Internet banking the pros and cons

Only a few years ago the concept of online banking seemed like a dubious one – concerns about security and computer glitches were enough to put most people off. But with the continuing success of flagship companies like Cahoot, Egg and Smile, more and more of us are choosing to do business over the net. Sophisticated technology means that your information is well protected, and an online account offers several advantages over traditional banking.

Anytime, anywhere

The convenience of being able to log on and carry out transactions at any hour of the day or night could be a welcome alternative to visiting the bank on your lunch hour. No queues and no bank holidays mean the customer has even more control over their finances. Plus, your account information is displayed as a clear overview – no more riffling through mountains of old bank statements to find the info you’re looking for.

Get higher

Because online banks don’t have the overheads of running branches, they can pass on the savings to the customer, and offer better rates of interest on your money. Not only do they offer substantially more interest on your current account but there are also loans available with very low APRs that will save you money in the long run.

Safe and secure

Some experts consider internet banking to be even more secure than traditional methods – you won’t have pieces of paper with sensitive information lying around, and there’s no danger of your business being overheard by other bank customers. Check that the site is secure whenever conducting business online, never send passwords or account information in emails, and be sure to log out when you’ve finished your session

The downside?

In the past there have been a few cases of computer glitches revealing customers’ personal information, but these have been relatively minor and as internet banking becomes more popular, systems are likely to become more secure than ever. Technophobes probably won’t enjoy banking online. You do need to make sure your computer’s security system is sound, and that you have privacy for your session. Some people may miss the face-to-face contact of their local branch, and most will choose a combination of online banking, phone banking and branch visits. As internet banking becomes more established, it’s likely most of us will end up conducting at least a proportion of our business online, and you could find switching on to the new banks well worthwhile.

How to bet on the superbowl

Since the SuperBowl is the last game of the season you have an advantage that you do not have during the beginning of the season.

With 2 weeks to go till the SuperBowl we know that the Indianapolis Colts and the Chicago Bears will be the ones representing their divisions in the biggest game of the year.

Many people like to bet on sports to make them more exciting, and the SuperBowl is no exception. It is common for many offices to have a SuperBowl Pool, and it is very common for friends to bet on the outcome of the game with each other, it just increases the fun of watching the game, but how do you know who to bet your money on?

There is no guaranteed way to know who will win without cheating, but comparing the states can help in making an informed decision.

There are many things to take into account:

Some teams have a great passing game; some teams are strongest on the run, so you have to look at whom are they playing and what is there defense best against. If you have a team that has a great running back, and the defense is weak against the run then that is a definite advantage to the team that likes to run the football.

The location of the game is also important the SuperBowl is always played in a Domed stadium so the weather is not usually a major factor in the SuperBowl but, if the stadium has Astroturf as apposed to real grass then that can effect a team, lets say one team has turf in their home stadium and he other team has grass, then this can be an advantage to the team who has turf.

The physical and mental state of the players must also be taken into account before placing a bet on the SuperBowl or any sporting event. Come the playoffs many teams have players on the injured list, but many players will try to come back for the playoffs to help their team, but often this backfires because they may not be playing at 100% and can re-injure themselves so that they are playing hurt during the big game. This means they will not be playing at their best, and this gives an advantage to the opposite team.

The mental state of the players can affect a players even more then an injury can. If a player is playing hurt he still has his head in the game, but a player with marriage or financial problems is not concentrating on the game, they may be thinking of their own problems. This can cause a player to drop balls or make stupid mistakes.

After researching all these issues you will start to form a picture in your head of who is the better team going into the SuperBowl, and this will allow you to make an educated guess as to who will win. Remember this guide will only help improve your odds of winning they are not a guarantee that you will pick all the winners.

401 k

A 401(k) plan is an employer sponsored plan. The employer makes direct contributions to the account that are deducted from the employee's paycheck. Most companies will match the paycheck contribution up to a certain percentage. In general, the contributions are before tax dollars and grow tax deferred until they are withdrawn. After-tax contributions are also allowed.

You should contribute as much as you can to your 401(k). Don't overextend yourself, but you don't want to waste the opportunity to deposit tax free, tax deferred money and have it matched. The amount the company matches you for is free money. Don't let it go.

In 2005, the maximum before tax annual contribution that an employee can make is $14,000. If the employee is over 50 years of age, he or she can contribute $16,000. The limit is set to increase by $1,000 in 2006.

Your 401(k) is simply an account; you chose the investments within the account. There is usually an array of mutual funds presented to you, but you must decide the allocations. There is no one to advice you when it comes to role fees and expenses that will affect your overall returns.

First, decide how much risk you are willing to assume. How much volatility within the portfolio can you stand?

If you are in your 20's and early 30's you have the time to be aggressive with your investments. The time factor allows you to recover from slumps in the stock market. As you age, your investments should become more conservative to protect your earnings.

Many 401(k) plans have tools, such as online calculators and worksheets, which help you in determining how much risk you should accept. The best tool is often to seek the advice of a competent financial planner. It is worth it to hire a planner to evaluate your assets and earning ability if the end result is a comfortable retirement.

If you find that you are in need of money, most plans will allow you to borrow up to 50% of your vested balance, but not over $50,000. You usually have to repay the money with interest within five years. The interest payments go into your account, so you are paying yourself the interest. There are downsides, though.

The money you have withdrawn as a loan isn't appreciating. The original contributions were made with pre-tax dollars, but the money you payback is after-tax. If you don't pay back the money it will be considered a normal distribution, and taxed and penalized.

If you leave the company, in most cases you will want to take your 401(k) with you. You can role it over into another company's 401(k) plan program or into your own IRA at a brokerage. With an IRA, you will have more control over your account, and better investment options.

Whatever you do with your IRA, make sure that you follow all procedures to the point. You don't want to accidentally withdraw your money and have to pay the taxes and penalties. This is a very costly mistake.

If you are an entrepreneur, you can open an individual 401(k). This gives you the option of investing thousands of dollars more than in other kinds of self-employment retirement accounts. An individual, or solo, 401(k) is available to businesses that only have the owner and spouse as employees. This means that if you work for someone else and have a business on the side, you can open an individual 401(k).

Private money land loans

We seem to have touched a nerve with our raw land loan product. It is very popular with our client base, and it is easy to understand why. First of all, the

banks pretty much stay away from raw land. There is no way to process raw land loans with an assembly line approach to lending. The only way to evaluate a

raw land loan is to put on your boots, roll up your sleeves, and prepare to get a bit dirty. It is also necessary to review stacks of documentation, have

conversations with city and county governmental authorities, and to make decisions based on an assessment of various probabilities with the understanding

that there are no certainties when it comes to raw land development.

So, as it turns out, our only real competitors in this niche--as far as I can tell--are other private money and equity type lenders. Well, for some reason

that I don't really understand, many of those lenders won't loan more than about 50-55% LTV on raw land. We feel that this gives us a significant edge, as we

are able to offer loans on raw land at as high as 75% LTV. Let me give you one example of the kind of thing that we do.

Scenario: We were approached by a developer seeking a loan on a forty acre parcel of land just outside the city limits of Eugene, Oregon. Our borrower was in

the process of applying for a zoning change, which would allow him to then subdivide the property into four ten acre lots. If all went according to plan, he

stood to make a very tidy little profit.

Problem: Our borrower needed a loan for 75% LTV on raw land and needed to base the value assessment on the future value of the lots. The future value of the

lots was based on the borrower being able to successfully obtain the zoning change and then successfully complete a partition, via the county, into four

separate building lots.

Analysis: We went out and walked the property with the borrower. We also visited and walked a number of comparable properties. We listened to our borrower's

plan and his explanation of why he believed it would be successful. We reviewed all of his correspondence with the county and his zoning change application

and all of the supporting documentation. We talked to the county ourselves to assess the probability of success. We spent easily 30 hours researching this

project, and in the end we concluded that our borrower was for real and that his plans were on target and we determined that there was a very high likelihood

that he would succeed.

Solution: We arranged a $375,000 loan (at 75% LTV based on future value), with a three year term and a rate of 13% per annum. The loan involved a

construction holdback for money to be spent on development of the lots, and we included 18 month's worth of pre-paid interest in the loan, so the borrower

would have no cash commitments during the development stage of his project.

--Jeff Chaney - VP California Private Money Loan

californiaprivatemoneyloan. com

Hip s the full story

Home owners will soon have just three months to sell their homes or be forced to re-issue the seller’s information pack at an estimated cost of Ј1000 for the average semi-detached home. This would be in addition to the original Ј1000 paid out for the original sales pack.

Much has been written about the Home Information Packs (HIP’s). Here we aim to examine the final details, just released.

From June 2007 it will be compulsory for all sellers to produce a dossier containing certain basic facts regarding the sale of the property. Ministers estimation of the costs of this survey are Ј776, a figure that the experts dispute. They say the figure is much more likely to be Ј1000. These figures are based on an average semi.

The information given in the dossier includes searches, deeds, description of the property and an energy efficiency rating. However, it appears that there are some rather worrying exclusions in the list. For example, there is no reference to rights of access, ground stability, natural subsidence or effects of mining. Risks of flooding are not included; neither is contamination from radon gas or other substances. Telecommunication links seem to have been overlooked too.

Despite this cost to the seller, it appears that if a buyer is borrowing in excess of 80% of the property value, they’ll still be expected to commission and pay for valuations.

With regard to the three month time limit on sales, it appears that mortgage lenders will refuse to advance cash to buyers where the HIP is over three months old. Also, if house is taken off the market for over 28 days within those three months, a new HIP will have to be obtained. Where the reason for the property being off the market for 28 days was connected with a sale, the rule would not apply.

Where a property is marketed for sale on a private website or even by a for sale sign in the garden, the failure to supply a HIP will result in a fine of Ј200 per day.

In reaction to the announcement of these regulations, a Tory spokesman was quoted as saying the packs were “expensive, deficient and dangerous. The refusal to tell families whether the back garden will be safe for their children or of potential flood risks, delivers a serious blow to the credibility of these packs.”

.The Law Society are concerned that there may be significant defects in the scheme in the there is no provision in the regulations for information within the HIP to be authenticated or confirmed by the seller. They are of the opinion that there should be a warning that reinforces to the buyer the risk of taking on substantial liabilities and commitments.

When you take into consideration the fact that the VAT alone from these packs will bring in Ј111m per year into the treasury you realize why the Government has been accused of yet another stealth tax implementation.

So there you have it. It appears to be that, for better or worse, HIP’s are here to stay.

Signing for your card transaction is now a thing of the past

From Valentines Day (14th February) 2006 a signature is not good enough for you to purchase goods in the UK using your debit or credit card. Chip and PIN technology has been around for years, but before now it has still been an option that you may sign for your card transaction. Now, however, that luxury has been taken away. No longer will a signature be enough proof that the card you are using is yours. If you own a debit or credit card you must now know your PIN number or else you won’t be able to use your card.

Card fraud is a big problem in the world nowadays, but this new technology has significantly decreased card fraud. It is estimated that 80% of retail transaction in the UK are now paid for by card. This isn’t because more and more people are getting credit cards, it’s because more and more people are getting a debit card with their bank account and using this debit card instead of cash when shopping.

Most new bank accounts nowadays offer free debit cards when you open your bank account. Barclays bank (one of the UK’s biggest banks), for instance give you a free debit card with their current account ( barclays. co. uk/currentaccount-index ) and their new High Interest Savings Account ( personal. barclays. co. uk/BRC1/jsp/brccontrol? task=articleFWgroup&value=2430&target=_self&site=pfs ). This card is a great benefit, as it means that you don’t have to carry cash around with you, and when crossed with an account that gives you a good interest rate, you can have a very beneficial addition to your purse or wallet.

For those of you that don’t already use a debit card; it is basically the same as your “hole in the wall” bank card, but also can be used like a credit card in stores when paying for your shopping. The good thing about the debit card is that it gives you access to your own money, without you having to get credit and get in to debt. Whenever there is no money in your account you can’t use your debit card – this curbs your spending and thwarts your ability to spend more than you can afford.

The problem in the past with debit cards was that if you lost it someone could easily use it in a store with your forged signature, potentially giving them access to all of your funds. Now that chip and PIN has become compulsory it means that a thief cannot use your card in a store without knowing your PIN. This makes your card a lot more secure. The only thing remaining is to remember you PIN (Personal Identification Number) and not to write it down and store it anywhere near your debit card.

Disclaimer:

All information contained in this article, is for general information purposes only and should not be construed as advice under the Financial Services Act 1986.

You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts.

The case against paying points

Points seem like a good idea, after all, the interest rate is lowered. But if you don't have cash on hand in advance, paying points can seem just out of reach. Do you need to pay points?

For most people, paying points just doesn't make sense.

A point, often called a discount point or origination fee, is equal to one percent of the loan amount. Points are paid to the lender at the time of closing.

By paying points, you are buying down your interest rate. The more points you pay, the lower your interest rate. Lenders started offering points in the early 1980's when mortgage rates were 15%. The housing market just went dead as people were unable to afford such high interest rates on mortgages.

To stimulate business, lenders offered discounted rates with fees attached, called discount points. Many sellers began to pay the points charged by the lender in order to sell their home. This gave the buyers an affordable mortgage and owners were able to get their homes off of the market.

But times have changed. Interest rates are no longer anywhere near 15% on mortgages -- they are more like 7%. The need to fork out a ton of dough in order to get a lower rate isn't really there for the average home buyer.

Let's look at the numbers. For example, you find a 30 year fixed rate mortgage at 6.50% with two points. For the life of the loan, you have a fixed rate of 6.5%. But you will have to pay the points at closing. If the home you want to purchase is $192,000, you will have to find an extra $3,840 at the closing to cover the points.

Another lender is offering you a 7% interest rate on the same mortgage.

Which deal is better for you?

You put the standard 20% down on the loan. The monthly payment and interest payment for the 6.5% mortgage is $1,207. The 7% monthly payment increases to $1,270 per month. That's a difference of $63 per month. If you divide the $3,840 by $63, you will find that it takes 61 months, or five years and one month, to recuperate your points in the form of a lower payment. This is your payback period.

You could put that $3,840 in the bank to earn interest. If your bank is paying three percent interest, you would earn approximately $10 per month. If you pay the points, you are loosing money that you could have made interest on. So, subtract $10 from the $63 savings. Now divide $53 into $3,840 and you will find that the payback period increases to 72 months, or six years.

So you have to stay in that home with that particular mortgage for six years to make back the money you pay in points. Most people won't stay in a home for over six years today.

And with rising home costs, many home buyers don't have the extra cash on hand to pay the down payment, closing and points. That's why many lenders have started offering lower down payment mortgages -- they understand how hard it is to save that money.

If the seller wants to pay points, that's great and extremely rare in today's market. If you aren't positive that you will stay in the home long enough to recuperate the cost of your points, it would be best to choose the mortgage without points.