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Q&A: Understand the dangers of no-cost loans

December 15th, 2011

No-cost loans and mortgages are very attractive at first. However, in most cases all is not as it appears. Simply compare mortgage rates and look at the difference between mortgage loans with standard closing costs and those classified as “no-cost.”

Whether you’re looking at national or local mortgage rates, you’ll see a significant difference in both options, with the “no-cost” mortgage rates usually one-half to three-quarters of a percent higher.

While standard purchase money or refinance loans may have closing costs of two to three percent of the mortgage amount, these are one-time charges. Paying higher no-cost refinance rates will continue over the life of the mortgage.

For example, a three-quarter of a percent increase would cost you over $17,000 more in interest over the life of a $100,000 mortgage. This is obviously more than a $2,000 to $3,000 one-time charge for closing costs.

In some cases, no-cost loans can generate disaster. The difference in national and local refinance rates may even cause a homeowner serious financial problems, sometimes leading to foreclosure or bankruptcy. The two or

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Tags: Loans, Nocost Loans

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An ‘astonishing’ new scheme for start-ups

December 13th, 2011

There weren’t many winners from George Osborne’s autumn statement. Yet hidden among the bad news is a juicy new tax break for investors. Accountants at Blick Rothenberg call it “astonishing”.

From April 2012 the seed enterprise investment scheme (SEIS) will allow individuals who invest up to £100,000 per year in a new start-up business (up to a maximum cumulative investment in one firm of £150,000) to claim back income-tax relief equal to 50% of the amount invested. Moreover, as accountants at Deloitte note, you’re eligible for the 50% tax break regardless of the marginal rate at which you pay income tax.

Another eye-catching part of the new scheme is its ‘capital gains tax holiday’. Investors can avoid paying capital gains tax (CGT) on any asset sold during the financial year 2012-2013 as long as they reinvest the proceeds in a SEIS eligible start-up in the same year.

If this sounds vaguely familiar, that’s because it is. The scheme will run alongside existing enterprise investments chemes and venture capital trusts (VCTs). The fundamental difference, other than the tax breaks, is that the SEIS focuses on investing in start-ups. Also, whereas wit

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Tags: Astonishing New, New

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The CFPB’s New Credit Card Agreements

December 7th, 2011

Although Congress is dragging its feet in confirming the Consumer Financial Protection Bureau’s potential director, the bureau has been busy developing new tools to help consumers understand agreements that are potentially damaging to a family’s finances. Last year, issuers debuted new credit card statements designed to frighten borrowers into paying off debt faster. The new statements explicitly outlined how long it would take to pay off an entire balance by paying just the minimum each month.

The CFPB wants to bring this clarity to credit card agreements. These agreements are typically several pages long with small print, like this agreement for a Wells Fargo Rewards Visa. The new look suggested by the bureau is more consumer-friendly than it is lawyer-friendly. It will likely need additional support with the terms in legal language, as well, but the new look makes it much easier to understand, and more importantly, compare offers between credit cards.

Here is the first section of the proposed new look for credit card agreements.

Right up front, you can easily find the important interest rates, including any introductory rate, regular rate, rates for balance transfers and cash advances, and penalty rates. It

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Tags: New, New Credit

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Discount ban ‘could kill off store cards’

December 7th, 2011

The ban on instant discounts could sound the death knell for store cards, campaigners say.

By Richard Evans

6:44PM GMT 22 Nov 2011

Under a voluntary deal announced by the Government this week, stores will no longer be allowed to offer an immediate discount if a customer takes out a store card on the spot.

“Instant discounts are one of the biggest attractions of store cards, so banning them could sound the death knell for these cards,” said James Daley, the editor of Which? Money.

“They could start to become more like loyalty cards with a credit card element on the side,” he added. “Stores will need to offer continuous incentives to make them worth while for customers.”

Mr Daley said Which? mystery shopping exercises had found that the cards, which often charge interest at about 30pc, were “too easy to come by” but added that the new ban should go a long way to stamp out bad practice.

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Tags: Cards, Store Cards

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Investments – Trudging the unknown waters in this debt situation

December 6th, 2011

Investments do help the investors in handling their debt problems. In fact, economists and market watchers have always recommended that people should start investing their money in different financial market in order to earn extra dollars. This not only helps a person to save for his future but also to handle all of the debt payments. However, after the great recession in 2007-2009, almost all of the investment options have gone through a serious setback. It is not only the financial condition of the nation but also the need for increased items that have been hurting the different financial markets. For example, the video game investment market too is suffering. But, still it is also being said that the gaming sector is a much better place to invest than t5he other markets.

The video game investment market

According to the new reports, the video game investments have nearly doubled in the year 2011 if compared to that of the numbers in the year 2010. Read more…

Tags: debt consolidation

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How to Buy Investment Property Under an LLC

December 5th, 2011

This is a common question in Robert Kiyosaki’s RichDad forum. In Robert Kiyosaki’s book Rich Dad Poor Dad Kiyosaki recommends building wealth by investing in rental properties under a limited liability corporation. The confusing thing about this to newbie investors is that a bank typically will not grant a mortgage to a buyer under an LLC.

The way around this is to do what is called a Quit Claim deed after you by the property. By doing this, an investor deeds the property purchased into their corporation while the mortgage loan remains in their personal name. Beginner investors get confused because the bank usually has a clause in the mortgage where they can call the mortgage if title is transferred. A good real estate attorney will explain that although this clause exists, the mortgagor is unlikely to find out about the transfer if the payments are made, and real estate investors do this all the time with their investment property.

The important thing to remember is that when you buy investment property and deed it into an LLC, you are transfer your rights to the property over to the corporation to limit your liability to lawsuits, but you will remain responsible for the mortgage as a personal guarantor. It

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