This means that if a worst-case scenario occurs where you can no longer pay your mortgage and the lender sells your home, your first mortgage would be paid first. Your second mortgage would receive any remaining funds after the first mortgage is paid. Second mortgages tap into your home equity, which is the market value of your home less any loan balances. Equity can increase or decrease, but ideally, it grows over time....
To understand senior notes, you need to understand the basics of corporate bonds. When a company needs to raise cash, it often does so by issuing corporate bonds. Investors receive regular interest payments, plus the return of their principal when the bond reaches maturity. But in a corporate default, bondholders will take their place in line with the company’s other creditors seeking to get paid in bankruptcy. Some senior notes may be convertible....
Savings bonds also have tax advantages. Interest accrued on a Series EE savings bond is not subject to state or local tax. Federal tax on the interest can be delayed until the bonds are cashed in, or potentially avoided altogether if the savings bonds are used for eligible education expenses. Because of their low risk, the interest rates on Series EE bonds are generally low. The interest rate is 0....
recep-bg / Getty Images You can purchase a CD or another type of time deposit at any financial institution. Since interest rates and terms vary widely, it’s well worth your time to shop around. Fortunately, most banks, credit unions, and other financial institutions post their rates on their websites. Alternate name: term deposit How Do Time Deposits Work? Once you commit to a time deposit, you let the financial institution use your money for a fixed term....
While no one expects to experience a disability, especially if they’re currently in good health, statistics show it happens too often to ignore the possibility. Data from the Centers for Disease Control and Prevention (CDC) reveals that 26% of adults—61 million people—in the United States live with a disability. Below, we’ll explore the ins and outs of a waiver of premium rider to help you decide whether it’s something you’d like to add to your next insurance policy....
If you’ve lost a spouse, it’s essential to understand what a widow(er)’s exemption is and how it can be applied to reduce your tax liabilities. How a Widow’s Exemption Works A widow’s exemption is a tax benefit for someone who has lost a spouse, meets other requirements, and has not remarried within a specific time frame. These benefits help people save money on taxes after losing a spouse. The way that a widow(er)’s exemption works depends on the type of tax exemption or allowance, which can differ based on factors such as the jurisdiction you’re in....
If you have been a customer of the same insurance company for years, without ever filing a claim, you are likely seen as a low-risk client. If one day you get in a car accident and have to file a claim, your insurer may consider this an outlier to your regular driving behavior, and it still has incentive to keep you as a policy-holder. You may benefit from accident forgiveness that is already written into your existing contract, or it may have been a rider that you paid for monthly....
Interest-only mortgages are loans secured by real estate and often contain an option to make an interest payment. You can pay more, but most people do not. People like interest-only mortgages because it’s a way to reduce your mortgage payment drastically. News headlines often distort the truth about interest-only mortgages, making them out to be bad or risky loans, which is far from the truth. As with any type of financing instrument, there are pros and cons....
How Asset Management Works Asset managers work with client portfolios by taking a look at several factors, such as the client’s unique circumstances, risks, and preferences. Asset management firms handle investments according to an internally formulated investment mandate or process. Many offer their services to wealthy businesses and individuals. It can be difficult to offer services to smaller investors at an appropriate price. Wealthy investors often have private accounts with these firms....
The term is usually used in three contexts: as part of a dollar-cost averaging strategy; in trading, where it is referred to as “pyramiding”; and when making the decision to buy more stock in a position after a big stock price gain. Let’s go over how each works, then look at a few examples. Definition and Examples of Averaging Up When you buy more of a stock or other investment after the market price goes up, you’re averaging up....
Without capital investment, businesses may have a hard time getting off the ground. Learn more about capital investment, how it works, and how it relates to the economy. Definition and Examples of Capital Investment The term capital investment has two usages in business. First, capital investment refers to money used by a business to purchase fixed assets, such as land, machinery, or buildings. Secondly, capital investment refers to money invested in a business with the understanding that the money will be used to purchase fixed assets, rather than used to cover the business’s day-to-day operating expenses....
If your permanent life insurance policy has built up significant cash value, or if funds are tight, you might be considering canceling the policy to access the funds. But before you do, it’s important to understand what you’ll give up and if your cash value will be subject to “surrender penalties” and taxes. If you need cash to get you through an emergency, or can’t afford premium payments, there are alternatives to canceling a policy that may provide the funds or breathing room you need, while keeping your coverage in place....
When you use EBDM, you take data from four types of sources that have been identified by The Center for Evidence-Based Decision Making: Empirical studies from academic journalsInternal company dataProfessional expertise from practitionersValues and concerns of stakeholders Furthermore, during an evidence-based decision-making process, there are three stages of action: Gathering evidenceInterpreting evidenceApplying what you have learned A study by Carol Gill at the Melbourne School of Business found that HR practitioners fail to follow the EBDM model even though that leads to “negative consequences for employees, organizations, and HRM practitioners....
House rich, cash poor is as much a feeling as it is a state of being. The median sale price of a home has risen 121% over the last 60 years, meaning that regardless of when—or why—you’ve purchased a home, it’s likely gone up in value. The positive value of your home vs. what you owe on it is called equity. How House Rich, Cash Poor Works Let’s say that you and your significant other bought a house in California in 2005 for $300,000....
Definition and Examples of Insurance to Value Insurance to value tells you how much of your home’s rebuild cost your insurer will pay under a covered claim. Insuring your home for any amount less than its full replacement cost (100% ITV) may mean you’re underinsured in the event of a total loss. That’s because your home insurance only covers costs up to your policy’s limits, so if rebuilding expenses are higher than those limits, you’d have to pay the difference out of pocket....
Acronym: LTC insurance, LTCI How Does Long-Term Care Insurance Work? Long-term care insurance pays benefits toward the cost of “custodial care” rather than acute care and surgery, for example. If you can’t perform “activities of daily living (ADLs),” it helps pay for the care you require. ADLs are basic living activities you once could do on your own, but because of a long-term illness or injury, such as arthritis, a broken hip, or just advancing age, you can no longer do without help....
These servicers contract with the U.S. Department of Education to manage the accounts of students who receive federal student loans. MOHELA also services private student loans. MOHELA is one of the highest-rated student loan servicers by Education Department standards. The Education Department tracks loan servicers’ customer satisfaction scores. It also monitors how well they keep borrowers out of default. MOHELA has some of the highest percentages of borrowers who are current on their loans of the nine servicers....
Preapproval can set you apart as a buyer in a competitive seller’s market when there are more buyers than there are homes available for purchase. Sellers tend to lean toward the sale that’s more likely going to go through because the buyer already has the backing of a lender. How Does Mortgage Preapproval Work? You can get a preapproval letter by completing a loan application. Lenders will ask you for specific financial documents, such as tax returns, pay stubs, and access to your bank and investment account records....
Documents usually require notarization if they handle important financial or legal matters that require a great deal of trust in all parties named in the document. Other types of documents that may need a notary are those that have the potential for fraud. For example, if you are designating a beneficiary on a life insurance policy, you’re signing over a large amount of money, and you won’t be around to vouch for the transaction....
The wholesaler doesn’t purchase the property. Instead, the temporary contract with the owner gives them the right to sell it on their behalf, keeping the profit for themselves. How Does Real Estate Wholesaling Work? A wholesale real estate transaction involves a contract between the seller and the wholesaler. The wholesaler agrees in the contract to sell the property for a minimum amount by a certain date. This may require that they invest some earnest money....
