Manage your Finances
Wealth Management
Financial services that focus on wealth management provide numerous financial services – asset management, private banking, estate planning – to their clients. In an optimal situation, a client will take advantage of these services that range from balancing the checkbook to long range estate planning. Managing personal investment and tax planning are also popular aspects of wealth management, as they can generate or save considerable sums, thus adding to the client’s wealth. Such services are helpful to those who have just begun acquiring numerous assets and either don’t have the knowledge or time to manage their personal finances.
Those who wish to begin wealth management must have a certain level of educational background connected to finances. Attorneys, brokers, and certified public accounts can be involved in providing wealth management. Attorneys can structure estates and trusts to complete estate planning. CPAs can advise a client on tax matters so that he can be exempt from certain dues and then reinvest the savings so that it can grow. There are also seminars and courses on wealth management that help educate other parties on the topic.
Stock Market Investing Strategies
Many people gain considerable wealth in the stock market; however, some do not and can even take a loss. The trick is devising a smart strategy. One such strategy is as follows: first, it is wise to spread one’s risk. One should never have all of his eggs on one basket; rather, he should put away his assets in multiple financial vehicles so that should one do poorly, the others can still balance those losses. Second, an investor should somewhat limit his investment in the stock market. The stock market is inherently a gamble and someone can always lose money on the investment; as such, it is wise not to put everything away into this venue. There are many other kinds of investment opportunities that are less risky than the stock market, and a person should spread out these investments to other markets.
Third, a person should always take an interest in current events and market trends. An investor should not put his money away into a portfolio and then ignore it; rather, he should stay focused on the market, his own assets, any wealth accumulation or losses, and make decisions if need be. Should he hear of a potentially hot commodity, then the investor might consider liquidating some of his assets and investing in the item.
Get Rich Quick Schemes
A person can increase his wealth in a relatively short period of time but with considerable financial risk. Some people utilize “get rich quick” schemes, which is where they acquire instant wealth at the expense of others. These schemes tend to involve high investments with artificially high returns; for example, a broker may call investors, convince them to buy options, and then sell them at a lower price. Get rich schemes usually involve a fast return on investment and they are generally unethical, as companies can take advantage of people who think they can earn money through minimal effort. Because the idea of accumulating instant wealth through minimal effort is so appealing, many people do fall for such schemes.
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Mortgage Options for a Refinance or Purchase
Conventional Mortgages
Conventional mortgages are arrangements that meet certain federal standards. A conventional mortgage can either be written as a fixed rate mortgage or carry variable structure. Fixed rate mortgages have fixed, unchanging interest rates during the term of the loan, and the monthly payments are the same during the duration of the mortgage. Variable interest rates result in varying amount payments over the course of the mortgage based on the changing standard rates of interest. The borrower can benefit from this kind of loan if the standard rates of interest shrink during the life of the mortgage. In fact, conventional mortgages with a variable rate may be good deals when projections show the interest rates are unmoving during the course of the loan. Numerous companies offer conventional mortgages to first time home buyers, and some offer mortgage-backed securities, which are bundled mortgage offerings.
Adjustable Rate Mortgages
Adjustable rate mortgages have flexible interest rates, where the percentage rate changes based on an index to benefit the lender. These are an extremely common type of mortgage in Canada, the United Kingdom, and Australia as well. Five types of indexes calculate the interest rate on adjustable rate mortgages: the Constant Maturity Treasury, the 11th District Cost of Funds Index, the National Average Contract Mortgage Rate, and the London Interbank Offered Rate, and the 12-month Treasury Average Index.
Such mortgages are used by financial institutions that cannot necessarily afford the risk of fixed loans. For example, for a bank that offers loans to individuals without credit history, this would be a risky investment for them due to the possibility of the borrower not being able to pay his debts. Banks funded by customer deposits only may also utilize adjustable rate mortgages. These mortgages, though risky to the borrower, can still be helpful, as in the case of the index falling, the borrower could pay less than he would on a conventional mortgage loan.
These loans often come with a cap or limitation on charges that control the lifetime changes of the interest rate. This both ensures the lenders have a fairly safe transaction while protecting the borrowers. Also, hybrid adjustable mortgages can protect the borrowers. Here, interest rates become flexible only a certain period of time, which gives the borrower time and opportunity to deal with the rate change.
Two-Step Mortgages
Two-step mortgages have one interest rate for the first part of the mortgage term and a second rate for the second part. The term for the first rate tends to run five to seven years and the second interest will carry through the remainder of the mortgage length. Generally, the interest rate is below the market interest rate for the initial period and then increases during for the second period. Such mortgages are appealing in three scenarios: (1) when interest rates are high early on but expected to drop; (2) when the borrower cannot afford higher payments now but will later on; and (3) when the borrower will likely not own the home beyond the first five to seven years
Receiving or Assuming a Mortgage
Mortgage lenders
Mortgage lenders offer mortgage loans to those who want to purchase property. Because very few people can afford to pay cash for property, they must rely on secure mortgage loans from mortgage lenders. These financial institutions use their assets to offer loans, and they rely on the borrowers to repay the loans over a period of time. Should the borrowers fail to do so, the property will be in foreclosure, which is where the property is confiscated and sold at auction in order to recover the debt.
Banks are the most common mortgage lenders, as they provide many loans for land, commercial property, and residential. Credit unions offer mortgages as well. To apply for a mortgage, borrowers can work with mortgage lenders, work directly with banks, or seek out mortgage brokers who are financial professionals with access to numerous lenders. Borrowers can also meet with loan officers on their own to find out where they can obtain the best rates.
The mortgage lenders research loan applicants to review their qualifications. These lenders look at issues such as the borrowers’ income levels, credit history, and size of the down payment. Lenders will offer loans at specific interest rates and terms to strong candidates, and the borrower will then decide if this is an attractive deal. Mortgage lenders charge origination fees on the loan in addition to the interest that accrues with the loan. As such, a lender must balance the risk and benefits of the borrower, as he is looking for a candidate who can make mortgages on time during the life of the loan.
An Assumable mortgage
Assumable mortgages allow a homeowner to assume the existing mortgage when purchasing property. This mortgage normally includes clauses that outline requirements to be met for the mortgage transfer. They require both the seller and entity holding the mortgage to agree the homeowner has good credit and is not a risky investment. The homeowner must demonstrate he is financially stable and that he has the resources to make payments on time. Additionally, most financial groups have minimum requirements for homeowners’ credit ratings prior to issuing a mortgage in order to ensure the debt will be paid until completely discharged.
One of the benefits of an assumable mortgage is the relatively short waiting period for approval. The seller can also recover the equity paid into the property as well. By allowing a person who has the proper resources and credit record to assume a mortgage assures the finance company that there will likely be no concerns of future foreclosures, which results in future savings in time and money if a foreclosure were to occur.
While some lenders will convert standard mortgages into assumable mortgages, this is not common as not all mortgages have this clause. Individuals who want to market their property as coming with an assumable mortgage should look over the mortgage contract very carefully.