Fixed loan type vs adjustable: higher rate vs uncertainty

A few decades ago, the home buyer could only get the only type of loan: fixed-rate 30-year mortgage. Now the borrower can choose between the rate that is fixed for the life of the loan (fixed-rate mortgage or FRM) and a rate that fluctuates in line with major indexes (adjustable-rate…

Subprime mortgage loan: what to do if your credit is not perfect

“Specialty financing” or “loans for someone with less than perfect credit” are polite terms used to market “subprime” or “non-prime loans”. Sometimes they are effectively the only way to homeownership for those who have frequent late payments, bankruptcies, liens, judgments or other mishaps tarnishing their credit history. People with below-standard…

Exchange Funds are: definition

Exchange funds allow investors a tax-free means to diversify a low-cost-basis and/or restricted stock position. Exchange funds allow investors to pool their low-cost-basis stocks in a fund. In exchange for contributing their stock to the fund, each investor owns a pro-rata share of the fund. After a set period of…

What Are Corporate Bonds?

Corporate Bonds (also called corporates) are debt obligations, or IOUs, issued by private and public corporations. They are typically issued in multiples of $1,000 and/or $5,000. Companies use the funds they raise from selling bonds for a variety of purposes, from building facilities to purchasing equipment to expanding the business….

Reverse mortgages let you use your house as a piggy-bank?

Reverse mortgages will gain popularity as more baby boomers are approaching retirement. This kind of loan is indeed the opposite of a regular mortgage as it allows seniors to borrow against the equity in the house. Debt does not have to be repaid as long as the senior lives. The…

Beating Inflation Possible With Stock Index Funds

One of the best, though little practiced, ways to outrun a mild loss of purchasing power is through stock index funds. Taylor Larimore and his wife Pat believe in low-cost index funds, although it took an experience with a stockbroker to become a convert. Taylor is an 80-year-old Miamian who…

Understanding Interest-Rate Risks and Yields

Like all bonds, corporates tend to rise in value when interest rates fall, and they fall in value when interest rates rise. Usually the longer the maturity, the greater the degree of price volatility. By holding a bond until maturity, you may be less concerned about these price fluctuations (which…

Do you qualify for a mortgage?

Lending institutions that will decide on your mortgage application will look at a variety of factors, such as your employment record, the number of credit cards you have and your credit record, which is why you should start the process by requesting a copy of your credit report from a…

Top Basic Facts that you need to know to Invest

Interest Payments Corporate bond interest is usually paid semiannually. Zero-coupon bonds pay no periodic interest. Forms of Issuance Corporate bonds are issued in several forms: Registered Bonds: Some corporate bonds are issued as certificates, with the owner’s name printed on them. There are no coupons attached for the owner to…

The Benefits Of Term Life Insurance

Many people may not realize that an affordable alternative to costly permanent life insurance policies even exists. They hear the often steep rates that come with a permanent (or whole) life insurance policy, and think they cannot afford life insurance, and may consequently leave their dependents uncovered. But an affordable…