Thursday, May 23, 2013
Monday, August 13, 2012
Overall, finding a great mortgage broker should not be too difficult. It should be easy to find one, either a reference from a real estate agent or bank, or through a friend. Most will be happy to answer any questions and compete for your business. If possible, interviewing a few mortgage brokers is an ideal idea. Do not be afraid to walk away if you do not feel comfortable with the mortgage broker or fees associated with the mortgage.
Thursday, June 7, 2012
It is estimated that you are 20 times more likely to be off work for six months because of sickness or injury than you are to die before reaching retirement. Few people question the need for life insurance to protect their dependants if they were to die, but only one working person in ten has any specific long-term financial protection if they are unable to work because of sickness.
Government figures show that about one in five people report having an illness or disability that limits their activities and about two million people each year claim benefits for long-term sickness or disability. Few people would find it easy to cope with the financial impact of a prolonged illness. So why is this area of financial planning so often neglected? There are three main reasons:
- A mistaken belief that the state and employers will provide. A 2008 survey
by Norwich Union Healthcare found that a quarter of the UK workforce believe
they would receive their full salary from their employer or be supported by the
state if they fell ill.
- A lack of understanding about how you can arrange protection privately.
This is not helped by the somewhat obscure name 'permanent health
insurance' often given to the main tool for protecting your income.
- The relatively high cost of this form of protection.
Warning: Do not rely on the state to provide you with a reasonable income if you were unable to work for a long period due to illness or disability. You have to pass strict medical tests to qualify for incapacity benefit. The alternative-means-tested income support-does not give you much to live on.
Protection from the state:
Most people assume that the state provides a safety net to catch anyone who is unable to earn a living and has no other income to rely on. After all, is that not why we pay National Insurance? However, you might be surprised at how little the state would provide if you could not work because of a long-term illness or disability. Since April 2005, the main help you can expect if you are off work sick is incapacity benefit.
For the first 28 weeks:
No benefits are payable for the first three days of illness. After that, most
employees qualify for Statutory Sick Pay (SSP), which is paid by your employer. If you are self-employed or you are an employee who does not get SSP, and provided you have paid enough National Insurance contributions, you can claim the lower rate of short-term incapacity benefit. In 2011 this was a tax-free £50.90 a week. There is no extra if you have children. You can claim an increase for your husband, wife or partner, but only if
- You have dependent children in the family (an increase of £31.50 a week
in 2011), or
- Your spouse or partner is over pension age (an increase of £38.80 a week in 2011), and
- If working, your spouse or partner earns no more than the amount of the increase.
During this first stage, you can qualify for incapacity benefit because you are
unable to do your normal job; you will need sick notes from your doctor.
However, from week 29 onwards, you must pass a strict medical test. In the
past, this has been called the 'all work test' but it has being renamed the
'personal capability assessment'. In both guises, it looks at your ability to perform certain functions, such as standing, seeing and reaching. You'll have to be found incapable of doing any work, not simply your normal job, in order to continue getting benefit. The personal capability assessment also focuses on what work you could undertake, despite your illness or disability.
From week 29 to week 52:
Provided they satisfy the medical assessment, both employees and the self-
employed switch to higher-rate short-term incapacity benefit (£60.20 a week in 2011). Although the amount is higher, it is now taxable. This means that, if you have income from other sources, you could actually receive less than you did during the first 28 weeks. If applicable, you still get the increase for your partner. You can now also claim extra (which is tax-free) for any children in your family:
- £9.85 a week in 2011 for your only or eldest child, and
- £11.35 a week for each additional child.
These additions for children are lost or reduced if your husband, wife or partner earns more than a given amount (£145 a week in 2011 if you have one child, increased by £19 for each additional child).
After a year:
You switch to long-term incapacity benefit (£67.50 a week in 2011 ). If you are terminally ill or you are very severely disabled, you can get this rate of incapacity benefit from the twenty-ninth week onwards.
There is also an increase if you are under age 45 at the start of the illness. If you are under 35, you get an extra £14.20 a week in 2011 . Between the ages of 35 and 44, you get less - £7.10 a week.
If you have children, you still get extra for your husband, wife or partner, though this is paid at a higher rate than previously (£40.40 a week in 2011 ) provided he or she earns no more than £52.20 a week. The same additions as before are payable in respect of children. Benefit (apart from increases for children) continues to be taxable.
Long-term incapacity benefit is not payable if you are over state pension age, but you will usually qualify for state retirement pension instead.
Other help from the state:
Various benefits are available if you are deemed to be long-term disabled.
Whether or not you get illness, disability or related benefits, if your income is low, you might qualify for means-tested benefits to top up your income. If you are available for work, this will usually be non-contributory Job Seeker's Allowance. If you are not able to work, you might be able to claim income support. You will not be able to get means-tested benefits if you have savings of more than £8,000 (or £16,000 if you live in a nursing or residential home). The benefit you get will be scaled down if your savings are less than this but still more than £3,000 (£10,000 if you live in a home).
How much help from the state?
Precisely what benefits you will qualify for and how much help you get will
depend on your particular circumstances. It is estimated that a single-earner
couple with two children would get about £7,000 a year if the breadwinner fell ill and couldn't work.
Reductions in incapacity benefit:
From April 2011 , any incapacity benefit you might have qualified for, will be
reduced if you have income from pension schemes (which could be personal
pensions, stakeholder schemes or occupational schemes) or income protection insurance (either your own policy or cover provided by an employer).
This income exceeds a given threshold. In 2011 , the threshold was £85 a week. For every £1 of such income above £85 a week, you will lose 50p of incapacity benefit.
Also applicable from April 2011, all new claimants for incapacity benefit will be
required to attend a work-focussed interview. This aims to identify work you
could apply for and to help you draw up a plan for getting a job or starting your own business. If you refuse to attend the interview, your benefit may be reduced or lost.
For more info on financial planning visit ePepi.com
Tuesday, October 11, 2011
The Average cost of home repairs typically costs home owners about one tenth of one percent of the value of the property. For example, a home that is worth $100,000 will run $100 a month in maintenance costs.
Keep in mind this figure represents an overall average which means the property may not even cost anything in maintenance for five years and then it needs a new roof for $6000. Just know that home repairs are an actual and ongoing cost of home ownership. Sadly, many forget to think about this ahead of time and never remember to budget it in before or even after purchasing property, forcing them to take out a home equity loan just as soon as they had begun building equity.
In this bad economy the combination of high unemployment rates and the rising cost of living is creating thinner wallets all across the country. When pockets run thin, home maintenance easily gets tossed to the wayside. Unfortunately however when even the smallest of home repairs is ignored it can lead to much larger and costlier repairs in the long run. Some of which can start out as just a simple leak in the roof which my have only cost $200 to repair, but left ignored could ultimately lead to water damage and mold, which will then run tens of thousands of dollars to fix.
A homes exterior is exposed to the elements 24/7 and requires constant maintenance. When these types of repairs go undone it becomes easy for everyone in the neighborhood to notice. The curb appeal of the property quickly deteriorates and the home turns into an eye sore. Boarded up windows, uncut lawns, missing shingles, fading paint, rotting wood, and defective siding are a few things that can cause homes to rapidly depreciate.
Another downside of neglecting home maintenance is the loss of value to your property. If it's for sale and needs repairs then buyers are going to offer thousands less then asking price. There are so many homes on the market that buyers don't need to buy one that needs immediate repairs. This also forces sellers to drastically lower their sale price just to stay competitive with similar homes not needing repairs.
Homes are only worth what others are willing to pay for them thus the value of a home is strictly determined by it's sale price. Strangely however, a lack of home maintenance is one of the only things that can reduce a homes value prior to sale and worse yet it can reduce the value of the surrounding homes in it's vicinity. It only takes just a few deteriorating homes to reduce the value of an entire neighborhood.
Thursday, October 6, 2011
Although the MFDR act has been in effect for the past five years, the majority of the public still remains completely unaware of its benefits. This act prevents underwater property owners from having to pay taxes on the difference between the amount of money owed to the bank on the property and the amount that it sold for in a short sale, foreclosure, sheriff sale, abandonment, etc.
If this act does indeed expire at the end of next year, many people will face outrageously large tax bills, for example consider someone in a 25% tax bracket that sells their home for $100,000 less then they owe the bank. The tax bill is going to be staggering and if the public becomes aware of this issue, all those people living in the shadow inventory will rush to short sale their homes next year to evade the tax man and his handy dandy 1099-c form. This will push a massive amount of new foreclosures into a market that’s already saturated with distressed homes for sale. Imagine a real estate market in which the majority of home sellers stand to make no profits what so ever from the sale of their homes, all racing against each other to lower their prices in order to sell out before the tax man returns in 2013. Home values will fall deeper and deeper at an even faster pace than we could ever possibly imagined.
This will further add to the downward spiral of things by increasing the inventory of homes for sale, which will lower the start ups on brand new homes. This means fewer jobs, more layoffs, greater unemployment rates, weaker neighborhoods, less tax for state and government and increased taxes for existing homes and business. All of which will eventually turn into less potential buyers and lower home values as supply and demand is tipped further into the buyers favor and as home loans and home ownership become more expensive in neighborhoods that are becoming worse then they have ever been in the past.
Read up on the complete 2012 Real Estate Outlook to get a better over all picture of things to come.
Wednesday, October 5, 2011
Obtaining a mortgage is the top concern among would be home owners in the nation and for good reason. All across the board the financial landscape is changing but none more rapidly than mortgage lending and so much so that it can be overwhelming even to industry professionals. Even though the mortgage industry tries to remain as lenient as possible it has no choice but to accept some of the changes taking place in this financial overhaul. They have been backed into a corner and placed under a microscope as mortgage defaults continue to rise and as they tighten up their standards, the mortgages are quickly becoming more expensive every year in an effort to recoup previous losses and to prevent additional ones.
Mortgage expenses can be broken down into three parts, the beginning, middle and end. The initial cost of a mortgage is comprised of about twenty different fees. They go towards things like attorney’s, appraisers, surveyors, clerks, title insurance, mortgage insurance, points, inspections, cert’s and doc’s. Put them all together and they encompass the loan origination, title work, and closing costs associated with the start of the mortgage. Every year these fees go up and cost buyers hundreds, sometimes thousands more out of pocket than in previous years.
Once the loan has been funded borrowers are now faced with rising ongoing costs like mortgage loan servicing fees, rising interest rates, tax hikes, rising home owners association fees, increased costs for home maintanence, furniture, appliances, handy men, and repair men, increases in home, flood, personal injury, disaster, and hazard insurance, and even higher mortgage insurance premiums just to name a few.
The back end of the loan is also becoming more expensive with increased fees for late payments, fines for delinquencies, higher legal fees for those who enter default, potential liens, and rising costs for refinancing. For the most part it’s pretty safe to say that in translation, tighter lending standards means more expensive mortgages and sinking home values making it more expensive to be a homeowner in any market in every little town or big city in the U.S.
Read the full 2012 Real Estate Outlook Now