General Info
What is Mortgage Insurance?
January 6, 2011 | Author admin
As a loan officer who has over one thousand loan closings within the last five years, I have fielded numerous questions from first time home buyers, but the question most asked has to do with mortgage insurance: what is it, why do I have to have it, and how long do I have to keep paying it?
Mortgage insurance is a financial guaranty for the lender that will help to reduce or eliminate a loss in the case of a default by the borrower, and it is almost universally required on loans where there is less than twenty percent equity. That means if you are purchasing a home with less than twenty percent down or refinancing to more than eighty percent of your homes value, you are going to be required to pay mortgage insurance. In other words, mortgage insurance spreads the risk between the lender and the insurance company.
The next question I get about mortgage insurance is, “Why do I have to have it?” The answer to that is simple: without mortgage insurance, many lenders would not be able or willing to accept the risk of lending without having twenty percent equity, making it significantly more difficult for customers to purchase a home, or use their home equity to consolidate debt or make an addition to their home. So while it may seem like you do not gain any advantage by having to pay mortgage insurance, it may be the factor that is allowing you to gain approval for your loan. In addition, a bill was passed in 2007 that allows people to write off their mortgage insurance on your taxes, just like you would for the mortgage interest that you pay. There are income restrictions on this provision, so check with a tax professional to see if this would benefit you.
Finally, the question comes up, “When can I stop paying mortgage insurance?” The answer to that will vary depending upon how your mortgage is worded, but there are a few general guidelines that are pretty universal. If you have a conventional mortgage, you are going to need to pay the mortgage insurance for at least the first year of your loan. If you have paid down the balance below eighty percent of the original purchase price or value, you can send a written request for the lender to remove the insurance (a lot of contracts say you can request the removal at eighty percent, they are required to remove it when the balance gets to seventy-eight percent). Some lenders will also allow you to pay for an appraisal, and if your home has risen in value to give you the twenty percent equity, they will also remove it. If you have an FHA guaranteed loan, you are going to be required to pay the monthly mortgage insurance for at least the first five years of the loan, and in order to have it removed you need to have the loan balance down to eighty percent of the original purchase price or value; they will not allow you to go off of what the appraised value is.
Mortgage insurance may seem to be an unnecessary monthly cost to many first time home buyers, but it is in fact what allows most people to purchase their first home. With the law that allows homeowners to write this cost off their taxes, it has become a little more consumer friendly as well.
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Mortgage insurance – Wikipedia, the free encyclopedia
January 6, 2011 | Author admin
Mortgage insurance (also known as mortgage guaranty) is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan. Mortgage insurance can be either public or private depending upon the insurer. The policy is also known as a mortgage indemnity guarantee (MIG), particularly in the UK.
For example, Mr. Smith decides to purchase a house which costs $150,000. He pays 10% ($15,000) down payment and takes out a $135,000 ($150,000-$15,000) mortgage. Lenders will often require mortgage insurance for mortgage loans which exceed 80% (the typical cut-off) of the property’s sale price. Because of his limited equity, the lender requires that Mr. Smith pay for mortgage insurance that protects the lender against his default. The lender then requires the mortgage insurer to provide insurance coverage at, for example, 25% of the 135,000, or $33,750, leaving the lender with an exposure of $101,250.[1] The mortgage insurer will charge a premium for this coverage, which may be paid by either the borrower or the lender. If the borrower defaults and the property is sold at a loss, the insurer will cover the first $33,750 of losses. Coverages offered by mortgage insurers can vary from 20% to 50% and higher.
To obtain public mortgage insurance from the Federal Housing Administration, Mr. Smith must pay a mortgage insurance premium (MIP) equal to 1.75 percent of the loan amount at closing. This premium is normally financed by the lender and paid to FHA on the borrower’s behalf. Depending on the loan-to-value ratio, there may be a monthly premium as well. The United States Veterans Administration also offers insurance on mortgages.[
Business overhead expense disability insurance – Wikipedia, the free encyclopedia
December 22, 2010 | Author admin
Business overhead expense (BOE) disability insurance pays the insured’s business overhead expenses if he or she becomes disabled. A BOE policy pays a monthly benefit based on actual expenses, not anticipated profits. It is designed for businesses that rely on a small number of people (or one person) to produce revenue.
[edit] Coverage
The following business overhead expenses are typically covered by a BOE disability policy:[1]
* Rent
* Interest payments on some business debts
* Utilities
* Employees’ salaries and payroll taxes
* Postage and stationery
* Equipment maintenance
* Rental, lease, or depreciation of office equipment
* Taxes on the business property location
* Insurance premiums for Workers’ Compensation, employee medical, and liability
* Accounting fees
* Professional memberships and subscriptions
Policies do not cover the salary of a temporary employee hired to do the duties of the disabled. Income taxes, the cost of inventory, and the cost of furniture are some expenses that are not covered. .
[edit] Characteristics
* Benefit Periods: BOE insurance policies have short benefit periods that do not usually exceed two years.
* Elimination Periods: BOE policies typically have short elimination periods; either 30, 60 or 90 days.
* Maximum Benefits: BOE insurance policies offer a maximum monthly benefit, but only pay actual overhead expenses if they are less than that maximum benefit. With some insurers, any unused benefit can be applied to increase future monthly maximums or to extend the benefit period.
* Taxation: BOE insurance benefits are subject to income tax, but the premiums are tax deductible as a business expense.
* Rates: BOE insurance rates are based on the insured’s age (at time of purchase), occupation, and health status. Once a BOE policy is owned, coverage can be increased without providing evidence of medical insurability.
via Business overhead expense disability insurance – Wikipedia, the free encyclopedia.
Business Overhead Expense Insurance
December 22, 2010 | Author admin
How long would your business survive if you were temporarily disabled? How would you pay the salaries of your employees and meet your monthly expense obligations? Some statistics would have you believe at least 50% of persons aged 35 will suffer a disability lasting at least 90 days before they attain the age of 65.
When a disability occurs, generally three things are sure to happen to a business owner:
* their regular living expenses will continue to occur;
* business expenses will continue to occur; and,
* at this most inopportune time, the income earned from the business will be severely interrupted.
Business overhead expense (BOE) insurance is designed to reimburse a business for overhead expenses in the event a business owner becomes disabled. This is not the same as personal disability insurance which usually pays benefits to age 65. A business overhead expense policy pays a shorter benefit of one to two years after a waiting (elimination) period. It is generally considered that no business can stay open more than two years if the owner is disabled and the business will either be shut-down or sold.
These policies also work where there is more than one owner. If there is a business partner each partner can take out a policy to accommodate their share of the expenses.
The premiums paid for the business overhead expense insurance is a legitimate, tax-deductible business expense; however, the benefits are treated as taxable income when paid.
Generally, there are two conditions which must be met to trigger the payment of benefits:
* total disability due to injury or sickness must be present and
* the expenses covered by the policy must be incurred during the disability.
Typically, eligible business overhead expenses are:
* employee salaries
* employment taxes
* employee benefit costs
* rental payments for property and equipment
* principal and interest on mortgaged business property
* utilities
* accounting and legal fees
* business insurance expenses
* interest on business debts
* property taxes
* general office supplies
Any agreements and insurance polices within a business must be integrated with the overall plan and objectives of the business. Careful consideration must be given to the selection of the plan which is right for your business and to the method of funding your plan.
* * *
This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contract your insurance agent. Our articles are intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state’s insurance department for more information.
Section 902 Definition of the Term Disability
December 22, 2010 | Author admin
Notice Concerning The Americans With Disabilities Act Amendments Act Of 2008
This document was adopted by the Commission in 1995 to explain its interpretation of the term “disability as used in the ADA. In 1999, the Commission published an Addendum to this document explaining that the discussion of mitigating measures in Section 902.5 was no longer correct due to the Supreme Court’s decision in Sutton v. United Airlines, Inc. The Americans with Disabilities Act Amendments Act of 2008 (ADAAA) was signed into law on September 25, 2008 and became effective January 1, 2009. Because this law makes several significant changes to the definition of the term “disability,” the EEOC will eventually make extensive changes to this document, but not before publication of a final regulation implementing the ADAAA.
Since the ADAAA applies only to acts of alleged discrimination that occur on or after January 1, 2009, the guidance offered on the meaning of “disability” in this document (with the exception of Section 902.5) will still apply to alleged discrimination that occurred prior to January 1, 2009.
The EEOC published a Notice of Proposed Rulemaking on September 23, 2009. For information on the proposed ADAAA regulation and to learn about the major changes made to the definition of “disability”, see http://www.eeoc.gov/policy/docs/qanda_adaaa_nprm.html.
Disability Planner: What We Mean By Disability
December 22, 2010 | Author admin
The definition of disability under Social Security is different than other programs. Social Security pays only for total disability. No benefits are payable for partial disability or for short-term disability.
“Disability” under Social Security is based on your inability to work. We consider you disabled under Social Security rules if:
* You cannot do work that you did before;
* We decide that you cannot adjust to other work because of your medical condition(s); and
* Your disability has lasted or is expected to last for at least one year or to result in death.
This is a strict definition of disability. Social Security program rules assume that working families have access to other resources to provide support during periods of short-term disabilities, including workers’ compensation, insurance, savings and investments.
Disability – Wikipedia, the free encyclopedia
December 22, 2010 | Author admin
A disability (or lack of a given ability, as the “dis” qualifier denotes) in humans may be physical, cognitive/mental, sensory, emotional, developmental or some combination of these.
An impairment is a problem in body function or structure; an activity limitation is a difficulty encountered by an individual in executing a task or action; while a participation restriction is a problem experienced by an individual in involvement in life situations. Thus disability is a complex phenomenon, reflecting an interaction between features of a person’s body and features of the society in which he or she lives.”[1]
An individual may also qualify as disabled if he/she has had an impairment in the past or is seen as disabled based on a personal or group standard or norm. Such impairments may include physical, sensory, and cognitive or developmental disabilities. Mental disorders (also known as psychiatric or psychosocial disability) and various types of chronic disease may also qualify as disabilities.
Some advocates object to describing certain conditions (notably deafness and autism) as “disabilities”, arguing that it is more appropriate to consider them developmental differences that have been unfairly stigmatized by society.[citation needed]
A disability may occur during a person’s lifetime or may be present from birth.
Third-party claim | Define Third-party claim at Dictionary.com
December 22, 2010 | Author admin
Legal Dictionary
Main Entry: third–party claim
Function: noun
1 : a claim made against a third party in a third-party complaint —compare COUNTERCLAIM, CROSS-ACTION, CROSS-CLAIM
2 : a claim made by an injured third party (as a third-party beneficiary of workers’ compensation insurance) against an insurer or insured for indemnification
via Third-party claim | Define Third-party claim at Dictionary.com.
third-party claim – Wiktionary
December 22, 2010 | Author admin
third-party claim (plural third-party claims)
1. A derivative lawsuit brought by a defendant in an original lawsuit, claiming that another new party being brought in is responsible for or should share in the plaintiff’s damages against the defendant.
* Practise note: the third party being sued by the defendant is cited as “First Third Party”, “Second Third Party” etc.
Business Insurance – And What You Need To Know – Article Blast! Free Articles And Content For Reprint On Your Website, Newsletters and Ezines. Submit Your Articles For Free!
December 22, 2010 | Author admin
Getting your business up and running is exciting, challenging and hard work. You’re finally making money – and you are the driving force that is making your business grow. But have you taken care of the “What ifs”. Like – “What if I get sick, how do I pay my bills” or “What if I have a fire, how do I keep my business running”. Simply put, the one thing you do not want is to have the business that you have labored so
tirelessly on, hit a financial snag.
If you are a sole proprietor or a partnership – both your business and personal liabilities are at risk. Do you think you’re safe if you incorporate or have an LLC? Many are misled into believing this is so, however, you too can become personally liable if you sign a personal guarantee on a loan, personally injure someone or act irresponsibility. As you will see, owning business liability insurance can and
does protects your business and personal life from financial ruin. My discussion here will be limited to Business Interruption,Overhead, Umbrella Liability and Liability Insurance – explaining what these four types of insurance are, and what they can offer you and your business.
Business Interruption Insurance
Business Interruption Insurance helps to insure against any economic losses that you may encounter if something should happen to close down your business. For example, you have a fire in your corner of the house – your business office.
Your home is covered for property damage – thus, the rebuilding is covered, however, what about the lose income you’re losing while you rebuild? That’s where Business Interruption Insurance can come in to play.
Overhead Insurance
There is one type of business insurance that you may want to consider when your business is making a good profit, and that would be Overhead Insurance. Overhead Insurance covers rent, salaries, utilities, insurance premiums and/or interest payments that are related to the business – this type of insurance would cover you in case of a major illness or accident.
Umbrella Liability Insurance
Umbrella Liability Insurance is used for catastrophic losses. This will protect you in the event someone wants to sue you. An umbrella policy will upgrade your basic auto, homeowners or business insurance to cover these unforeseen events.
Liability Insurance
If you have people coming to your home-based business, than liability insurance may be something you should look into it. Liability insurance will cover you against
claims made by others against you for injuries or damages that occurred on your property.
Yes, your homeowner’s policy includes some liability insurance, but it may not cover you for liability claims caused by your business.
To conclude, life offers many unexpected turns in the road – and basically, that’s what all insurance does – it protects you against those unexpected bumps in the
road – and keeps you moving toward your goals with only limited stales. Personally, I believe I can deal with a small bump in the road better than a complete halt in
business. How about you?
