Hard Money Home Equity Loans: Understanding Bad Credit Loan Consolidation

Hard money equity loans in the prevailing market are loans at a premium mortgage rate to the borrower in exchange for a “no red tape” 2nd mortgage loan. The money may be used by the lendee for whatever purpose they chose so long as the equity in the property or collateral provided is sufficient to cover the loan.

The term hard money loan initially meant a loan for hard cash. Today the term has been enhanced to cover loans for non-conventional loans such as investments, private funded loans, home equity loans and equity line of credit loans. Now it is possible to refinance your primary mortgage to get cash, consolidate debt and purchase investment properties instead of a taking out a purchase loan as a non-owner occupied investment property.

A maximum loan on property owned by the borrower is called a cash out loan. The borrower has a loan to value, which means the loan on the property, or collateral used is equal to the value of the property or collateral used to secure the loan. This type of loan has a higher interest rate than the “A paper” home equity loan that has a fixed rate around prime.

A home equity loan is one type of loan available for a hard money cash out loan. The Payment option negative ARM is another good 1st mortgage for investment properties if the borrower is looking for a short-term loan or if being self-employed has created some cash flow concerns.

A negative ARM mortgage calls for the payment of interest only on the loan. If the interest for a period is not paid in full the balance is added to the mortgage. The end result is an increased mortgage balance and a loss of equity in the property used for collateral. As the mortgage balance increases, the interest on the mortgage loan increases even though the interest rate remains the same. If both the loan balance and the interest rate increase, the property owner may be forced to sell or the loan may be foreclosed.

A home equity lender may require all or some of the following items before making a hard money loan.

1. A clear precise description of the property

2. Home Title to collateral

3. Borrower must show expertise in the field the loan will be used in

4. Mortgagor must accept all lender terms unconditionally

Because the interest rates are higher, and state laws may vary, borrowers should examine all ramifications before considering hard money loans.


Five Tips to Minimize Your Family’s Tax Burden

Parents: Did you know that you can hire your kids in your small business and reduce your taxes?

Hiring your children if you own your own business is a great tax planning strategy, but it’s more than just a tax deduction. Here are a few ways you can save taxes by hiring your children in your small business:

1. You get a tax deduction for the wages you pay your kids, which reduces your taxable income

2. By paying your children, you are effectively transferring income from your higher tax bracket to your childrens’ lower tax bracket

3. You reduce your self employment income, thus you also reduce your self employment tax

4. Your kids may not owe any tax on the amount you pay them, depending on how much they earn and whether you claim them as a dependent or not (in 2009, dependent children can earn up to $5,700 before they will owe any income tax)

5. Paying your children a wage allows them to open an IRA or Roth IRA, which gives them a jump start on saving for retirement, college and other goals

If you have entrepreneurial kids, consider starting the business in your name and hiring your children instead of having the kids own the business. This will reduce your family’s overall tax burden.

Why would it matter who owns the business? Well, if you are self employed, you have to pay self employment tax on your net earnings over $400. This rule applies to both adults and children, so there is no advantage to being a kid when you’re self employed. However, kids have a huge advantage if they earn wages paid from an employer. Why? Well, kids don’t have to pay taxes on the first $5,700 of earned income, even if they are claimed as a dependent on their parents’ tax return.

Here’s an example:

Let’s assume Teddy, who is 14 years old, has a web design business. In 2009, he expects to earn $5,000 from this business after all of his expenses.

If Teddy is the owner, he is considered self employed and will have to pay 15.3% in self employment tax on this income. Assuming this is his only income, he won’t owe any federal income tax because his total earnings are less than the standard deduction amount ($5,700 in 2009), but he will still have to pay self employment tax on the net profit. Teddy’s total tax in this example will be $765.

Now let’s assume that Teddy’s dad is the owner of the business and he hires Teddy to do the work. Teddy still makes $5,000 from this business, but because he is an employee instead of the owner of the business, he doesn’t have to pay self employment tax. Teddy’s dad will report the $5,000 in income on his tax return, but he gets to deduct the $5,000 he pays Teddy to work in the business, so dad won’t owe any tax on this income. In addition, because Teddy is under 18, Teddy’s dad doesn’t have to pay payroll taxes on him. Finally, because Teddy earned less than the standard deduction, his total tax liability will be zero.

In this example, the family’s total tax savings by having the business in the father’s name and having the child as an employee instead of the owner is $765.


How to Save Money on Car Insurance

In spite of the state of the economy one expense that drivers these days can’t cut from their monthly budget is auto insurance. The good news is that thanks to the wide variety of leading car insurance companies in this day and age, drivers no longer have to be stuck with paying for expensive full coverage auto insurance plans. Every driver has the opportunity to choose a cheap auto insurance plan or a more affordable full coverage auto insurance.

How Much Car Insurance Do You Need?

The first step to finding a more affordable car insurance policy is determining how much auto insurance you really need. For example, most people who lease or purchase new vehicles are required to have full coverage policies but after the car is five years old or older those full coverage policies are no longer necessary. Before switching to a more affordable auto insurance policy, make sure that you verify how much automobile insurance you’re required by law to have in your state because, the amount of insurance does vary from state to state and you can face a ticket and heavy fines if you’re found to be under-insured.

Saving Money Is Easy

Before choosing just any vehicle insurance policy, there are several key things that you can do:

1. Ask for a bundle rate – If the insurance company offers other forms of insurance like life, disaster or home owners insurance make sure that you ask for a special bundle rate for choosing more than one policy with the same company.

2. Drive your car less per year – Even though you might not like the idea of driving less this is the best way to save money on car insurance.

3. Stay a good driver – It’s true that a good drivers discount does pay off. If you want to continue saving money on your vehicle insurance, set a priority to stay a safe driver and you will be able to continue enjoying that savings.

4. Be a good student – one of the best ways to get an affordable car insurance policy for a student is to have good grades.

5. Move to a safe neighborhood – Most auto insurance policies charge their customers more based on where they live. If you’re able to move to a safer neighborhood, you can enjoy a significant savings every year.

How to Find the Right Car Insurance Company

You should get at least five quotes to get a good comparison of the best rates that are available for you on the internet. Before signing up with a new automobile insurance company make sure that they have a solid history of paying accident claims and that their coverage is good nationwide.


Starting a Company With a Guaranteed Bank Account

Many entrepreneurs have great ideas, business plans in place and a desire to get a new company started. Unfortunately some people think that they cannot move forward with their new project due to their credit history. When starting a new business it is important that you are able to open and use a bank account for the business. There are alternatives to the high street banks and poor credit history should not deter entrepreneurs from getting their new venture up and running.

Conducting any business will require buying and selling goods and services. The most efficient way of doing this is with a business account that provides online banking and a payment card. The world of eCommerce has made purchasing items simple and fast but it also means that having access to a payment card is essential. More traditional service providers will also expect payment at the time of order and a payment card for electronic or in person transactions makes life a lot easier.

Therefore it is recommended that when forming a new company you work with an organisation that can provide a guaranteed bank account. Company registration agents should offer a range of banking options for their clients. It is not advisable to operate a business through a personal account and in many circumstances the banks do not permit this. If your company directors have a clean history then most high street banks should be able to provide an account with very few charges. This is recommended in most circumstances.

For any company director with bad credit history approaching high street banks for a bank account may be a futile exercise and a waster of time. Each financial institution sets its own criteria for accepting new account holders. There is no set rule on who will or won’t be accepted as a customer. If for any reason you have acquired adverse banking history then you need to select your account provider with care. When forming a company choose an incorporation service that can offer a guaranteed bank account.

Check your bank can provide you with-
No account set up fee just a small annual fee
No monthly fees, stay in control of your monthly costs.
No charges to make or receive bank transfer payments
No charges for setting up direct debits or standing orders
No charges to pay cash in to your account at over 14,000 locations nationwide – including the Post Office
Inclusive MasterCard payment card with all accounts
Free Online Banking

These features will allow you to start a business and process payments without any fuss or hassle.

Opening a specialist business bank account when registering your business will get you processing orders and receiving payments in just a few days. Having bad credit is no reason to avoid starting your new company.