Saturday 28 April 2018

30 Year Fixed Mortgage Rates Quickly Heading Towards 5%

Mortgage Rates Recap and Outlook For the Week Ending April 27, 2018

30 Year Fixed Mortgage rates for Conforming Loans (Loan Amount $453,100 and below) climbed to the highest levels since September 2013.
30 Year Fixed Mortgage rates for Jumbo Loans (Loan Amount >$453,100) climbed to the highest levels since January 2014.
The 15 Year Fixed mortgage rates climbed to the highest level in  7 years (Since April 2011). The 5/1 ARM rate didn’t fare any better- rising to the highest level since February 2011.
Because of the rapidly rising rate, the refinance share of mortgage activity decreased to 37.2 percent of total applications, the lowest level since September 2008.
All of this was reported by Mortgage Banker’s Association (MBA) in their latest weekly survey.
Freddie Mac, that conducts Primary Mortgage Market Survey (PMMS) reported similar numbers. See the 3-year mortgage rate chart (Source – Freddie Mac).
Let’s look at the exact numbers as reported by MBA. Note that these rates are for 1-unit, Primary Residence with 20% Down Payment.
The average interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 4.73 percent, with points increasing to 0.49.
1 point = 1% of the loan amount

The average interest rate for 30-year fixed-rate mortgages with jumbo loan balances increased to  4.64 percent, with points increasing to 0.39.

The average interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.71 percent, with points increasing to 0.79.

The average interest rate for 15-year fixed-rate mortgages increased to  4.13 percent with points increasing to 0.52.

The average interest rate for 5/1 ARMs increased to 3.98 percent, from 3.94 percent, with points increasing to 0.44.
Some of the biggest banks are quoting rates even higher than the MBA survey. Take a look at this screenshot from Wells Fargo’s rates for today.

Outlook For Mortgage Rates

We might see a small correction this week, but the overall trend looks ominous. See my quote in The Washington Post Article.
At the beginning of 2018, most Government Agencies and Industry Associations (like MBA) were forecasting a 5% rate towards the end of the year or even in 2019. At this stage, it seems we might see that as early as this Summer.
Just goes on to show predicting mortgage rates is not easy even for the best economists and pundits in the country.
If you were planning to get a mortgage whether to buy a home or refinance – I will repeat what I have been saying all year long – get it as soon as you can. Else, you will more likely be paying a higher interest rate as the year goes by.

Impact on Real Estate Prices

A mortgage rate increase of up to 1% typically has a very little impact on real estate prices for homes bought for the purpose of Primary Residence. In fact, rising interest rate scenario may even get some buyers off the fence, thus increasing the demand.
If the rate touches 5% for 30 Year Fixed the first impact will be seen with investors buying rental properties for cash flow. Higher mortgage rates mean higher monthly payments and lower cash flow. That might dissuade some investors from pursuing to buy real estate and possibly look at other assets to invest in.

Thursday 26 April 2018

Small Business Health Insurance in Texas



According to the Texas Association of Health Plans, group health insurance in Texas covers 47 percent of all insured Texans. In addition, just about one million people relied upon small business health insurance in Texas for their coverage. Since small group plans protect so many people in the Lone Star State, it’s important for small business owners to understand how they can obtain and afford high-quality group coverage to satisfy and protect their employees and themselves.

Understanding small business health insurance in Texas

How many employees do you need to be considered a small group in Texas? The Texas Department of Insurance, or TDI, defines small group health insurance in Texas as any group with at least two members, and no more than fifty.
These are answers to common questions about small business health insurance in Texas:
  • What are small groups? Small employers with no more than 50 employees don’t have to pay penalties if they don’t offer small business health insurance in Texas. At the same time, employers must offer it to all full-time employees and dependents if they offer group health insurance to anybody. Employers may have the option to choose to offer group coverage to part-time or even contract employees, but that’s not a requirement.
  • Do small businesses have to contribute to premiums? Small businesses also don’t have to offer to pay any of the premiums. Many insurance companies ask employers to pay at least half of the premiums to qualify for their plans. In the case of many plans, it will be required for the employer to contribute at least 50% of his or her employees’ premiums, but make sure to check your plan specifics to see what is required. Some companies may qualify for federal tax credits if they pay at least half of the premiums.
  • What is a full-time employee? The TDI defines full-time employment as at least 30 hours a week. The law checks this by seeing if the employees work at least 120 hours in an average month. This way, hourly employees won’t lose their full-time status if they work less than 30 hours during some weeks because of a holiday, illness, or irregular schedule.

Texas doesn’t have its own Marketplace website, so small businesses in Texas must buy ACA Marketplace small business health insurance at the federal Marketplace, directly from an insurance company, or through a broker like eHealth. With eHealth, you will benefit from a streamlined sign up process that helps you gather and organize all the right information for whichever insurance company you’re purchasing from. You’ll also get to easily compare plans from several different companies that provide in your area.

How to learn more about group plans in your state

Small business owners in every state can rejoice, because eHealth has tools that allow you to shop for health insurance by state. With our resources, you don’t have to sift through plans that aren’t even available in your state–just visit our small business health insurance in Texas page, and you’ll be on your way to getting coverage for your small business.

Premiums for small business health insurance in Texas

Typically, health insurance quotes for small groups will show estimates for the share that the employer and employee pays. The employer’s share of the premium may depend upon the type of plan, they level of contributions, and the number of employees.
In addition, expect health insurance quotes for small business health insurance in all states to reflect these factors:
    • Average employee ages: Insurance companies can’t increase premiums because of medical issues for group health insurance in Texas; however, they can base premiums upon average ages, according to the Texas Association of Health Plans.
    • Tobacco use: Small groups with more smokers can pay higher premiums than groups with few or no employees who use tobacco.
    • ZIP code or county: Insurance companies may charge different premiums in different geographic areas.
    • Employer size: Somewhat larger groups may have advantages because they have greater buying power.
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Thursday 12 April 2018

Is Loan Protection Insurance Right For You?


Loan protection insurance is designed to help policyholders by providing financial support in time of need. Whether the need is due to disability or unemployment, this insurance can help cover monthly loan payments and protect the insured from default. The loan protection policy has different terms depending on where it is offered. In Britain, it is often referred to as accident sickness insurance, unemployment insurance, redundancy insurance or premium protection insurance. These all provide very similar coverage. In the U.S. it is usually called payment protection insurance (PPI). The U.S. offers several forms of this insurance in conjunction with mortgages, personal loans or car loans. 

How Does Loan Protection Insurance Work?
Loan protection insurance can help policyholders meet their monthly debts up to a predetermined amount. These policies offer short-term protection, providing coverage generally from 12 to 24 months, depending on the insurance company and policy. The benefits of the policy can be used to pay off personal loans, car loans or credit cards. Policies are for usually people ages 18-65 who are working at the time the policy is purchased. To qualify, the purchaser often has to be employed at least 16 hours a week on a long-term contract or be self-employed for a specified period of time.

There are two different types of loan protection insurance policies.

Standard Policy: This policy disregards the age, gender, occupation and smoking habits of the policyholder. The policyholder can decide what amount of coverage he or she wants. This type of policy is widely available through loan providers. It does not pay until after the initial 60-day exclusion period. Maximum coverage is 24 months. (For related reading, see: Layoff Protection Plans: Good Deal or Gimmick?)

Age-Related Policy: For this type of policy, the cost is determined by the age and amount of coverage the policyholder wants to have. This type of policy is only offered in Britain. Maximum coverage is for 12 months. Quotes might be less expensive if you are younger because, according to insurance providers, younger policyholders tend to make fewer claims.

Depending on the company you choose to provide your insurance, loan protection policies sometimes includes a death benefit. For either type of policy, the policyholder pays a monthly premium in return for the security of knowing that the policy will pay when the policyholder is unable to meet loan payments.

Insurance providers have different coverage start dates. Generally, an insured policyholder can submit a claim 30 to 90 days after continuous unemployment or incapacity from the date the policy began. The amount the coverage pays will depend on the insurance policy.

What Are the Costs?

The cost of payment protection insurance depends on where you live, the type of policy you select, whether it is standard or age-related, and how much coverage you would like to have. Loan protection insurance can be very expensive. If you have poor credit history, you might end up paying an even higher premium for coverage.

If you think this type of insurance is something you need, consider looking for a discount insurance group that offers this service. Premiums through large banks and lenders are generally higher than independent brokers, and the vast majority of policies are sold when a loan is taken out. You have the option to buy the insurance separately at a later date, which can save you hundreds of dollars. When buying a policy with a mortgage, credit card or any other type of loan, a lender can add the cost of the insurance to the loan and then charge interest on both, which could potentially double the cost of borrowing. Get the policy that best applies to your needs and current situation; otherwise you could end up paying more than you have to. (For related reading, see: Why You Don't Need Mortgage Protection Life Insurance.)

Pros and Cons of Having Loan Protection
Depending on how well you research the different policies, having a loan protection policy can pay off when you select a policy that is inexpensive and will provide coverage suitable for you.
In terms of credit score, having a loan protection insurance policy helps maintain your current credit score because the policy enables you to keep up-to-date with loan payments. By allowing you to continue paying your loans in times of financial crisis, your credit score is not affected.
Having this type of insurance does not necessarily help lower loan interest rates. When you shop for a policy, be leery of loan providers that try to make it seem like your loan interest will decrease if you also buy a payment protection insurance policy through them. What really happens in this case is the loan interest rate difference from the new "lower" rate is latched onto the loan protection policy, giving the illusion that your loan interest rate has decreased, when in fact the costs were just transferred to the loan protection insurance policy.
What to Look out for
It is important to point out that PPI coverage is not required to be approved for a loan. Some loan providers make you believe this, but you can definitely shop with an independent insurance provider rather than buy a payment protection plan from the company that originally provided the loan.
An insurance policy can contain many clauses and exclusions; you should review all of them before determining whether a particular policy is right for you. For those working full-time with employer benefits, you might not even need this type of insurance because many employees are covered through their jobs, which offer disability and sick pay for an average of six months.

When reviewing the clauses and policy exclusions, be sure you qualify for submitting claims. The last thing you want to have happen when the unexpected occurs is to discover you aren't qualified to submit a claim. Unfortunately, some unscrupulous companies sell polices to clients who don't even qualify. Always be well-informed before you sign a contract.

Make sure you know all the loan protection insurance terms, conditions and exclusions. If this information is on the insurer's website, print it out. If the information is not listed on the website, request that the provider fax, email or mail it to you before you sign up. Any ethical company is more than willing to do this for a prospective client. If the company hesitates in any way, move on to another provider.

Policies differ, so review the policy carefully. Some do not allow you to receive a payout under the following circumstances:
  • If your job is part-time
  • If you are self-employed
  • If you can't work because of a pre-existing medical condition
  • If you are only working on a short-term contract
  • If you are incapable of working at any other job other than your current job
Understand which health-related issues are excluded from coverage. For example, because diseases are being diagnosed earlier, illnesses such as cancer, heart attack and stroke might not serve as a claim for the policyholder because they are not considered as critical as they would have been years ago when medical technology wasn't as advanced.

The Bottom Line
When searching for a loan or PPI, always thoroughly read the terms, conditions and exclusions of the policy before committing yourself. Look for a reputable company. One way is to contact the consumer advocacy facility where you live. A consumer advocacy group should be able to direct you to ethically responsible providers.
Review your particular financial situation in detail to make certain that getting a policy is the best approach for you. A loan protection policy does not necessarily fit everyone's situation. Determine why you might need it; see if you have other emergency sources of income through either savings from your job or other sources. Go through all exclusions and clauses. Will getting the insurance be cost-effective for you? Are you confident and comfortable with the company handling your policy? These are all issues that must be addressed before making such an important decision.

Wednesday 11 April 2018

What is loan protection insurance?



Compare car insurance quotes now.

In the process, you've probably been offered credit insurance or loan protection products from your lender or had offers flooding your mailbox.

These products are touted as a way to protect your family's finances by canceling or suspending your debt if you die, become disabled or lose your job. But they typically come with hefty costs and in reality aren't the best way to protect your family's future.

What is loan protection insurance?

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It’s insurance to pay your credit balances and loans if you are injured or die. According to the Federal Trade Commission (FTC), there are four main types:
  • Credit life insurance pays off all or some of your loan if you die.
  • Credit disability insurance makes loan payments if you can't work because you're ill or injured.
  • Involuntary unemployment insurance pays on your loan if you lose your job and it's not your fault.
  • Credit property insurance offers protection if personal property that is used to secure a loan is destroyed in an accident, theft or natural disaster.
While these are typically lumped together, there are differences. Credit insurance products, such as mortgage protection insurance, are regulated by the state, while debt protection products, such as those for credit cards, fall under the jurisdiction of the Consumer Financial Protection Bureau.
While a lender may recommend or even pressure you to purchase credit protection, the FTC warns it's illegal for a lender to include the insurance without your permission.

What does mortgage protection insurance cover?
When you take out a mortgage, you're likely to receive offers of mortgage protection insurance. The offers may come from your lender or from independent insurance companies.

With mortgage protection insurance, if you die, the insurance is paid directly to the lender to pay off the loan. That differs from traditional life insurance, which makes payment to your beneficiary, and they can allocate the money as they see fit.

Mortgage protection insurance is different from private mortgage insurance (PMI), which you may be required to buy as a condition of your loan if you put less than 20 percent down on a house. PMI doesn’t pay off the mortgage; it pays the lender if you fail to make your payments.

Some mortgage protection insurance benefits gradually decrease over time. Ostensibly that's tied to the declining balance of your mortgage.

You also may see your premiums change over time. So you run the risk of premiums increasing and the payout decreasing.

You also may be offered mortgage disability insurance or mortgage unemployment insurance to cover your payments because of disability or job loss. The money will be paid directly to your lender. With traditional disability insurance, you receive compensation if you're unable to work for a certain period of time.

You may be offered similar types of life, disability and unemployment coverage if you take out an auto loan, open credit cards, or take out a personal loan.

Gap: Extra insurance that's worth the money
One type of extra insurance you might want to consider is gap insurance, which covers the difference between the actual cash value of your vehicle and the current outstanding balance on your loan if your car is totaled.
So if you owe $25,000 on your car and it's only worth $20,000, gap insurance will make up the difference.

You may be offered the insurance by the dealership where you buy your car, by the bank or credit union where you finance your car, or through some auto insurance companies. Be sure to shop around for the best price, as it can vary widely. Insurers typically offer the lowest price.

A cheaper alternative to most loan protection insurance
If you're worried about leaving your loved ones with debts to pay if you die, or if you worry about paying your bills if you're disabled, you usually can find better alternatives than those offered by lenders.

Even the FTC cautions it may be cheaper to purchase life insurance than credit insurance.

A 2011 report by the U.S. Government Accountability Office found that in 2009, consumers paid about $2.4 billion for debt protection for credit cards. Annual costs of these products often exceeded 10 percent of the consumer's average monthly balance, and they received 21 cents in benefits for every $1 spent on protection.

Consider a term life insurance policy instead, which covers you for a certain length of time, such as 20 or 30 years. If you die after 10 years, your beneficiaries would receive the face value of your policy when you die and not pay taxes on it. If you died after 35 years, they'd receive nothing.
Life insurance premiums are typically cheaper if you buy a policy when you're younger.

If you're older or in poor health, you might consider guaranteed or simplified-issue life insurance. Policies are generally offered for small amounts, such as $10,000 or $20,000.

If you worry about making your payments if you're disabled, you can purchase short- and long-term disability insurance.

Questions to ask about loan protection offers
If you're still interested in credit insurance and debt protection products, the FTC has a list of questions you should consider.
  • How much is the premium?
  • Will the premium be financed as part of the loan? If so, it will increase your loan amount and you'll pay additional interest.
  • Can you pay monthly instead of financing the entire premium as part of your loan?
  • How much lower would your monthly loan payment be without credit insurance?
  • Will the insurance cover the full length of your loan and the full loan amount?
  • What are the limits and exclusions on payment of benefits, or what exactly is covered and not covered?
  • Is there a waiting period before coverage becomes effective?
  • If you have a co-borrower, what coverage does he or she have and at what cost?
  • Can you cancel the insurance? If so, what kind of refund is available?