Category Archives: Finance

What Your Startup Needs to Succeed

The office of a startup businessChamath Palihapitiya, founder, and CEO of Social Capita said that it is in starting businesses that people create many interesting things. It is with starting businesses that innovations arise — things we did not know of before now exist.

The idea behind his latest venture is to provide funding for startups without knowing their age, race, gender, or other social biases. You’ll never run out of options when looking for funding for your startup. All you have to do is come up with the following:

A Business Plan

What’s a business idea without a plan for action? This is the proof you show lenders when applying for online startup business loans to convince them that you know where you want your startup to go. It’s not just about dreaming; it’s about making things happen. Just ask TAB Bank.

A Unique Approach

Starting a business can be scary, but the one thing you shouldn’t do is be a copy-cat of another business. Come up with a unique approach to selling your products or marketing them. Be a little more creative, but remember to address pain points of your consumers.

Understand them through surveys to know what they’re looking for. Be accessible to them and show them you have their best interests at heart. These days, tackling a social problem while selling a product seems to do wonders.

An Alternative

Your original business plan is not showing the results you expected? Don’t give up just yet. There should be a plan B — something that steers your startup in a different direction and uses the resources you already have to start something new. For instance, that product can be used to address a different need than what you originally intended it for.

There’s no guarantee that your startup will succeed on the first try. But if you work hard and use your funds wisely, you’ll go far.

4 Loan Terms for the Lone Millennial

Loan on the monitor of a macbookNow that you are a grownup, here are the kinds of loans you might want to note. First off, let us understand what a loan means. It means you ask someone to lend you money so that you can buy something you originally could not, like a house.

After you buy a house, the lender expects you to repay the money you borrowed.

HARP Loan

HARP stands for Home Affordable Refinance Program. It is basically for homeowners who need a stable and more affordable loan. Studies also show that HARP loans have helped people who owe more than their home is now worth.

If you are an aspiring homeowner, let a home loan company grant HARP to you.

VA Loan

This kind of loan is meant to be used by those in active duty Military Service, veterans, and eligible surviving spouses. You can say it is a thank you to these people for their service to the country. Like your usual home loan, you can use the VA loan to buy, build, and maintain a house.

FHA Loan

An FHA home is like the HARP Loan since they designed it for everyone. The difference is that it has backing from the Federal Housing Administration (hence the FHA initials) and that it actually does not loan money.

What FHA loans do is provide lenders insurance against a borrower in case the latter does not pay the money they borrowed.

Reverse Mortgages

This is useful for senior citizens because they can get money without selling their homes. Reverse mortgages are all about assessing the value of a home. If you have a well-maintained house in a great location, you will probably get to borrow a considerable amount of money.

While these loans are different in design and target users, they all share one thing in common: to help people secure a home. This is helpful for young professionals who want to settle down and find a new place they can come home to.

What Are the Costs Covered by Construction Loans?

Piggy bank and paper house and coins stack for mortgage loans conceptA construction loan is a short-term loan given to a borrower to foot the costs of building a home. Most construction loans have very strict rules for eligibility. Lenders typically require a qualified contractor. They are part of the construction team and detailed building specifications.

A majority of creditors ask for 20–25% in down payment for a construction loan in Utah, according to American Loans. This protects the creditor from loan defaulting. In most construction projects, the capital budget is normally divided into various cost components. These costs vary depending on specific projects. Here are the most common elements.

Hard Costs

These are the costs of equipment, labor, and materials needed for construction. Hard costs sometimes also include communication costs, decoration, and fixtures. A borrower’s equity often funds any hard costs not covered under a loan contract.

Site Costs

These include the cost of buying land, legal fees, taxes, brokerage commissions and insurance costs. Some construction loan lenders assume that borrowers have already paid the cost of land purchase before the loan closing. They will, however, reimburse your funds depending on the loan agreement. Land improvements such as sewers, utilities, and water are also part of these costs.

Soft Costs

These include engineering and architectural fees, taxes, permits, construction site security and various ongoing fees. The debtor incurs these costs in addition to the construction’s hard cost. The borrower pays some of these costs before the loan approval. Local councils should approve house plans, for instance, before a lender can give you a loan.

Loan closing costs also form part of your construction budget. These include appraisal fees, underwriting fees, title fees and administration costs. Construction loans do not work like conventional ones where money is advanced at closing. You first submit a draw request and other supporting documents to your creditor. They then issue reimbursement payments for completed constructions.

Why and How You Should Save For Your Retirement

ing with a river as a backgroundEveryone grows old, and at some point, will reach retirement age and will have to quit their jobs. The good news is that they can continue working if they want to. The bad news is that if they did not take care of their retirement money, they really have to work after retiring.

There are many resources online about mutual funds and other trust products, including those from ambankqc.com. However, if you really want to keep a tight rein on your retirement fund, you can do the following:

Know how money is managed

There are other things you want to know about investing your money besides the charges. Specifically, you should know if your investment choice has a low return or not. You should also try to learn how much you are paying the investment company to manage your funds. This should be reasonable, like 3%. Anything above 3% for managing your money can be a cause for alarm.

There are always risks

Any investment comes with risks. You should understand that sometimes, the trust fund takes a hit and the growth slows down. This is normal and sometimes, it takes a slowdown in order for your funds to earn more money.

Nevertheless, if you want a higher return on your investment, you should be prepared for a wild ride on high-risk investments. Lower returns are the result of a conservative investment approach. You have to decide how safe you want your investments to take.

Make sure you retire with enough money

Depending on the inflation rate and the help of the onsite calculator, you can calculate how much you need in the bank before you start withdrawing money for your expenses. Typically, you would need 4% return on the principal. Once you have calculated the amount you need to invest, you have to calculate how much money you can withdraw annually. Planning involves a lot of calculations, and this may require help from a bank adviser.

You should start planning for your retirement while you’re still young. Setting aside a portion of your earnings for the future is always a wise move.

Here’s Why You Should Pay More Than 20% Down Payment on Your Ogden Home

A couple looking at their new homeNext to Salt Lake City, Ogden, Utah is one of the best places to set up a business or start a career. The historic city is also a transport hub, and with many universities around, it is teeming with new and young talent. Most of all, the cost of living is affordable, according to Sperling’s Best Places.

When it comes to housing, property prices are competitive with a median price of $180,000. Note, though, that appreciation has been strong over the past few years and that it may increase up to 4% by 2018. There’s no better time to buy a property there than today, but then how much should be your down payment?

Utah is no different from other states. It can vary from zero to 20%, and it depends on the lender. Some may allow you to pay as low as 3.5%. But if you want to save money, you should aim for something higher than 20%.

Avoid Private Mortgage Insurance

One of the reasons to increase your down payment is to avoid paying private mortgage insurance. Also known as PMI, it is a type of insurance policy that allows the lender to make a claim in case you default on your home loan. In other words, it protects the lenders, not you.

While PMI allows you to buy a house with a very small down payment, it also means additional costs. Although you can cancel it, you can do so only when your loan-to-value ratio is at least 78%. So you may end up paying this for months or a few years.

How to Avoid PMI

If you want to stop paying PMI, then you need to reduce your credit risks. There are two ways to do that. One, you can add improvements into your home to increase its value or equity. The second, and the easiest as what Wasatch Peaks Credit Union mentioned, is to ask for down payment assistance in Ogden. A credit union can provide you with the money you need not only to pay off the down payment but cover over 20% of the home loan.

Your life in Ogden doesn’t have to begin with a huge mortgage. You can make it more affordable by avoiding PMI and getting the assistance you need.

5 Money Matters to Consider When Buying a Franchise

Man stacking coins in increments as a concept of investment growingIf you are planning to invest in your own franchise, one of the vital steps you need to take is a thorough due diligence exam to make sure that you’re on the right path prior to signing an agreement. You’re probably confused and inundated with millions of questions, but the following are vital money matters you need answers to before taking the leap.

1. The Initial Investment

In general, initial franchise fees differ from several thousand dollars to a couple of million dollars. You will need to get a clear understanding of fees and how much you’ll need to get the franchise off the ground and earning.

2. The Liquid Capital

Apart from the startup costs, you’ll need sufficient operating capital for a couple of months until you break even. Knowing this magic number will help you prepare financially and determine when you’ll start reaping profits.

3. The Franchise Company’s Financial Capability

Knowing how financially strong the franchise company is could lend you an idea of how successful your franchise could be. Consider asking how they experienced consistent growth and their plans expansion plans if any. You will likewise want to find out if where they get the significant portion of their income, whether from selling franchises or royalties, or perhaps because they assign a sufficient amount of funding to their operations.

4. Your Potential Profit

While the franchisor can’t possibly forecast how successful your franchise will be, they must have an accurate idea of how much their franchisees make. Make certain to ask beyond the gross sales since this doesn’t operate expenses such as rent, labor, etc.

5. The Ongoing Fees, Marketing Fees and Royalties

You need to take a step back and understand how much you’re expected to pay the franchisor with regards to miscellaneous fees like royalties, marketing, etc. You need to determine how much this would cost, so you could set the right budget and accounting for royalties.

Before you invest in a franchise and sign on the dotted line, get clear answers to these crucial money matters. Once you do and you’re satisfied with the franchisor’s answers, you’ll feel more confident about investing in and running your very own franchise.

Refinance Basics: FHA Streamline or Conventional Loan?

Jar full of coins

Jar full of coinsIf you are concerned about refinance rates increasing, but have an FHA loan and are still considering refinancing, you could reflect on transitioning to a conventional mortgage. However, this move comes with its own advantages and disadvantages, so you need to determine if it is the best move for you.

Conventional Loans vs. FHA Loans

Plenty of first-time homebuyers typically lean towards FHA loans simply because of the less stringent requirements for down payment. However, the FHA typically requires homebuyers to put down a one-time MIP or mortgage insurance premium upfront that is usually 1.75% of the value of the loan.

You would likewise need to pay for a yearly premium already built in into your loan repayments. And when you refinance your FHA mortgage to a conventional loan, you will not need to pay for mortgage insurance, but only if your home equity is more than 20%, says refinance specialists in Tempe.

Save on Costs

Finance expert VIP Mortgage notes that this would result in bigger savings and reduced monthly payments. You could then use the money for repaying your other debts, putting some for your retirement fund, or for building your emergency fund.

However, you need to be prepared for associated costs when you refinance your FHA loan to a conventional mortgage. The most substantial upfront cost would come from paying closing costs that could cost between 2% and 5% of the value of your mortgage.

Insufficient equity

However, if you do not have sufficient home equity, you might get stuck paying for PMI or private mortgage insurance when refinancing. These combined costs could offset the savings you get from the lower interest if you cannot secure a significant discount on your interest rate.

Do note however that you will still need to make yearly payments for mortgage insurance premiums, which is a tradeoff if you decide to go with an FHA refinance.

Getting the Deal that Makes the Most Sense

If you are not entirely certain that a traditional refinance or FHA refinance is the ideal option for you, it is best that you look around and see what other options are available to you.

You need to estimate all associated refi costs including closing costs so that you could determine which option would give you the biggest savings.

Fixed-Rate, Adjustable-Rate, or Hybrid Mortgages: Which Should You Choose?

Man Holding Mortgage Loan Contract And PenFor many first-time homebuyers, choosing the right mortgage can be complicated. There are different types, as well as variations and terms for those loans. The good news is, you don’t need to be an expert to choose the right one. It is best to start with basics of the three types of mortgages.

Fixed-rate mortgage. As its name suggests, this has a locked-in interest rate throughout your term (10, 15, o3 30 years). Unless you refinance or pay it off, the interest rate remains the same for as long as you have the loan. If you ask a mortgage company in Portland, they will tell you that this option is ideal if you plan to keep the house for five years or more, or if the interest rates are going up.

Adjustable-rate mortgage (ARM). Unlike fixed-rate, an ARM has interest rates that adjust after the introductory period. There are different variations of ARMs so it best to read the fine print carefully before committing. The adjustments in interest will cause your monthly payment to adjust too. It is a good option if the rates are dropping or if you plan to sell the house.

Hybrid mortgage. This combines the features of two loans mentioned. It begins like a fixed-rate loan and then converts to an ARM. This means that the rate will change throughout the life of the loan. Hybrid mortgages have two numbers separated by a slash (/). A 5/1 loan, for instance, has a fixed-rate for five years, but will then become adjustable for a period of one year.

Buying a Loan

Before committing to a certain mortgage type, make sure to talk with different lenders. Compare their terms and interest rates to get the best deal. You may also want to talk about monthly payments that should coincide with your financial plan. Note a good lender can give you advice on how to improve your score and then help you explore loan options.

Do your homework before choosing a loan. Note that other factors such as down payment, credit score, and the debt-to-income ratio can affect your eligibility for a certain type of mortgage.

Important Facts to Know About FHA Loans

Woman handing over a paper labeled loan and pen for signing inMortgage loans offered by the FHA are popular among lower and middle-income borrowers. The standards for these loans are far lower than what is required by banks, and the loans are available for lower down payments. The FHA insures these loans so that lenders don’t have to worry about defaults. The interest rates on these loans are more affordable, making them attractive to consumers.

Here are the criteria to meet if you are planning to apply for an FHA loan:

Credit Rating

The minimum credit rating to qualify for a loan in the FHA program depends on the type of loan one needs. To be able to get a loan with a down payment of just over 3%, scores have to be 580 and above. Those with lower scores can get a loan but need a higher down payment.

Down Payment

A down payment of 3.5% is attractive and affordable for many. Many borrowers are able to tap into their savings or get gifts from family or in the form of a grant to meet the requirements.

Closing Costs

The FHA makes it easier for sellers, lenders, and builders help a borrower with closing costs. Expenses paid toward appraisals, title transfer, and credit report can add up. Any help in this area enables borrowers to get the home of their dreams.

FHA Lender List

The FHA just insures the mortgage; it doesn’t lend directly. Borrowers must approach one of the FHA-approved lenders to get their money.

Insurance

Borrowers have to pay two insurance premiums on their mortgage – 1.75% upfront on the loan amount and the annual premium. These need to be paid on a monthly basis and will vary based on the loan period. Check with the lender about the amount that you need to pay.

Cash for Repairs

As part of the FHA loan program, the FHA has a special facility for those borrowers in need of extra cash to make necessary repairs. Also known as the 203(K), the loan amount is calculated on the project value of a home after the repairs are completed. The maximum amount for which a borrower is eligible is $35,000.

Financial Hardship Relief

FHA listed lenders usually work with borrowers who are struggling to make payments because of financial issues. Borrowers get temporary relief or even modifications on their loans so that they can keep their homes.

The FHA program has made it easier for people to own a home and build equity in it. Look for a financing company that offers this type of loan so you can get started immediately.

The Reverse Mortgage Program: Is a Home Equity Conversion Mortgage (HECM) the Right One for You?

A Reverse Mortgage Form

A Reverse Mortgage FormThe HECM or the Home Equity Conversion Mortgage-backed by the U.S. Department of Housing and Urban Development is among the most popular mortgage options under FHA/HUD’s reverse mortgage program. It’s targeted to homeowners 62 years old and older who are looking to convert the excess equity in their home.

How the Home Equity Conversion Mortgage Works

Your mortgage lender who makes the reverse mortgage program would have the first lien on your home, but won’t get payments like in a standard home loan, nor are you responsible for value deficiencies once your lender gets your home upon your death or when you move out. Primary Residential Mortgage, Inc. added that the greatest benefit of the HECM is that your lender gives you cash, with the exact amount being based on your home equity’s amount and other factors, including your age and the loan’s interest rate. As your property becomes your collateral for the HECM, your lender gets your home when you pass away or move. With this in mind, you or your heirs could repay the mortgage at any time should you wish to keep your home.

Here’s a basic example to illustrate how an HECM works. Let’s say your lender makes a $150,000 mortgage lien on your property that’s currently valued at $300,000. Let’s also say that you have a $100,000 from a previous mortgage. Using the $150,000 of your new mortgage, you could pay off your outstanding loan balance of $100,000. This leaves you with $50,000 extra cash. If you didn’t have an outstanding mortgage balance of $100,000, the cash you’ll receive would be $150,000. You could choose how you receive the extra proceeds: in lump sum payments, line of credit, monthly payments, or a blend or line of credit and payments.

Should You Consider a Home Equity Conversion Mortgage?

As you’re not required to pay off any interest or principal payments on an HECM, this characteristic, along with cash payments (which are non-taxable and won’t impact your Medicare or Social Security benefits), could benefit older adults who need money. If your parents or you are 62 years or older, an HECM could a helpful tool you could use for achieving financial security.

HECM isn’t ideal for everyone, so make sure to examine all the rights and responsibilities attached to it before signing anything.