or her entitlement. Once a down payment is required, it would make sense for a borrower to explore other mortgage options in addition to the VA Program to weight costs and benefits. For more questions about VA loans and to find out if a VA loan is your best option, contact a loan specialist.

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How to Get Cheap Mobile Home Insurance in Florida

Because hurricanes, floods, fires, and burglaries are on the rise in Florida, mobile home insurance is no longer a luxury, it's a necessity. Here's how to get cheap mobile home insurance in Florida.

Mobile Home Insurance

Standard mobile home insurance includes the following coverages:

Structure coverage - This pays to replace or repair your mobile home, and other structures like a detached garage, when they've been damaged or destroyed by fire, plumbing leaks, vandalism, or storms. Standard policies do not cover damage caused by floods, so you'll need to purchase extra insurance if you want flood coverage.

Personal property coverage - This pays to replace your personal property - electronics, clothing, furniture, bicycles, sports equipment, tools, etc. - when they've been damaged or destroyed by fire, plumbing leaks, vandalism, or storms. Standard policies limit the amount of coverage for expensive items like jewelry, furs, collections, and antiques, so you'll need to get additional insurance for these.

Additional living expense coverage - This pays your additional living expenses when your mobile home is uninhabitable and is being repaired. This coverage pays your hotels bills, restaurant bills, and other additional expenses.

Libility coverage - This pays for medical claims, property damage expenses, and legal fees if you or your family injure another person or damage their property.

Trip collision coverage - This pays to repair or replace your mobile home when it's been damaged when you move it to a new location.

Emergency removal coverage - This pays to move your mobile home when it's being threatened by an approaching fire, hurricane, or other perils.

Loss assessment coverage - This pays your share of losses assessed by your association.

How to Get Cheap Florida Mobile Home Insurance

The cost for mobile home insurance can vary by hundreds of dollars from one company to another, so the first thing you should do is get quotes from different companies see which company has the cheapest rate. The best place to do this is at an insurance comparison website where you can get multiple quotes by filling out a simple questionnaire with information about your mobile home and the amount of insurance you want.

In order to get the cheapest insurance premium, request the highest deductible you can afford and get all the discounts you're eligible for when you fill in the questionnaire.

The top comparison sites feature a service that allows you to talk with an insurance expert so you can ask questions and get advice on mobile home insurance (see link below).

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HCFP Mortgage Loans Program Information

Not everyone has heard about the Housing and Community Facilities Programs (HCFP) because they provide funding for many types of loans other than the conventional home loan in the city or suburb of a city. The loans they provide begin with loans for rural individuals for housing. They also provide funding for rural community facilities, apartments for low-income persons and the elderly. They provide funding for so many different types of loans including housing for farm laborers, childcare centers, nursing homes, and schools. Also, included are fire and police stations, hospitals and libraries. The HCFP is funded by the United States Department of Agriculture (USDA). The HCFP has a Loan Guarantee Program that is similar to FHA or VA loans where they are not actually doing the funding of the money. With this type of program a borrower may borrow as much as 100 percent of the appraised value of the home they want to purchase. Borrowers that qualify for this type of loan may have 115 percent of the median income for the area they live in.

The Housing and Community Facilities Programs for Individuals is for the following:
1) single family rural housing;
2) renovations and repair of a home;
3) programs that supply assistance for the disabled, low-income rural residents of multi-family housing, and the elderly.

Then there is the HCFP Direct Loan Program which makes it possible for individuals or families to qualify for a home loan at a reasonable interest rate. There are limits for the loans made under this program and they are different depending on which area you live in. Also, the borrowers using this program must be in the low income range which falls below eighty percent of the median income for their community.

There are many programs that fall under HCFP and another one is the HCFP Mutual Self-Help Housing Program. This program is to help certain people construct their own homes. These borrowers must be in the very low-income range of approximately fifty percent of the median of the area they live in. The borrowers actually perform at least sixth-five percent of the construction on not only their home but on the homes of other borrowers in the same category. Of course, there are professional builders that supervise this construction.

There are also HCFP loan for refurbishment of very low-income borrowers. These grants or loans can be repaid in a period up to two years and the interest rate is only one percent. Also, there is a program for Rural Development Real Estate for Sale which includes real estate owned by the government and fall under the category of possible foreclosures.

The HCFP and the USDA makes it possible for those people in this nation that live in the rural areas of this country to be able to provide housing for their families. Most of the citizens living in the rural areas fall within the very low-income category and they are given the opportunity to help themselves by participating in building their own homes with the help of HCFP. The HCFP even helps the poor families that have to live in multi-family dwellings that are overcrowded and in areas where they actually have to live off the land and grow their own food, etc. If they were not assisted by the HCFP they would not even be able to do that.

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Apply For Free Grant Money and Never Pay it Back

There's over millions of dollars in free grant money that is given away to everyday people through various government and private foundations. These are not to be confused with loans. That's mainly because the money you are awarded by submitting a grant application never has to be paid back.

This free money was budgeted for through tax payer dollars and tax incentives provided to organizations, and it allows American citizens to obtain cash grants for their personal use.

Applying for some of this free government grant money and private foundation grants can be done by searching the online grant database program. There you'll find many of the available programs with various funding amounts. Just review the eligibility requirements and qualifications to see if you feel you match the criteria for receiving these funds.

Often times many people can be awarded money for the same grant, so it doesn't hurt to submit an applications. There is also no limit on the number of grants you can apply for or receive. If you feel there are a number of programs you can qualify for, then you are free to apply for all of them.

As a result, you could receive as much as $50,000 to build your own business, $13,000 to pay your bills, or even $19,000 to help you pay for school. There are hundreds of grant programs for various reasons. Single parents, college students, minorities, and many other groups may qualify to receive some of these funds. Once your application is reviewed and accepted, you'll receive the cash grant you need that never has to be paid back.

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Recreational Land Loans

Owning a getaway property built on a land close to the mountains or the sea are stuff dreams are made of for many. However, the brave ones find the means to bring these dreams to life. One of the ways to own a recreation land is by applying for recreation land loans.

However, before you jump in glee over the very prospect of being able to take a loan and invest in an undeveloped plot of land, you must realize that loans for such real estate don't come easy. The interest rates are also not nearly as attractive as for mortgage or refinancing loans. The reason is that it is quite difficult to evaluate the value of land as compared with a house. Now appraising land is complicated because it may suffer from soil, drainage, or other issues.

Another major issue in getting recreational land loans is there is no loan company that will be able to buy these loans from loan dispensing individuals or companies that aren't equipped to keep them anymore. However, that being said, you still have options to get a recreational land loan if you are willing to make 10% or 20% down payment. There are some banks that will be happy to finance you, but the catch is that they will dispense the loan only for land belonging to their neighboring areas. In order to buy land outside the banks' neighborhoods, you'll be required to put down at least 50%! However, if you are really desperate and don't mind paying 12% interest on the borrowed amount, you may be in luck as there are land finance companies who can finance your need.

So is there no other way to buy recreation land? One of the best ways to do this is open up your pocket and pay cash for the land deal. If you don't have that kind of money then use home equity or go for refinancing (cash). There are recreational land loan specialists that can help you get a better deal from financial institutions. As a matter of fact, your seller can also help arrange financing for you. Some land companies refer their buyers to local banks in the vicinity of their developments for loan to buy land. If you are lucky you may get ARM for 30-year duration at 5.5% interest rate. So look around, try to negotiate before making a choice.

On the other hand, if you aren't buying land directly from a developer, nor can you invest your home equity, visit the local banks for loan programs. If you are certain that the property value is increasing, you will be able to get recreational land loans easily. As land prices rise, banks are willing to give out loans for lower rate of interest. Who knows you may just get lucky enough with one of them.

Another good thing to remember when buying undeveloped land is that it will be counted as an investment if you have plans of constructing a house on it in future. The loan will not be treated as a mortgage loan.

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Mortgage Refinancing: Home Appraisal Basics

If you are in the process of refinancing your mortgage loan, your new mortgage lender may require an appraisal prior to approving your loan. Here is what you need to know about appraisals, including tips to help maximize the equity in your home.

Your home's appraisal is a written estimate of the market value of your property. Mortgage lenders use the appraisal to determine how much of a mortgage you qualify for. When you are refinancing your mortgage, the appraisal will also determine how much equity you own in your home. If you will be borrowing against this equity, the lender will most likely require that you pay for a new appraisal prior to approving your loan.

The appraiser is a licensed professional that will do a market analysis of sale prices for similar properties in your neighborhood and evaluate the condition and amenities of your home. The appraisal will require a thorough inspection of your home inside and out.

When you are refinancing your mortgage your goal is for the appraised value to be as high as possible. There are a number of improvements you can make to your home that will improve the appraised value of your home; however, don't go overboard. New carpet and a coat of paint will go a long way to improve the appraised value. What you don't want to do is purchase top of the line appliances; these purchases rarely give you enough of a boost in your home's value to justify the expense. The best thing to do is make sure your home is up to snuff with your neighbors as far as the amenities and add-ons you invest in to improve your home's value.

When searching for a home appraiser, look for an experienced professional licensed in your area. Your realtor may be able to recommend a good one; if you are not able to find a recommendation try contacting the Appraisal Subcommittee. The ASC maintains a database you can access on their website to help you locate a licensed appraiser in your area. You can learn more about your mortgage and the appraisal of your home by registering for a free mortgage guidebook.

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Wells Fargo Home Loan Modification Programs

The Wells Fargo loan modification program decides on borrowers based on their current budget. In order to be considered for their loan modification program you will have to set a goal for your target payment.

Your next step in the process and an important one is to complete all forms for the mortgage modification process. Completing all the necessary form will show the lender that you are ready for the new terms and that you have created a budget and it will be enough to repay the loan. A great and simple way to increase your chances of approval is to completely and correctly complete the application for the loan modification.

Remember there are many people in similar situations. Hundreds of people are filling out applications for the Wells Fargo mortgage refinancing or modification and those without errors are much more likely to get approved. Don't give the lenders any reason to push your application aside, be honest and clear. Give the lender all the information that they asked for the first time so you can save time and you won't have to worry.

It is always recommended to do some homework if you are applying for a loan refinancing or modification for the first time. There is tons of information about Wells Fargo online, you can find an application guide that can help you complete the forms you will need and anything else regarding Wells Fargo or their loan modification process. The guide will come in handy when completing the application, writing your hardship letter and also calculating your debt. It comes in handy when thinking about loan modification.

Since there are many homeowners that are facing foreclosure, Wells Fargo came up with there loan modification program. The program will help those that have defaulted on their mortgages and help keep them in their homes. Wells Fargo does have a program that would stop foreclosure for a period of one month. In that time the homeowner is able to look for a solution that works for everyone. Many will already be excluded including those already in bankruptcy and those with a second home.

There is a second type of home loan modification from Wells Fargo; it deals with those loans that have an adjustable rate. This type proposes a five year period where the introductory rate would not be considered. There are other criteria that one must meet in order to qualify for their loan modification program, for example the loan must have been taken before or on January 1st 2009. There's a lot more information online, look up any other information that may be able to help you along with the process.

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Commercial Real Estate Jargon Investors Should Know

Commercial real estate investment is a new territory for many real estate investors. The following is the alphabetical list of most commonly used terms in this area.

Anchored tenants: big brand-name national tenants, e.g. Albertsons, Longs Drug, Walmart that bring in lots of traffic to the shopping center.

CAM: Common Area Maintenance. Associated with CAM is CAM fees. For NNN leases, the term CAM fees refer to the money tenants pay landlord to cover property taxes, insurance and maintenance.

Cap rate: Return of investment in the first year of ownership. Capitalization rate is the ratio of 1st year Net Operating Income over the purchase price. The higher the cap rate, the higher the rental income. For people who invest in the stock market, cap rate is the inverse of P/E ratio.

Cash on cash: annual percentage return of your down payment not including appreciation. First year cash flow divided by your initial down payment.

Conduit loan: also called Commercial Mortgage Backed Securities (CMBS) loan often with the lower rate than traditional commercial loan but either has high pre-payment penalty (called defeasance or Yield Maintenance Penalty) or does not have payoff flexibility.

CPD: Car Per Day or traffic volume on a road.

CPI: Consumer Price Index. It's often used to calculate annual rental increase to compensate for inflation.

Due Diligence Period: the duration after acceptance normally 15-30 days to allow buyer to investigate about the property. Buyer can cancel the contract during this time for any reasons and get full refund of the deposit.

Estoppel Certificate: a letter provided and signed by tenant confirming the current rent and terms.

Full-service lease: lease in which tenant pays rent that covers everything including utilities.

Gross income: total annual income before any expenses.

Gross lease: lease in which tenants just pay rent. Landlord pays tax, insurance, & maintenance.

GLA: Gross Leaseable Area or total rentable area. This is the space that can be leased and receive rental income. It does not include spaces for utilities room, elevator, etc.

GRM: Gross Rent Multiplier for apartment. Ratio of purchase price over annual income.

LLC: Limited Liabilities Company. A legal entity many investors formed to own commercial properties.

LOI: Letter of Intent/Interest or the normally non-binding offer letter used to make an offer to buy a commercial property.

MAI appraiser: Member Appraisal Institute commercial appraiser.

Master lease: lease signed by the seller to rent the vacant space to provide rent guarantee.

Mixed Use: commercial properties with retail on 1st floor and apartment on upper floors.

Triple Net (NNN) lease: lease in which tenants pay base rent plus property tax, insurance & CAM fees. Absolute NNN lease is NNN lease that tenants also pay property management fee.

NOI: Net Operating Income. Annual income after all expenses (property taxes, ins., & maintenance) except mortgage payment.

Pad: stand alone building in a prime location of a big shopping center.

Pass Thru: see reimbursement.

Percentage lease: lease in which tenant pays base rent plus a percentage of tenant's revenue.

Phase I Report: inspection report that provides an assessment for soil/environment contamination. It's normally required by the lender as part of loan approval process for a commercial property.

Phase II Report: inspection report for soil & groundwater subsurface investigation. This inspection is more extensive which involves testing to see if there is any soil and water contamination.

Proforma income: potential, i.e. higher, income when the property is 100% leased.

Proforma Cap rate: potential cap rate assuming property is 100% leased at market rent.

Reimbursement: the share of property tax, insurance & CAM fees that a tenant has to pay the landlord besides the base rent.

Rent guarantee: rent paid by the seller to buyer for vacant spaces until they are leased.

SBA Loan: a government-guaranteed loan for owner-occupied properties.

SNDA: Subordination, Non-disturbance, and Attornment. it's an agreement required by lender, signed by the tenants agreeing: the new lien in 1st position; lender as landlord in case of foreclosure; lease as valid as long as tenant is not in default.

TIC: Tenants In Common. A way for small/self-directed IRA investors to own a fraction of high-valued properties as tenants in common.

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What Household Budget Percentage Breakdown Is Typical?

The typical American household budget percentage breakdown looks like the list below. For most of the categories a range is shown. A range makes more sense to help you see where your personal budget fits (or doesn't fit.) If your budget doesn't fit the typical American household budget, rejoice! The average American household budget is jacked up - we carry too much debt and we just don't save enough. We're so worried about our neighbor's new pool, our co-worker's new car and our friend's new designer shoes that we spend more than we earn to try and keep up. But take heart! Review the percentages below, compare your household budget and then read on to find out how you can move yourself into the elite minority of Americans who have mastered where their money goes.

Typical Household Budget Percentages

33-38% Housing (59%-66% of this is on shelter - mortgage interest, property taxes, repairs, and rent, and other items)
15-19% Transportation (up to half of this is vehicle purchase - 2 cars per household average)
13-14% Food Budget (55% at home, 45% away)
0-2% Alcohol
0-3% Tobacco and related products
0-2% Caffeine related products
4-5% On clothing and related services (drycleaning)
4.5 - 6% on out of pocket Health Care
9% Personal Insurance and Pensions (breakdown: 1% life and other personal insurance, 7.5% Social Security, .5% investment
5% Entertainment
2.5% Charitable Contributions
2% Reading and Education
1% Personal Care products and services
2% Miscellaneous
4% Credit Card, Consumer Loan Interest

If your budget closely matches the above, here's what you can do to fix that. Do these in order. Do not proceed to the next step until you've addressed the current step:

Stop using your @#!&*! credit cards!
Make a down and dirty budget right away! Don't worry about it being right at first...you can perfect it over time. Just do it!
Cut back on your easy to identify, frivolous spending habits (3 dollar lattes, magazines, 450 extra satellite channels, etc.) If you've got some expensive habits you've wanted to quit for some time, now's the time. For example, if you're a hard-drinkin', chain smokin', coffee drinkin' fool, you can reap a windfall of up to 7% or more of your income! Just cutting back to 2 drinks per day, only drinking coffee from home and quitting the cigarettes will net you a nice amount of extra cash and add years to your life! Refine your budget after eliminating what you can.
Reduce your 401K and other investment payments (if you have any) to the minimum allowable to keep your 401K and/or other investment accounts open. If your employer has a stock matching plan, keep that in addition to the minimum to keep your investments accounts open (but only up to the minimum you need to get all the matching money.) You're going to reap a whole lot more return on paying off your debts than you can ever hope to reasonably get from traditional investments. If you're paying into a college fund for your kids - keep doing that - if you're not and you really want to, hold off until step 6. Refine your budget to reflect the extra income available, if any.
Build an emergency fund equal to 2% of your gross annual income. It should be a little hard to get to (like a separate checking account or mutual fund), but not too difficult (Certificate of Deposit.) Work this into your budget - it's very important. You will not believe the amount of stress that will melt away when you do this.
Pay off your debts - everything except mortgages. And don't just move your revolving debt into a second or third mortgage - that's bad. Pay them off using a rapid debt paydown system. Pay off any student loans (for future reference, these are a bad idea.) Pay off your car(s) too. If you're not upside down on a car loan (your car is worth more than you owe) you can sell it and get a cheaper, paid for car. Throw a small (inexpensive but fun) party for yourself and your loved ones every time you pay off a debt.
Take all the money you WERE spending to pay off your non-mortgage debt and start putting it into those investment accounts you put on idle. Make sure you're investing at least 10% of your gross income. If you followed steps 1-4 exactly, you should have lots of breathing room in your budget now. If this is true and you want to invest more than 10%, go ahead, but be sure to reward yourself too and live a little. Grow your emergency fund to a level you're comfortable with (2 or more months of income is a good start.) If you have young kids and you want to send them to college, start putting money into a college fund of your choice for them, if you haven't already. Throw a bigger party than usual when this is done.
Pay off your mortgage and throw your biggest party yet! You can start towards this by refinancing to a single fixed rate mortgage (your credit should be in pretty good shape having paid off all your other debts.) If it's a 30 year mortgage, pay more than your monthly payment to dramatically lower the amount of interest you give to the bank. If it's a 15 year fixed - wow! That's excellent!
When you're totally debt free, regularly give away whatever you think you can afford. It's good for the soul!

Easy? Not. Worth it? Doing the above will pay dividends in your life in many more ways than just dollars and cents. You will assure yourself a dignified and financially secure retirement. Do this well and you will also build a way for your kids and your grandkids to enjoy prosperous lives, and they will remember you with fondness and respect long after you've moved on to the other side. Now get started!

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How to Calculate a Cost of Living Allowance

A Cost of Living Allowance (COLA) is a salary supplement paid to employees to cover differences in the cost of living, particularly as a result of an international assignment. The amount of COLA should enable an expatriate to be able to purchase the same basket of goods and services in the host location as they could in their home country. The basis for calculating a COLA is the Cost of Living Index (COLI) which indexes the costs of the same basket of goods and services in different geographic locations. COLA is a simple accurate method of measuring fluctuating salary purchasing power and ensuring parity.

Cost of Living Index

Our cost of Living Indexes measure the cost of 230 products and services across 13 different basket groups in 276 cities across the globe. The data is gathered by a team of research analysts who survey comparable items that are available internationally. A minimum of 3 prices for the same brand/size/volume of product is used to determine the average price for each item in each location. The items are priced on a quarterly basis and tend to rise and fall with inflation. The 13 different basket categories are as follows:

Alcohol & Tobacco: Alcoholic beverages and tobacco products

Alcohol at Bar
Beer
Cigarettes
Locally Produced Spirit
Whiskey
Wine

Clothing: Clothing and footwear products

Business Suits
Casual Clothing
Children's Clothing and footwear
Coats and hats
Evening Wear
Shoe Repairs
Underwear

Communication

Home Telephone Rental and Call Charges
Internet Connection and service provider fees
Mobile / Cellular Phone Contract and Calls

Education

Crèche / Pre-School Fees
High School / College Fees
Primary School Fees
Tertiary Study Fees

Furniture & Appliances: Furniture, household equipment and household appliances

DVD Player
Fridge Freezer
Iron
Kettle, Toaster, Microwave
Light Bulbs
Television
Vacuum Cleaner
Washing Machine

Groceries: Food, non-alcoholic beverages and cleaning material

Baby Consumables
Baked Goods
Baking
Canned Foods
Cheese
Cleaning Products
Dairy
Fresh Fruits
Fresh Vegetables
Fruit Juices
Frozen
Meat
Oil & Vinegars
Pet Food
Pre-Prepared Meals
Sauces
Seafood
Snacks
Soft Drinks
Spices & Herbs

Healthcare: General Healthcare, Medical and Medical Insurance

General Practitioner Consultation rates
Hospital Private Ward Daily Rate
Non-Prescription Medicine
Private Medical Insurance / Medical Aid Contributions

Household: Housing, water, electricity, household gas, household fuels, local rates and residential taxes

House / Flat Mortgage
House / Flat Rental
Household Electricity Consumption
Household Gas / Fuel Consumption
Household Water Consumption
Local Property Rates / Taxes / Levies

Miscellaneous: Stationary, Linen and general goods and services

Domestic Help
Dry Cleaning
Linen
Office Supplies
Newspapers and Magazines
Postage Stamps

Personal Care: Personal Care products and services

Cosmetics
Haircare
Moisturiser / Sun Block
Nappies
Pain Relief Tablets
Toilet Paper
Toothpaste
Soap / Shampoo / Conditioner

Recreation and Culture

Books
Camera Film
Cinema Ticket
DVD and CD's
Sports goods
Theatre Ticket

Restaurants, Meals Out and Hotels

Business Dinner
Dinner at Restaurant (non fast food)
Hotel Rates
Take Away Drinks & Snacks (fast Food)

Transport: Public Transport, Vehicle Costs, Vehicle Fuel, Vehicle Insurance and Vehicle Maintenance

Hire Purchase / Lease of Vehicle
Petrol / Diesel
Public Transport
Service Maintenance
Tyres
Vehicle Insurance
Vehicle Purchase

Each basket category does not count equally and are weighted in the final calculation based on expatriate spending patterns.

In order to calculate an accurate cost of living index for a specific individual the basket items that are not relevant to the individual should be excluded from the calculation. For example if education and housing is provided by the employer these basket categories would be excluded from the cost of living index calculation. This increases the accuracy of the cost of living index and makes it possible for each individual to have their own customized cost of living index based on their specific arrangements rather than using an overall "generic" index which is likely to contains costs that are not relevant to the individual.

The formula for calculating the specific cost of living index for an international assignment is as follows:

Cost of Living Index = Customized Cost of Living Index for Host City / Customized Cost of Living Index for Home City

When moving to a higher cost of living host city, the index will be greater than 1 (positive). When moving to a lower cost of living host city the index will be less than 1 (negative). Where the index is negative it means that in real terms the cost of living in the host city is lower than the home city. This means that if the negative index where to be applied to the employee's salary, they would actually be paid proportionately less spendable salary in the host city. It is important to note that the majority of organizations do not apply a negative cost of living index because it makes it difficult to persuade an employee to take up an assignment as they tend to see it as a reduction in salary.

Examples of Cost of Living Index Calculations using our data:

Example 1) An Australian employee moving from Perth to London where healthcare and communication will be provided by the employer

More Expensive in London:

Alcohol & Tobacco +4.77%
Clothing +21.85%
Education +31.53%
Furniture & Appliances +16.03%
Groceries +16.35%
Household +50.72%
Miscellaneous +137.47%
Personal Care +11.18%
Recreation & Culture -6.82%
Restaurants Meals Out and Hotels +34.99%
Transport +19.80%

The overall difference in cost of living moving from Perth and London is +28.06%.

In this case the cost of living index is positive and would be applied as it is.

Example 2) A British employee moving from London to Mumbai where the employer will provide housing and education

More Expensive in Mumbai:

Alcohol & Tobacco -37.53%
Clothing -9.58%
Communication -44.92%
Furniture & Appliances -19.31%
Groceries -24.03%
Healthcare -31.24%
Miscellaneous -72.43%
Personal Care -24.94%
Recreation & Culture -35.73%
Restaurants Meals Out and Hotels -33.11%
Transport is -27.99%

The overall difference in cost of living moving from London Mumbai is -30.53%.

In this case the cost of living index is negative and would not be applied.

Net Spendable Salary

Differences in cost of living only impact the portion of the salary that is spendable in the host country. Items in the home country such as retirement funding, medical insurance and other home based costs are not impacted by the cost of living in the host country.

To determine the Net Spendable Salary establish what amount / portion of the current salary (in home currency) is spent in maintaining the employee's current standard of living / lifestyle. What will the expatriate need to spend their salary on in the host country? For example will accommodation be provided or will the employee pay rent, will healthcare be provided etc. Deduct all items that are either provided in kind or are spendable in the home country. Deduct the hypothetical amount of tax, social contributions and any other statutory deductions applicable in the home country from the Spendable Salary. What is left is the Net Spendable Salary.

Cost of Living Allowance (COLA)

The formula for calculating the cost of living allowance using the above inputs is as follows:

(Net Spendable Salary X Cost of Living Index X Hardship Index X Exchange Rate) less (Net Spendable Salary X Exchange Rate) = COLA

Examples of COLA Calculations using our data

Example 1) An Australian employee with a net spendable salary of AUD$100,000 moving from Perth to London where healthcare and communication will be provided by the employer

($100,000.00 X 1.2806 X 1 X 0.4768) less ($100,000.00 X 0.4768) = COLA of £13,379.44 (GBP)

Based on all the above factors a person would require a Cost of Living Allowance of £13,379.44 (GBP), in addition to their current salary of 100,000.00 Australian Dollar (AUD) to compensate for relocating from Perth to London. This Cost of Living Allowance compensates for the overall cost of living difference of +28.06% and the relative difference in hardship of 0%.

Example 2) A British employee with a net spendable salary of £18,000 moving from London to Mumbai where the employer will provide housing and education

Note: Because the Cost of Living Index is negative it is not applied.

(£18,000.00 X 1 X 1.3 X 67.2852) less (£18,000.00 X67.2852) = COLA of 363,340.32 Indian Rupee

Based on all the above factors a person would require a Cost of Living Allowance of 363,340.32 (INR ), in addition to their current salary of £18,000.00 British Pound (GBP ) to compensate for relocating from London to Mumbai. This Cost of Living Allowance compensates for the overall cost of living difference of [-30.53%] and the relative difference in hardship of 30%.

COLA Payment

The COLA is paid as a salary supplement (i.e. as an additional allowance) net of tax in the host country. If the COLA is a taxable allowance in the host country it should be grossed up in order that the full amount of calculated COLA is paid net of tax given that the basis of the calculation is Net Spendable Salary. The COLA is often accompanied by other allowances and benefits such as flights home, relocation / settling in allowance, and furnishing allowance.

Exchange Rate Fluctuations

Significant changes in the exchange rate can make a considerable difference in the COLA calculation. In 2008 some of the major global exchange rates changed by as much as 30-40%.

The cost of living index reflects the changes caused by inflation and exchange rates. In the short-term there may be disequilibrium between inflation and the exchange rate (the one pushes the other), however over time the cost of living index provides the most accurate view of the cost of living.

It is important to remind expatriates that when the cost of living difference is negative, and the negative value has not been applied, they have higher purchasing power in the host country than they would at home.

Where a negative cost of living index has not been applied (our recommended approach), and a change in the exchange rate indicates an upward adjustment in COLA may be required, it is recommended that the COLA should not be adjusted upward until the cost of living index becomes positive i.e. the cost of living reflects that there is a "real" increase in cost of living between home and host countries. This may mean that their would be no increase in the COLA as a result of exchange rate fluctuations for some considerable time. During this time the employee's purchasing power decreases. But it is important to remember that until the cost of living difference becomes positive, the individual will still have a higher purchasing power than they do in their home country.

It is advisable to stipulate a currency protection rule, rather than reacting to every fluctuation in the exchange rate. For example the rule may state that COLA will be reviewed if exchange rates or local inflation move by more than +10% during a year. It is important to keep in mind that the prices of goods and services are unlikely to drop in local currency. This would only occur in a period of deflation (negative inflation). Therefore the currency protection rule would normally make provision for upward adjustments in COLA and not downward adjustments during an employee's assignment. Downward adjustments to an existing COLA due to exchange rate fluctuations without a corresponding drop in the prices of local goods and services puts immense pressure on an employee's host currency budget commitments and can lead to the employee experiencing financial difficulty.

Using an independent service provider provides an independent, objective basis for determining an employee's COLA.

We recommend therefore that a COLA is calculated by applying the specific (customized) cost of living index to the net spendable salary at the beginning of the assignment and monitoring exchange rate fluctuations thereafter in addition to the annual salary review.

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