Tuesday, October 30, 2012

Could the US Mortgage Crisis Have Been Prevented?

The blows of debt have made us witness the hardest financial times which at the same time introduced us with several debt relief firms and debt consolidation programs. Nevertheless, it made us a victim of certain financially declining processes like foreclosures, bankruptcy and mortgage crisis of course. We have perhaps known all ifs and buts, pros and cons of the recent mortgage crisis but somewhere the information is yet to be gathered completely. The year when it all started in was 2007 when the economy watchers failed to realize the sheer magnitude of the subprime mortgage and the perfect storm of bad events that could soon follow. . First, banks were not as worried about the credit-worthiness of borrowers because they could sell the mortgages on the secondary market. Second, unregulated mortgage brokers made loans to people who weren't qualified. Third, many homeowners took out interest-only loans to get lower monthly payments. As home prices declined and mortgage rates reset at a higher level, these homeowners could neither pay the mortgage nor sell their homes for a profit, and so they defaulted. Fourthly and most importantly, mortgages were repackaged as mortgage backed securities by banks which were further re-packaged by bank technicians into high risk and low risk product bundles. Now, the computer programs were so complicated that no one really understood what exactly was in each product bundle or how much of the bundle had subprime mortgages. When times were good, it didn't matter, and everyone bought the high risk bundles because they gave a higher return. As the housing market declined, however, everyone knew that these products were losing value but, since no one other than the computer programs understood them, the resale value of the products was unclear. By March 2007, it appeared that these hedge fund housing losses could threaten the economy. Throughout the summer, banks became unwilling to lend to each other, afraid that they would receive bad MBS in return. No one knew how much bad debt they had on their books, and no one wanted to admit it. If they did, then their credit rating would be lowered, their stock price would fall, and they would be unable to raise more funds to stay in business. The stock market see-sawed throughout the summer, as market-watchers tried to figure out how bad things were. As a result, the housing market dropped due to this liquidity problem and panic gripped the financial market. However few things could have prevented this mortgage crisis from happening. The first would be regulation of mortgage brokers, who made the bad loans, and hedge funds, which used too much leverage. Secondly, an early recognition of this credibility problem by the federal government could have prevented the situation if the same would have bought the bad loans. To some extent the financial crisis was also caused by the financial innovation that outstripped human intellect. The potential impact of new products, like MBS and derivatives, were not understood even by the technicians who created them. Apart from that even some good regulations could have softened the downturn but the greed for new products could not be avoided.

Sunday, October 21, 2012

Useful Tips About a Student Loan Application

Since there are not many people who can finance a college education without some sort of financial assistance, at some point most students will have to fill out at least one student loan application. This process can be daunting, but fear of completing a student loan application is no reason to give up on higher education. Unfortunately, sometimes the easiest student loans to apply for are those with the most unfavorable terms.

For this reason, any student who is attempting to procure financial aid should become familiar with the types of loans available and the student loan application procedures that need to be followed in order to qualify for these loans.

FAFSA: The First Step in Financing an Education

The Free Application for Federal Student Aid or FAFSA is the most important scholarship and student loan application that any student must complete. It is also frequently the most complex and tedious application for students and their parents. This is because the FAFSA requires a lot of detailed financial information, including tax returns, from both students and parents. While the application requires time, this form is essential for all students. Filing a FAFSA is not only the sole method of obtaining federal funding for education including Stafford Loans, but this exhaustive form is also a prerequisite for most state and institution based loan programs. Since these types of loan programs tend to offer the most favorable terms for students, filing a FAFSA should be every student's first step in the financial aid process.

Applying for Federal Aid

Even though the FAFSA is free and can be completed online, its exhaustive nature causes too many students to give up and accept private loans with high interest rates and unfavorable repayment terms. A little preparation can help families avoid this undesirable situation, however. Anyone seeking financial aid should be sure to file a tax return as early as possible. As soon as the tax return is done, families should gather the completed return, bank statements and financial paperwork and fill out the FAFSA. Having paperwork on hand will make the process go more quickly, and early filing is crucial in ensuring eligibility for the maximum amount of aid available. It is imperative that families not only file the form before the FAFSA deadline but before the deadlines for individual school and private loan programs. A completed FAFSA is frequently required before students can even submit any other student loan application, and often these deadlines are earlier than the federal deadline.

School Based Financial Aid

Most higher education institutions have financial offices and offer many forms of financial aid and counseling to their students. While a FAFSA is usually required to qualify for school based programs, there are also additional applications to fill out. Since the deadlines for school based aid are often very early, every student should contact the financial aid office of his or her school as soon as a matriculation decision is made and obtain the necessary paperwork. This paperwork will often include a general financial aid application, applications for specific scholarships and a student loan application for any loans offered specifically by the school. These applications may require personal information in addition to the financial information required for the FAFSA.

Friday, October 19, 2012

Pros And Cons Of The Coverdell Esa For College

The Pros and Cons of the Coverdell ESA for College

As you're setting up investment plans for your child's college, it's smart to be aware of the pros and cons of the Coverdell ESA for College. This educational savings account is a very attractive savings plan for many people. Let's take a look at some of the negatives and positives of this program and so you can see if it's a fit for you.

Pro- The Coverdell Education Savings Account can be self-directed with a wider array of investment products available than a 529 plan. The account can be placed in almost any sort of investment. Typically, stocks, bonds, bank CDs, mutual funds and unit investment trusts. No part of trust assets may be invested in life insurance contracts.

Pro- The Coverdell funds are available to finance elementary and secondary school, not just college. This includes items such as tuition, fees, tutoring, books, supplies, room and board, uniforms, transportation and computers.

Pro- Earnings accumulate tax-free. Qualified distributions are exempt from federal income tax. Please note that contributions are not deductible on federal or state income tax.

Pro- Corporations may contribute. This even includes tax-exempt organizations. Regardless of income level, corporations may contribute to an individuals Coverdell account.

Pro- People can contribute to both a Coverdell account and a section 529 plan in the same year. Note that there may a gift tax implication if you give more that ,000 per beneficiary.

Con- Contributions to the Coverdell ESA are limited to 00 per beneficiary per year. Here's an example, you have a son and a daughter that you want to contribute 00 into Coverdell accounts for. You deposit 00 to your son's account and 00 into your daughter's. Their grandmother wishes to add another 00 but she is only allowed to put 0 into your daughters account as the 00 limit has been reached. At 00 a year, it would be tough to have this be your entire college savings plan.

Con- Contributions can only be made until the beneficiary reaches age 18. This may be a non-issue with some families but a 529 plan would allow you greater flexibility. There are no age restrictions for special needs beneficiaries.

Con- The money must be used by the time the child reaches the age of 30. If the funds are not used, the earnings will be taxed as ordinary income plus a 10% penalty.

Con- There is less flexibility in changing beneficiaries in a Coverdell ESA. Coverdell plans are considered permanent gifts. You cannot open up an account for your child and take back the money for your own use. Typically, the parents are responsible for the account until the child reaches 18. Then, the beneficiary usually takes control of the account. There is some ability to change beneficiaries.

Con- The Coverdell ESA is not eligible for the state tax deductions available for some 529 plans. The available 529 state tax deductions vary from state to state. Of course, a tax deduction is not the only reason to select an investment.

Con- The contribution limit is phased out for contributors with an adjusted gross income between ,000 and 0,000 for single people and between 0,000 and 0, 000 for joint filers. A clever way around this con if you're in this income bracket is to give the money to your child and let her open a Coverdell for herself.

After looking at the pros and cons of the Coverdell education savings fund, you can see if this is a wise investment for your child. The items that have been identified as cons are non-issues for many people. Coverdell is a good investment overall for most families. Talk with your tax profession and see if it's right for you.

Thursday, October 18, 2012

The Good and the Bad Things About Leasing a Car

Leasing a vehicle allows you to drive the car for a specified term without purchasing it and provides several additional advantages such as requiring little or no down payment, lower monthly payments compared to purchasing a new automobile, easier disposal of the vehicle, and flexible options when your lease comes to an end. However, auto leasing can be disappointing since it restricts your car usage, needs suitable and scheduled maintenance of the car, demands higher charges should you decide to terminate the lease contract early, and offers you less freedom in customizing your car.

Deciding whether to lease or purchase a new car involves examining the pros and cons of auto leasing. Considers these vital benefits and pitfalls of leasing your car when selecting the best option for you:

There is little to no money required for the down payment on a lease

You don't have to put money down when you lease a car. Even if the dealer wants a down payment, it won't be very much. A lease auto service would benefit you the most if you need a car to drive but do not have the money to initially purchase one or if you cannot secure a loan to pay for the car when you need it most.

When you lease rather than buy a car, your monthly payments are smaller

Auto leasing also features lower monthly payments than purchasing a new car, allowing you to drive a more expensive car with similar monthly payments than if you purchased a less-expensive car. This is wonderful for people who desire to drive elaborate vehicles sometimes.

It helps with getting rid of it even without a car

Purchasing a new car soon can only be done if you can find a buyer for the car you have owned for a few years. A definite advantage to leasing a car, is that you do not have to fret over what to do with it when you want a new car. The only thing you have to do is give back the car when your lease contract runs out. When that happens, you can lease another car of your choice or buy a new one and leave the burden of disposing the old car to your car dealer.

At the end of the term, leasing offers flexible options

Auto leasing also offers flexible options at the end of the lease contract. You have the choice to buy the car, return it or renew the lease. This is a good choice for you if you have not really decided how to get hold of the car, but you badly need to have one.

It limits your car usage

As attractive as it may seem, auto leasing also has its drawbacks. To start with, it minimizes utilization of your car. Most auto lease contracts restrict your car usage for up to 12,000 to 15,000 miles per year. Should you go beyond the stipulated mileage, you would have to pay for the excess mileage penalty depending on your contract. Before you sign a lease contract think carefully about the milage that is allowed in your contract and the miles tha tyou travel, because you do not want to have to pay penalties when your lease is up.

You need to ensure that the car is taken care of

One frustration you might experience with an auto lease is the requirement that the car be kept in top shape at all times. In that case count on paying more when you bring back the leased car You need to make sure you follow the suggested schedule for oil changes and routine check-ups, as well as make sure you keep the car safe when parking to avoid possible damages.

If you decide to end the lease contract early, auto leasing requires higher charges

A termination fee will be imposed should you opt to end your automobile lease contract prior to the end of the term. If you want to lease a car, make sure you will be able to finish your contract so you can avoid being charged later.

When you lease your ability to customize your car is limited

Last of all, when you lease an automobile you will not be able to customize the vehicle to the extend that you can do so when you buy a car. Just because you need to return the car when the term ends, you cannot make permanent changes to it or you will be charged for that. When you purchase a car, be certain to thoroughly discuss and establish any vehicle enhancements so you do not see unexpected charges later.

Considering these positives and negatives will help you figure if an auto lease or buying a vehicle is best for you. Think about what is important to you and include any conditions you may have - this will help you come to the right decision for you.

Saturday, October 6, 2012

How To Repair Your Credit Rating Quickly

If you're in fact determined to improve your credit ranking, then you are supposed to check your current status with all three of the foremost credit rating firms, Experian, Trans Union, as well as Equifax at least once in a year. Since hard as it might be to consider, more than one third of all credit report in the U.S. includes errors and many of them are most important ones.

When you demand your credit reports, be sure to spell out that they must as well include enclosed credit scores, as without them, they will be more or less useless, and as well be conscious that six hundred and ninety-four is an average score and that below six hundred means that you have a less than superior credit rating.

You'll optimistically never see the lowest credit score that is three hundred, and although we'd love you to get a credit score of seven hundred and fifty that is the best at present available, be very grateful if yours is seven hundred and twenty or above, which is outstanding.

If you find any errors in your credit report, which you too much likely will, you must quarrel them as quickly as possible by sending the credit bureau in question any information and copies of all official procedure that you believe might assist.

Send the credentials by certified mail, and be conscious that with the exception of the postage there shouldn't be any extra cost involved since all the major credit rating bureaus offer a free credit account.

Luckily, the main contributing aspect to a bad credit rating will almost certainly be the easiest to fix, if you're strong-minded to do it. The very initial thing that you'll require to do, is to decrease your debt-to-credit ratio that merely means reducing as many debts as you can, across all of your open lines of credit.

Your amount overdue should never exceed eighty percent of the ongoing credit that you have obtainable at any given time, and if you're capable of reducing them to fifty percent then you'll be well on your path to have an excellent credit ranking, because reducing debts develops a credit score much quicker than anything else. The moment you start to get things are controlled, and your credit rating starts to improve, you should get in touch with all the bureaus that you owe money to and begin lessening your indebtedness.

Thursday, October 4, 2012

Harris Bank Auto Loans Interesting Knowledge Base

If you are searching for information related to Harris Bank Auto Loans or any other such as Auto Loan Banks, Capital One Auto Finance, Bad Credit Need a Car Loan, Auto Refinance Lenders, Interest Rates for a Car Loan or Car Loans for People with Really Bad Credit you have come to the right article. This piece will provide you with not just general Harris Bank Auto Loans information but also specific and helpful information. Enjoy it.

Another tactic for obtaining a low rate on an auto loan involves saving for a down payment. Even though down payments are not required on auto purchases, the funds are ideal for acquiring a lower rate, and lowering monthly mortgage payments. In some cases, persons applying with a down payment can afford a more expensive vehicle.

The average length of a car loan is five years or 60 months. Nonetheless, some dealerships and finance companies will stretch out the loan for 72 or 84 months. A longer term means lower payments. However, it also equals more interests, and you will likely owe more on the vehicle than it's worth. If possible, limit loan terms to 60 months or less.

Down payments lower your monthly repayments and interest thereon. Time for repayments is also less. Therefore, you can repay loan faster and project good credit as shorter repayment periods ensure you repay less interest. Auto dealers charge differential auto loan rates for different models and makes of cars. Therefore, decide which car you want to buy before applying for auto loan. If you are unable to decide the car type, go in for flexible auto loan so that you can adjust rates according to the car you buy. Your credit scores also influence your loan rates. Normally, scores above 750 speak well of your credit position, and you receive best rates for your auto loan.

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The better your credit score, the better your rates. So if you don't have great credit, look for someone who does. By having them co-sign for your loan, you can find yourself qualifying for much better rates. Lenders look at your co-signers record, but you pay for the loan.

To ensure that you are getting accurate quotes, fill out the form as completely as possible. A slight difference in income or employment dates can reduce your interest rate. To find the best auto loan for your financial situation, you will want to balance the interest rates and length of your loan. Shorter loans offer lower rates, but with a higher monthly payment. Take a look at your monthly budget to see what type of auto loan would work best for your situation.

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So your work actually should begin before you ever visit the dealer lot. Try to determine beforehand what vehicle(s) you are interested in buying and become familiar with the average cost for that vehicle, either online or locally. Then make sure that it will fit your budget. Most financial experts recommend that you shouldn't spend more than 10% of your monthly income on vehicle costs, including the loan, gas, repairs, insurance, etc.

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