Archive for the ‘Finance & Banking’ Category
Imitation is not only the best form of flattery, but it can also be a shortcut to success. That is the law and concept of franchising. Many businesses, even new ones achieve success by being innovative, adaptive and aggressive. When these three qualities are ever-present in a business, there’s no way to go but up. Companies like McDonalds, Apple and even Facebook have these qualities but not everyone can have them immediately. Not everyone who engages in business can have them without extensive experience.
So how can any entrepreneur achieve success without having to go head-to-head with other vibrant businesses? The key is to follow or at least temporarily follow other businesses. The key is to imitate the business model of other businesses. They key is to sell the products and services that they sell. The key is acquiring a franchise.
Many successful companies offer franchising to entrepreneurs who want them. These companies themselves benefit by expanding their reach to places they consider successful but otherwise have no resources or will to expand just yet. They also benefit financially from franchise fees as well as partial profit from supplied inventory. The entrepreneur on the other hand benefits from the successful name or the popularity of the business. He also benefits and learns from the successful business model of the franchisor which he can apply or adapt to other businesses.
The common types of business that can be franchised are food businesses like McDonalds or KFC. The entrepreneur gets to use the McDonalds name and business model. He cannot add to it that is not endorsed by McDonalds. McDonalds supplies the training for personnel as well as most of the inventory. The entrepreneur handles the rest. Customers won’t have a clue if their local restaurant is owned by someone else unless they read the receipts fine print.
If you are considering establishing a Franchise contact us at 214.550.6455 for a free consultation.
A mortgage involves the transfer of an interest in land as security for a loan. The mortgagor and the mortgagee generally have the right to transfer or assign their respective interest in the mortgage. Standard contract and property law provisions govern the transfer or assignment of any interest. There are several different types of mortgages available.
Fixed Rate Mortgage
A fixed rate mortgage carries an interest rate that will be set at the inception of the loan and remain constant for the length of the mortgage. A 30-year mortgage will have a rate that is fixed for all 30 years. At the end of the 30th year, if payments have been made on time, the loan is fully paid off. To a borrower the advantage is that the rate will remain constant and the monthly payment will remain the same throughout the life of the loan. The lender is taking the risk that interest rates will rise and it will carry a loan at below market interest rates for some or part of the 30 years. Because of this there is usually a higher interest rate on a fixed rate loan than the initial rate and payments on adjustable rate or balloon mortgages. If the rates fall, homeowners can pay off the loan by refinancing the house at the then lower interest rate.
Adjustable Rate Mortgage
An adjustable rate mortgage (ARM) provides a fixed initial interest rate and a fixed initial monthly payment for a short period of time. With an ARM, after the initial fixed period, which can be anywhere from six months to six years, both the interest rate and the monthly payments adjust on a regular basis to reflect the then current market interest. Some ARMs may be subject to adjustment every three months while others may be adjusted once a year. Also, some ARMs limit the amount that the rates can change. While an ARM usually carries a lower initial interest rate and lower initial monthly payment, the purchaser is taking the risk that rates may rise in the future.
Owner Carryback and Financing
An alternative form of financing, usually a last resort for those who cannot qualify for other mortgages, is owner financing or owner carryback. The owner finances or “carries” all or part of the mortgage. Owner financing often involves balloon mortgage payments, since the monthly payments are frequently interest only. A balloon mortgage has a fixed interest rate and fixed monthly payment, but after a fixed period of time, such as five or ten years, the whole balance of the loan becomes due at once. This means that the buyer must either pay the balloon loan off in cash or refinance the loan at current market rates.
Home Equity Loan
A home equity loan is usually used by homeowners to borrow some of the equity in the home. Doing so may raise the monthly housing payment considerably. More and more lenders are offering home equity lines of credit. The interest may be tax DEDUCTIBLE because the debt is secured by a home. A home equity LINE OF CREDIT is a form of revolving credit secured by a home. Many lenders set the credit limit on a home equity line by taking a percentage of the home’s appraised value and subtracting from that the balance owed on the existing mortgage. In determining the credit limit, the lender will also consider other factors to determine the homeowner’s ability to repay the loan. Many home equity plans set a fixed period during which money can be borrowed. Some lenders require payment in full of any outstanding balance at the end of the period.
Home equity lines of credit usually have variable rather than fixed interest rates. The variable rate must be based on a publicly available index such as the prime rate published in major daily newspapers or a U. S. Treasury bill rate. The interest rate for borrowing under the home equity line will change in accordance with the index. Most lenders set the interest rate at the value of the index at a particular time plus a margin, such as 3 percentage points. The cost of borrowing is tied directly to the value of the index. Lenders sometimes offer a temporarily discounted interest rate for home equity lines. This is a rate that is unusually low and may last for a short introductory period of merely a few months.
The cost of setting up a home equity line of credit typically includes a fee for a property APPRAISAL, an application fee, fees for attorneys, TITLE SEARCH, mortgage preparation and filing fees, property and TITLE INSURANCE fees, and taxes. There may also be recurring maintenance fees for the account or a transaction fee every time there is a draw on the credit line. It might cost a significant amount of money to establish the home equity line of credit, although interest savings can justify the cost of establishing and maintaining the line.
The federal Truth in Lending Act requires lenders to disclose the important terms and costs of their home equity plans, including the APR, miscellaneous charges, the payment terms, and information about any variable-rate feature. If the home involved is a principal dwelling, the Truth in Lending Act allows 3 days from the day the account was opened to cancel the credit line. This right allows the borrower to cancel for any reason by informing the lender in writing within the 3-day period. The lender must then cancel its security interest in the property and return all fees.
Second Mortgage
A second mortgage provides a fixed amount of money repayable over a fixed period. In most cases the payment schedule calls for equal payments that will pay off the entire loan within the loan period. A second mortgage differs from a home equity loan in that it is not a line of credit, but rather a more traditional type of loan. The traditional second mortgage loan takes into account the interest rate charged plus points and other finance charges. The ANNUAL PERCENTAGE RATE for a home equity line of credit is based on the periodic interest rate alone. It does not include points or other charges.
Reverse Mortgage
A reverse mortgage works much like traditional mortgages, only in reverse. It allows homeowners to convert the equity in a home into cash. A reverse mortgage permits retired homeowners who own their home and have paid all of their mortgage to borrow against the value of their home. The lender pays the equity to the homeowner in either payments or a lump sum. Unlike a standard home equity loan, no repayment is due until the home is no longer used as a principal residence, a sale of the home, or death of the homeowner.
The following provisions have recently taken effect.
Card issuers will be prohibited from raising rates on new accounts for 12 months.
Issuers can’t impose retroactive rate increases, meaning that rate hikes on outstanding balances generally will be prohibited. The exception to this is consumers who are 60 days or more late with their payments.
However, card issuers can still raise your rate on new purchases at any time, as long as they provide 45 days’ written notice.
People under age 21 will have to get an adult co-signer to get a credit card if they can’t show they have the means to pay off the debt on their own.
Card issuers also will be barred from offering freebies to college students on campus to get them to apply for a card.
Any amount you pay above the minimum payment will be applied to the balance with the highest interest rate.
Issuers must show you how long it would take you to pay off your card and the total cost if you just made minimum payments. (That’s assuming you don’t charge more on the card.)
“If you had no idea of how damaging minimum-payment syndrome is, you get it now,” said Todd Mark, vice president of education at Consumer Credit Counseling Service of Greater Dallas.
One rotten thing some card issuers have done in response to the law is double the minimum payment for some cardholders from 2.5 percent of the total balance to 5 percent.
“It may be more difficult for these consumers to realize the benefit from this provision,” said Bill Hardekopf, chief executive of LowCards.com.
Card issuers won’t be able to charge interest on balances from a prior billing cycle that have been paid, a practice known as “double-cycle billing.”
Due dates for card payments must be the same each month.
Credit card issuers will be prohibited from opening an account or increasing the credit limit on an existing account unless the issuer has considered whether the borrower has the ability to repay the debt.
The Washington Post – Organized cyber gangs in Eastern Europe are increasingly preying on small and midsize companies in the United States, setting off a multimillion-dollar online crime wave that has begun to worry the nation’s largest financial institutions. A task force representing the financial industry sent out an alert Friday outlining the problem and urging its members to start using many of the precautions that detect consumer bank and credit card fraud. “In the past six months, financial institutions, security companies, the media and law enforcement agencies are all reporting a significant increase in funds transfer fraud involving the exploitation of valid banking credentials belonging to small and medium-sized businesses,” reads the confidential alert sent to members of the Financial Services Information Sharing and Analysis Center, an industry group created to share data about critical threats to the financial sector. The group is operated and funded by such financial heavyweights as American Express, Bank of America, Citigroup, Fannie Mae and Morgan Stanley. Because the targets tend to be smaller, the attacks have attracted little of the notoriety that has followed larger-scale breaches at big retailers and government agencies. But the industry group said some companies have suffered hundreds of thousands of dollars or more in losses.