How Good a Deal Is Your Bank’s Mortgage Insurance Plan?

When you go to the bank to get a mortgage, you’ll inevitably be asked to take out mortgage insurance. The idea behind mortgage insurance is simply that if something happens to you or your spouse then your loan will be paid off which is good news for your family and the bank.

Most financial institutions act like they are doing you a favor by offering you mortgage insurance through their own group plan, but are they?

The truth is that you could probably get a much better deal and at least an equal amount of protection by shopping around for your own insurance policy.

Essentially, mortgage insurance is no different than term-life insurance. With both, your policy only lasts for a specified period of time and pays its benefits if something happens to you or your spouse. The real difference comes down to how much control you’ll have over your policy and how much you’ll pay for it.

If you choose to use the mortgage insurance offered by the bank, you will not be able to customize a policy to fit your needs and you’ll be lumped together with other borrowers under a group plan. Because of this, you will only have limited control over your policy. For example, through a third party provider, you would be able to choose your own beneficiary, decide how to spend the proceeds if necessary, and cancel the policy at any time. You would not have these options with a lending institution.

Additionally, the bank maintains the right to not renew your policy and to cancel the policy when you sell the house. If you find your own insurance provider, you can make those decisions yourself.

The other big difference is cost. A third party insurance policy’s premiums will not go up, so you would pay the same premium today that you’d pay ten years from now. You won’t get that same guarantee from a bank which can and probably will increase your premiums during the life of the policy. In most cases, you’ll probably pay more through a bank anyway. In fact, you could pay as much as 40% more than you would if you shopped around and found your own insurance provider. Not to mention that the policy you take out through your bank will gradually decrease in value while a plan you select from an outside source will be worth the same amount during the entire policy period.

Of course, many people don’t mind paying more for their mortgage insurance because it’s more convenient than dealing with insurance agents. The truth is that you can easily find a policy that fits your needs and provides affordable premiums via the Internet. An organization, such as the Hughes Trustco Group, can even generate quotes for you from multiple insurance providers so you’ll know that you’re receiving the best deal possible on the policy you want.

The bottom line is that mortgage insurance is important and should be part of your home buying or refinancing preparations, but that does not mean you need to pay more or let the bank make important decisions for you. Instead, you should find your own personal plan from a third party provider which will let you stay in control of your policy and will save you money in the long run.

What You Should Look For in Good Bank Foreclosure Lists

You can expect to earn more profits from bank foreclosures. And you can find great property deals if you subscribe to foreclosure house listings. Foreclosure homes are properties that have been repossessed by banks because their owners reneged on their obligations to pay their mortgage.

Reasons Why Bank Foreclosures are Popular:

Many successful real estate foreclosure investors prefer to buy bank foreclosures for several reasons. You can be sure that bank owned properties are free from any lien. Also, you do not have to worry about evicting previous owners because banks will make sure that the properties are vacant when they placed them on the market. Furthermore, bank home foreclosures or real estate owned properties are very cheap. This is because banks want to sell the foreclosures immediately to recover their lost investments. Also, having a long inventory of foreclosure properties will not be good for their business.

Elements of Good Bank Foreclosure Lists:

A good foreclosure lists will help you find foreclosure properties that are cheap and in good conditions. A good foreclosure listing provider will make sure that all the information it provides is accurate to allow you to easily and quickly locate the property that caught your interest. Accuracy is very important so as not to waste your time and effort locating a property on a wrong address.

Details are important in making a buying decision. It would be to your advantage if the foreclosure list contains information that can help you make a purchasing decision. For example, it would be of much help if the property is described complete with the number of rooms, accurate land and floor area and many more.

A good foreclosure lists should not focus only on one foreclosure market. It should be able to provide new foreclosures from all major cities and towns in the country. This would give you ample foreclosure choices to consider and buy.

Lastly, good bank foreclosure lists should be updated daily to give you an advantage in knowing immediately new foreclosures as soon as they are placed on the market for sale.

The Concept Of Banking And Bad Debt

The financial sector plays a very vital role in the development of any country or nation. The banking sectors, as a major player in the financial system, is a major concern to all and sundry in a country most importantly the government through its agencies like the central bank and the ministry of finance. Recently, there has been a big upheaval in the Nigeria financial sub-sector i.e. the banking sector as the Central Bank of Nigeria and the Governor, Sanusi Lamido Sanusi, audited the accounts of some banks and came up with a list of banks that are found faulty.

THE CONCEPT OF BANKING AND BAD DEBT

Banking could mean different things to different people. Scholars, bank professionals and even laymen had defined the concept and lots are still going on to capture what banking denotes in the present time taking into consideration the changing world environment. A number of definitions shall be considered here:

Banking, according to InvestorWord (2009) has been defined as engaging in the business of keeping money for savings and checking accounts or for exchange or for issuing loans and credit, etc. However, from finance perspective, it is defined as ‘the management of money and credit and banking and investments. From right of offset perspective, InvestorWord sees banking as the legal right of a bank of seize deposited fund to cover a loan that is in default.

Wikipedia also gives a number of definitions as to the word banking. First, it defines banking as the transacting business with a bank deposit or withdrawing funds or requesting a loan, etc. A second definition sees it from financial perspective, deforming banking as the commercial activity of providing funds and capital. More relatively modern term is that which defines banking from home banking perspective as ‘that in which transactions are conducted by means of electronic communication (vial telephone or computer). Other definitions as provided by Wikipedia are:

i. Banking is the business of a bank or of a banker (role perspective)
ii. Banking is the art of transacting business with bank, depositing or withdrawing funds or requesting a loan etc.
iii. Lastly, banking as engaging in the business of banking, maintaining savings and checking accounts and issuing loans and credit, etc.

In all, banking is a nebulous concept but one could curl out some cogent terminologies so important the concept of banking to include the following: Exchange, account, business, savings, checking, loans, credit, finance, deposit, withdrawal, fund or capital, transaction, and issuing.

THE CONCEPT OF BAD DEBT

There is no organization, whether banks or others kind of establishment that prays for bad debt. Ironically, bad debt is table in some certain organization, more importantly in the banking sector where loans are being given out in millions and billions on even daily/weekly basis.

Backlog of irrecoverable loans could sum-up to bad debt which used to pose great threat to the survival of most banks. The recent audit of some bank’s records which reveals anomalies in the operations of such banks and which brought about the removal of seven bank chiefs (CEO) up-to-date has been the talk of the town and a more controversial issued both locally, nationally and at the world’s scene.

Here, we shall be looking at some of the definitions of bad debt as it were and do a bit of exigency on the concept.

The investor word takes a comprehensive look at the concept from two perspectives Vis-a-Vis Non- GAAP and GAAP. Also, dictionary of finance and investment terms defines it as open account balance or loan receivable that has proven noncollectable and is written off.

The dictionary of Banking terms describes bad debt as loans classified as a probable loss and has no economic values.

Lastly on definitions, the dictionaries of Business terms see bad debt as debt that is not collectible and is therefore worthless to the creditor. So noncollectable because the debtor is insolvent; while the dictionary of marketing terms put bad debt as ‘customer failing to pay for the merchandise or service received; also called bad pay’.

The highlights from these definitions are:

i). Bad debts are receivables
ii). they are always noncollectable
iii). the debtors are usually insolvent
iv). Bad debts are usually written off
v). They are treated as expenses in the income statement
vi). They are loss to the going concern
vii). Such amount is worthless to the creditor

South Florida Bank Repossessions Are Up 83%

In the first half of 2010, reports have indicated that an average of approximately 4,000 homes a month were repossessed by banks. This is a startling increase of 83 percent in repossessions from the first half of 2009.

“We’re at a crossroads now in the South Florida real estate market, said Alberto Tarafa, a respected Foreclose analyst, in a recent news interview. “We haven’t see numbers this high at any time during the last 20 years. We will certainly see these bank-owned homes appearing at discounted prices on the market, in the near future.”

However, other analysts are speculating on how this will affect housing prices, in general. It has already been noted that there has been a decline in Miami home prices according to all real estate evaluations. Of particular note is the decline in New York housing prices as well. These two cities are the only cities that have seen a decline in home prices out of the 20 cities that are indicated in Standard & Poors housing index report.

Leading the nation in bank repossessions, Miami-Dade County produce a spike of 125 percent with Palm Beach coming in a close second at 112 percent. Additionally, Broward repossessions saw an increase of 42 percent. This translates into a rate that may reflect repossessions of about 50,000 properties by the end of 2010.

However, analyst Alberto Tarafa provided some encouraging news. “On the positive side, the number of new foreclose bank filings has decreased by 34 percent during the first six months of 2010. This means that we may see fewer than 70,000 foreclosure actions in 2010 as opposed to the 97,000 that we saw in 2009”.

It should be noted, however, that bank repossessed properties only represent a small number of homes that are currently on the resale market, numbering about 6 percent of the 67,000 homes being sold.

Those homes that are for sale have seen an increase in listings in five of the last six weeks which translates into a 2.7 percent increase in available properties. Even so, the available inventory has dropped by more than 37 percent when considering the 108,000 homes that were on the market in South Florida in late 2008.

Another reason that is being cited for the increase in bank-owned home repossessions is a new technology that has been created to facilitate online auctions. This has been implemented to assist South Florida courts in addressing backlogs.