Archive for December 2014
- 24 December 2014
- Staff Reporter
Aussie Home Loans will continue its 15-year tradition of feeding homeless people on Christmas Day.
The group will provide food donations to the Salvation Armys annual Christmas lunches in Melbourne.
Salvation Army spokesperson Gordon Sanders said Aussie had helped brighten Christmas for hundreds of people over the past 15 years.
This month we saw two fixed rate home loan products launched in the market. With the rising number of home loan products in the market, the hunt for the right one is not easy. Financial institutions seem to think it is a great time to launch fixed rate home loan products, but is it good for you too?
The latest COUNTRY Financial Security Indexreg; survey revealed over half of parents (56 percent) have not started saving for their child#39;s college education. It appears those saving habits don#39;t improve dramatically with age, either. A large number of parents between the ages of 40 to 49 (52 percent) and 50 to 64 (47 percent) have not begun to save for the education of their children at all.
Despite this reality, many parents are optimistic about the amount of their children#39;s education they can pay.
- Fifty percent of parents would like to pay for more than half of their child#39;s education, and a quarter of parents hope to pay for all of it.
- Younger parents are among the most ambitious, with over half (54 percent) of 18- to 34-year-olds aspiring to pay for at least half of their child#39;s education.
The apparent gap between parents#39; financial aspirations and their actual saving habits might be causing a majority of them to consider postponing retirement to make up the difference. Sixty-nine percent of parents say they would be willing to retire five years later if it meant their child would graduate from college debt-free.
A child#39;s college education can be one of the biggest expenses for parents, so it is easy to feel overwhelmed, says
Joe Buhrmann, manager of financial security support at COUNTRY Financial. However, planning can help relieve a lot of the pressure. Knowing how much loan debt your child is willing to take on and how saving for college fits within your overall financial plan are key issues to consider, especially since borrowing money for retirement isn#39;t an option.
Making Family Finances a Priority
Saving for a child#39;s education might not be the only expense parents are underestimating. According to the latest version of the
Nevertheless, finances were, or will be, a significant factor for a majority of Americans in their decision to become parents.
- Fifty-nine percent said their level of financial security was, or will be, an important factor in their decision to become a parent, with a quarter of those citing it as a very important factor.
- Younger Americans are more likely to stress the importance of financial planning, with 70 percent of those age 18 to 29 saying it was, or will be, an important factor.
Financial Security Fatigue
The financial responsibilities of family life are causing parents to feel overwhelmed, while Americans overall are doubting the next generation#39;s potential for success. A majority of parents (66 percent) say the current costs associated with having a child make it difficult to work full-time to provide financial stability while being a consistent presence in their child#39;s life.
Meanwhile, 71 percent of Americans overall are generally pessimistic about the potential for the next generation to be better off financially than their parents, with nearly half (47 percent) saying it is not possible.
Parents have the best intentions when it comes to their family#39;s financial security, says Buhrmann. As any parent will tell you, real life can disrupt even the best laid plans. If you feel you can#39;t get on firm footing with your finances, consider working with a financial planner or someone you trust to see what changes you can make to improve your family#39;s financial security.
The COUNTRY Financial Security Indexreg;
Since 2007, the COUNTRY Financial Security Index has measured Americans#39; sentiments of their personal financial security. The COUNTRY Index also delves deeper into individual personal finance topics to better inform Americans about the issues impacting their finances. Survey data, videos and analysis are available at www.countryfinancialsecurityblog.com and on Twitter at @FinanceSecure.
The COUNTRY Index was created by COUNTRY Financial and is compiled by GfK, an independent research firm. Surveys were conducted using GfK#39;s KnowledgePanel TM, a national, probability-based panel designed to be representative of the general population and includes responses from approximately 1,000 US adults for national surveys. The margin of sampling error for a survey based on this many interviews is approximately +/- 3 percentage points with a 95 percent level of confidence.
The COUNTRY Financial group (www.countryfinancial.com) serves about one million households and businesses throughout
SOURCE COUNTRY Financial
First-time homebuyers now have more options when it comes to getting a mortgage with a low down payment. The only question is how many of those buyers who tend to be young, often in their early 30s will actually benefit from the loans.
First, a primer: This month, Fannie Mae and Freddie Mac, the two government-sponsored enterprises that buy, repackage and sell mortgages to investors, announced they will begin accepting home loans with down payments as low as 3 percent.
While traveling between stops, students will present reports on books they have been assigned to read, and listen to presentations on topics ranging from how to spend their last semester of school preparing for the business world; how to navigate the intimidating world of insurance and retirement plans; and even personal budgeting.
Students are be responsible for a number of short papers, reports and presentations; they also will be graded on things such as how they interact with the business professionals they meet and how appropriately they dress for the events they attend.
That last item, was covered at length in a Dec. 10 class, when representatives from State Farm Insurance visited the class and covered topics such as the difference between “business casual” and “smart casual” and more.
Scott Ziemet, who owns a State Farm Insurance Agency in DeKalb, told students he wished someone had clued him into the importance of appropriate attire while he was a political science major at NIU.
“I interviewed for a position as an intern in the office of Congressman (and future Speaker of the House) Dennis Hastert,” Ziemet said. “I walked in wearing jeans and a T-shirt. Needless to say, I didn’t get the job.”
For the next hour, Ziemet and Jeff Keicher (who owns a State Farm Agency in Sycamore) and Leslie Anderson, a human resource manager for State Farm, discussed everything from the evils of all-cotton dress shirts to the appropriate length for a business woman’s skirt. Keicher also gave an impromptu 20-minute lesson on the body language of a handshake.
The benefits of handling loans electronically rather than passing around sheaves of paper are a given.
An all-digital process is quicker, with fewer errors and less paper to be filed in a cabinet. Less bureaucracy and faster answers make for happier customers. US Bancorp, for one, has found all these advantages in its six years of offering paperless consumer loans and recently rolled out a similarly automated account opening.
Yet a large segment of the industry still hesitates to use this technology, for legal, technical and cultural reasons, some more perceived than real.
Banks continue to stumble when it comes to automating the consumer lending processes, wrote consultants at Cornerstone Advisors in a recent study of 61 US banks with assets of $1 billion to $40 billion nationwide. The percentage of direct loans approved through automated underwriting and direct loan applications originated online remains at zero. Banks are simply not spending the time or money on direct consumer lending to make it an efficient process.
In a survey of 80 community banks and credit unions around the country, AccuSystems, a document imaging and management software company in Pueblo, Colo., similarly found that just 12% are making paperless loans.
The reliance on manual, paper-bound lending continues at a time when costs are rising. Most bankers are scrambling to find ways to become more efficient without sacrificing customer convenience a combination of needs that automated loans and account openings would seem to neatly answer.
US Bancorp, based in Minneapolis, has been offering e-signature-assisted paperless consumer loans in all 3,000 of its branches since September 2011. In the $387 billion-asset banks process, the customer is authenticated by standard means, then signs his name using an electronic signature pad. Bank customers electronically sign documents 70,000 times per week in the branches (the bank calls these in-branch signing ceremonies) which translates to more than 150,000 signed documents a week. Most small consumer loans are handled this way, including home equity loans and lines of credit. (Mortgages are not paperless yet, due to incompatibilities with the banks existing origination systems, but they are on the banks road map.)
About a year ago, the countrys ninth-largest banking company also began offering paperless deposit account opening.
We started at 70% of all loan account openings having e-signatures, and within a year we were up to 85%, which is where we stayed for the five years after that, said Ron Eddy, an associate vice president for technology and operations at US Bank. For deposits were at 90%.
The sliver of loans and new account openings that the bank does not handle paperlessly are mostly cases where electronic signatures are still not quite accepted. For instance, certain accounts involving the Small Business Administration cant be e-signed under the banks interpretation of the laws and forms involved. And a few bank customers choose to not use the electronic signature pad; the bank lets them opt out.
One of the biggest advantages to the automated process is the reduction in errors, due to the fact that bank staff no longer need to type in data from paper documents the data is captured through imaging of paper documents or automatically drawn account data.
The customer now has the flexibility to go into any branch, sign wherever they need to, and its reduced a lot of errors in the paperwork, Eddy said.
In fact, mistakes have dropped so much that entire departments that used to be dedicated to fixing errors and calling those customers back in to repair mistakes have been disbanded and the reps are being redeployed to other work, he said.
THE HURDLES TO PAPERLESS LOANS
There are a few reasons banks havent rapidly adopted the technology US Bank has found so helpful.
For banks that specialized in higher-end customers with more complicated transactions, investment in the technology would not have that same payoff.
Mid-market banks are not [offering paperless loans] as much as youd see US Bank or other retail banks [doing], because this group is primarily commercial business and wealth management banks, said Sam Kilmer, a senior director at Cornerstone Advisors. For the small to midsize banks, it has not been a priority.
His colleague, Cornerstone principal Terence Roche, adds that you invest where you make your money. For a lot of mid-size banks, retail is not their primary line of business, and if you have certain number of dollars to invest, commercial or cash management or trust would be higher on the food chain than retail.
Some banks worry about the legal and compliance aspects of using electronic signatures and documents.
According to Eddy, no problems have materialized on this front for US Bank. We havent had a single court challenge in the six years this has been out there, he said.
Still, the use of e-signatures does get questioned often in court, said Michael Laurie, the vice president of product strategy and co-founder of e-signature software company Silanis, whose e-sign software US Bank uses.
Theres tons of court cases out there, he said. They challenge the use of e-signatures. They challenge the use of e-documents and records.
Cash-strapped first-time home buyers caught a big break this week. Fannie Mae and Freddie Mac announced that they are adopting programs that will allow first-time home buyers to put as little as 3 percent down towards the purchase of a home. Similar programs are offered through the FHA, but the backing of Fannie Mae and Freddie Mac will make the terms much more favorable for well-qualified first-timers. This new 97 percent loan-to-value program officially becomes available on December 13, 2014.
#x201c;First-Time#x201d; Home Buyers?
Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac are allowing #x201c;first-time#x201d; home buyers to qualify for their new 3 percent down programs. Fannie and Freddie define #x201c;first-time#x201d; home buyer as someone that has not owned a home in the last three years. So, you may qualify as a #x201c;first-time#x201d; home buyer even if you#x2019;ve previously owned a home. Fannie Mae will also let you qualify as #x201c;first-time#x201d; home buyers if one, but not both buyers qualify as a first-timer.
Conventional Loans and Financing
IRVING, Texas, Dec.12, 2014 /PRNewswire/ –Caliber Home Loans, Inc. (Caliber), a full-service national mortgage lender and agency direct seller/servicer, today announced that Kevin A. Ginsburg has joined the Company as Regional Vice President of the Central and South Texas region. In this role, Mr. Ginsburg will be responsible for helping Caliber expand its retail lending business within the Central and South Texas area.
Kevin comes to Caliber with 17 years of experience in the mortgage industry, said John Bianchi, EVP of National Retail Lending at Caliber. We have had the opportunity to collaborate closely with Kevin as we execute our strategy to expand Calibers lending footprint in Central and South Texas. We are extremely pleased that Kevin has agreed to join the Caliber team and believe that his unique background in retail mortgage lending will provide us with a significant competitive advantage as we continue to grow our purchase loan volumes in the Texas region.
I am thrilled to join the strong team leading Caliber, said Mr. Ginsburg. Over the course of my career in the mortgage industry, I have come to appreciate and enjoy the detailed nature of our business and how difficult it can be to succeed in todays constantly evolving environment. I am excited about the opportunity to help grow the Companys retail lending business and expand its builder platform in Central and South Texas.
Mr. Ginsburg has held numerous senior management positions in the mortgage industry throughout his career. Prior to joining Caliber, Mr. Ginsburg served as a Regional Manager in Texas at a privately-held mortgage organization where he helped grow and manage retail production throughout the state. Mr. Ginsburg began his career originating mortgages for a large, national homebuilder and made a transition to management in 2002.
Mr. Ginsburg will be based in Austin, Texas.
About Caliber Home Loans, Inc.
Caliber Home Loans, Inc. is a privately-held financial services company. Calibers headquarters are based in Irving, TX. The company is an approved Seller/Servicer for both Fannie Mae and Freddie Mac, an approved issuer for Ginnie Mae and is an approved servicer for FHA, VA and the USDA. The company carries multiple servicer ratings from Standard amp; Poors, Moodys, Fitch and DBRS. To learn more about Caliber, visit www.caliberhomeloans.com.
SOURCE Caliber Home Loans, Inc.
The margin of error for the local sample was high, at 9 percentage points.
Michael Kinane, TD Banks head of mortgage and consumer lending products, said the numbers were not troubling. Many consumers ultimately do not draw on emergency lines of credit, he said, and banks are more careful about their lending than they were before the recent recession.
Its actually a very positive sign that consumers are confident in their borrowing abilities, Kinane said.
Home equity loans have been rising in Massachusetts since 2011. Previously, borrowing had dropped off after home values collapsed in the recession that started in 2007. Earlier this summer, Massachusetts banks reported their home equity loan volumes had risen as much as 40 percent.
Compared to its national sample, TD Bank reported that homowners in Greater Boston were less likely to use their home loans for debt consolidation and health care expenses. In the rest of the United States, debt consolidation was the second-most popular reason for borrowing against ones home; in Boston, it was the fourth-most popular reason. Health care expenses were the reason given for 18 percent of borrowing nationally, but just 11 percent in Boston.
The survey interviewed more than 1,300 homeowners nationally and 115 borrowers in Greater Boston.
Jack Newsham can be reached at firstname.lastname@example.org. Follow him on Twitter @TheNewsHam.
Home equity loans and home equity lines of credit can be invaluable wealth-creation tools — the latter can even be turned into checking and savings accounts. And odds are, youre fairly familiar with both options. Even if youve never used them, theyve been heavily advertised by banks for decades.
Now, however, theres a new variation on using your homes equity: You can get an investor to buy a portion of any future equity you may acquire on the property.
Unlike with a traditional home equity product, the money you receive is not a loan but an investment. Youll pay no interest, and youre free to do with the funds whatever you see fit. EquityKey offers its home appreciation rights agreement only in selected areas, and there are other limitations.
Lets say your home is worth $500,000, and you have a mortgage balance of $200,000. This means you already have $300,000 equity, which remains yours. An investor will pay between 6 percent and 17 percent of your homes appraised value, in return for 30 percent and 75 percent of the future appreciation in the home (if any). The appreciation calculation is based on the Samp;P/Case-Shiller Home Price Index, which tracks 20 major US markets, and not the actual value of your home.
If you make improvements in your property that cause it to be worth more money, that added value wont be part of the calculation of what you owe your investor. Any equity you obtain by paying down your debt is yours to keep. Its only the portion of any market-based gain that will be shared with the investor.
Lets assume you sell 50 percent of the future equity for $90,000 and that the starting value of your index is 100. Fifteen years later, you want to sell. The index is 200, meaning your home has now doubled in value to $1,000,000. The investor will be owed $250,000, half the $500,000 appreciation.
Lets also assume you had paid your home off during that time. You will walk away with $750,000 in cash from this transaction — minus your costs of sale. If the market does nothing or goes down, and you decided to take the option of not having to pay back any of the investors investment, you would have received less money at the beginning, but would owe none of it back.
Why might you consider this? A good play might be to put some of your maybe equity into for sure lifetime retirement income. This would be done by purchasing a solid fixed indexed annuity with a lifetime income rider. In the example, in 15 years, that income rider would have somewhere between $200,000 and $350,000 inside of the annuity. If you then took a 6 percent draw from that income rider every month, youd get a $1,000 to $1,750 monthly lifetime income stream for both you and your spouse, no matter how long either of you lives — all paid for with a portion of your maybe future equity.
Perhaps youd rather retire debt, help with college costs, diversify your holdings, or contribute to a charity. The choice is yours.
True, if your property value went up that much during that 15 years, you might have been better off to keep 100 percent of the future equity. But nobody can know if real estate values will go up or down, or remain relatively stagnant. Real estate is no different than any other investment. It can create wealth or steal it, depending on when you buy and sell, and at what price.
Some Other Considerations
- The EquityKey program isnt yet available nationwide; Its currently available in most of California, Florida, New York, New Jersey, Connecticut, and soon Chicago.
- The property must be your personal residence or a second home that is not used for income purposes.
- The property must have no more than 65 percent of total debt load against the current value.
- If you sell within seven years of signing up, you may be subject to fees and/or the return of some of the investment made by the fund.
- There are certain minimum property values based on your local pricing.
This type of program isnt meant for people who are struggling financially but rather a sophisticated wealth-building and retirement tool.
John Jamieson is the best-selling author of The Perpetual Wealth System and each week promotes a free training video of the week.