From: BARBARA SCHUTZ Subject: Re: persfin-digest V5 #62 Date: 01 Nov 1998 10:35:54 -0500 (EST) HI all you Persfinners: I have a couple of questions about the Roth Ira I hope someone can help with. 1. I recently retired and started up my own business by opening a booth in an antiques mall. Can I start up a new Roth IRA if I earn enough from this business? (I may have a loss with start-up costs.) 2. I already have two regular IRAs, but I am 66 and am uncertain about whether or not it is worth it to pay the taxes and convert at my age. What do you think? Thanks. BFS - ------------------------------------------------------------------------------- From: Rich Carreiro Subject: Re: Question about bond funds Date: 02 Nov 1998 08:38:39 -0500 >I know that the main purpose of bond funds is the interest return, not >fund >appreciation, but the interest rates are so low now that it seems like >the >interest rates (long term) are much more likely to go up than down. > >How is this accounted for in the share price (or interest rate paid)? It isn't (at least not directly). The share price of the fund (assuming an open-end mutual fund, which are the overwhelming majority of mutual funds) is simply its NAV, which is the assets of the fund minus its liabilities (i.e. its net worth) divided by the number of shares outstanding. So the only reason the fund's price changes is that the prices of the securities it holds changes (and from the income those securities throw off). >The interest rates have gone down 2% to 6% since then which has >increased the per share >value of the fund. If I sell now, I've made a windfall profit on my >capital in addition to the interest that I've accumulated. Yup. >Compare that to now, when interest rates. are extremely low. If I buy >$10,000 worth of a bond fund now when interest rates are 6% and the bond >fund is paying 5% interest, I'm fine as long as I collect interest and >don't sell the shares. If however, I decide in 2 years to sell the bond >fund, my guess is that the interest rate is more likely to be 8% than >4%. >So, I'll more likely lose capital on the per share price than gain. Yes. You'd take a significant capital loss in that event. >Is this just a bad time to buy bond funds, or is this capital risk >reflected in the interest paid by the bonds? Well, it depends what you mean. The consensus opinion of the bond market about interest rates, inflation, etc. in effect sets the yield to maturity on bonds. Right now, all those forces have come together to drive yields very low (i.e. bond prices are high). People are so positive on bonds (or, more likely, so negative on other things) that they are willing to tie up their money for significant lengths of time at low yields. So obviously lots of people think bonds are a good alternative to other things right now. >In my example above, would the bond fund from two years ago when >interest rates were higher be paying a lower rate of interest than the >current 5%? Probably not. Bond funds have a maturity objective, and they will trade bonds and reinvest matured bonds to stay with that objective. So if long-term corporate bonds have a current yield of 5.5%, then most long-term corporate bond funds will also have a yield of around 5.5%. I also recommend going to the misc.invest FAQ (www.invest-faq.com) and reading the article about the time value of money, which explains why bonds behave the way they do. Rich Carreiro rlcarr@animato.pn.com P5-100/RedHat Linux 4.1 - ------------------------------------------------------------------------------- From: Jacqueline.D.Richardson@Hitchcock.ORG (Jacqueline D. Richardson) Subject: ROI - How do I calculate it? Date: 02 Nov 1998 11:07:32 EST I have 3 apartment buildings and I would like to know how to calculate my annual return on investment. Could someone give me a formula to use or some guidance. Thanks Jackie Jacqueline.D.Richardson@Hitchcock.org - ------------------------------------------------------------------------------- From: "Anderson, Alfred I." Subject: Re: ROI - How do I calculate it? Date: 02 Nov 1998 12:42:52 -0600 You Wrote: Date: 02 Nov 98 11:07:32 EST From: Jacqueline.D.Richardson@Hitchcock.ORG (Jacqueline D. Richardson) Subject: ROI - How do I calculate it? I have 3 apartment buildings and I would like to know how to calculate my annual return on investment. Could someone give me a formula to use or some guidance. Thanks Jackie Jackie, here are a few Websites that might be of help to you: First, try: http://cses.com/rental/analysis.htm This gives you a good overview. Then click on "Financial Analyses" near the bottom of that page to get an annual return on investment example. In general, you may want to bookmark http://cses.com/rental/buying.htm as there is a lot of good landlord material here. If you're looking for automated assistance, check: http://www.realdata.com/ as they have good analysis software (it is nothing you can't do yourself with a spreadsheet, but they've done all the work in advance and tested it and it is reasonably priced. You might also check out: http://www.rentalprop.com/ as a source of additional information. Good luck, if you hear of any other good sources for similar types of material, please let me know! Alfred Anderson email: anderson@alumn.mit.edu - ------------------------------------------------------------------------------- From: "Peter & Karen Diamond" Subject: Account Fees Date: 02 Nov 1998 20:12:21 -0500 Hello everyone, If my mutual fund company takes their annual IRA maintenance fee out of my account, (instead of me paying it with a separate check) does that reduce the amount I can contribute? For example: Say I've sent them $1000 so far this year for my IRA contribution. If they take the $10 fee out now, can I send them $1010 more (since my contribution is reduced to $990), or only $1000 more? If it is only $1000, they are in effect reducing my allowable contribution and denying me the additional time value of the fee amount. Thanks for any info. Peter Diamond - ------------------------------------------------------------------------------- From: Ken Stone Subject: Quicken question Date: 03 Nov 1998 20:23:21 -0500 This seems like it should be a simple but I am having trouble trying to find this investment report in Quicken. How do I show the annualized percent return for individual securities and/or accounts? Thanks, Ken - ------------------------------------------------------------------------------- From: Ken Stone Subject: rollover IRA's Date: 03 Nov 1998 20:07:45 -0500 What are the major considerations between rollover and non-rollover IRA's? What are the concerns if I make a contribution of non-rollover money into an account that was created by a rollover? Thanks, Ken - ------------------------------------------------------------------------------- From: ANDREA WELCH Subject: rollover IRA's Date: 04 Nov 1998 06:48 -0600 --- Received from ACE.AWELCH 630-990-6645 11-04-98 648= a Ken, If you commingle rollover and non-rollover funds you will no longer be able to rollover the funds to a qualified plan (meaning another 401k-typ= e plan). This is as far as I know the primary concern with commingling new contributions with rollover funds. Regards, Andrea -- What are the major considerations between rollover and non-rollover IRA'= s? What are the concerns if I make a contribution of non-rollover money int= o an account that was created by a rollover? Thanks, Ken - - ------------------------------------------------------------------------------- From: "Shirley A. Humphrey" Subject: Roth IRAs Date: 04 Nov 1998 16:25:03 -0800 (PST) Roth IRAs It is my understanding that to make an Roth IRA contribution, earned income must be used for the contribution. If a married couple files jointly, one has earned income and the other has passive income (retirement, investment checks, etc.), can an IRA account be established for both using the earned income of one spouse? Any comments would be appreciated. Shirley Humphrey sahumphrey@ucdavis.edu - ------------------------------------------------------------------------------- From: "Steve Foulks" Subject: Re: Roth IRA Date: 05 Nov 1998 12:06:23 -0500 >From: BARBARA SCHUTZ >HI all you Persfinners: I have a couple of questions about the Roth Ira I >hope someone can help with. 1. I recently retired and started up my own >business by opening a booth in an antiques mall. Can I start up a new >Roth IRA if I earn enough from this business? (I may have a loss with >start-up costs.) 2. I already have two regular IRAs, but I am 66 and am >uncertain about whether or not it is worth it to pay the taxes and convert >at my age. What do you think? Thanks. BFS Regarding your first question, you can contribute 100% of your earnings from labor up to $2,000. If you show a tax loss and are a sole proprietor, you can contribute nothing. 2. No one is going to be able to give you a diffinitive answer until you supply them with: - the taxes you will pay on the rollover, - the return you will get on your investment, - the length of time until you withdraw from the Roth, - and your tax rate at that time that you actually do withdraw the money from the Roth. Once one has all of this stuff, the solution becomes a "time value of money" problem. As a general rule, for what it is worth, the higher the return, the longer the time period until you need the money, and the smaller the tax rate differential, the more attractive the conversion is. Many brokerage firms and mutual fund companies have internet site devoted to doing the math for you. Steven M. Foulks, CPA, CFP, PhD http://www-instruct.nmu.edu/business/sfoulks/ email: steve_foulks@up.bresnan.net - ------------------------------------------------------------------------------- From: "Melinda Johannes" Subject: Tax considerations in financing business Date: 05 Nov 1998 10:12:46 PST I've got the cash necessary for my startup, but am considering different ways to fund my business. I can either pay in the capital, just transfer the cash from my personal accounts to the business books in exchange for owner equity, or I can loan the S corp the cash, in which case the business can take a write off for the interest expense, and I'll claim interest income on my personal return, right? What other considerations are there in determining whether to loan or "give" my new business capital? Thanks in advance. mbjohannes@hotmail.com ______________________________________________________ Get Your Private, Free Email at http://www.hotmail.com - ------------------------------------------------------------------------------- From: Nancy Slator Subject: Changing UGMA custodian Date: 05 Nov 1998 14:01:08 -0500 (EST) A relative set up UGMA accounts for my sons, 10 and 15, with herself as the custodian. The relative has since passed away. The accounts are in the form of CDs. We have the CDs, but the bank says we can't cash them unless we "petition the court" to be named custodian for my younger son, and unless my older son does his own petition. We live in Massachusetts and the relative lived in Minnesota. The bank is in Minnesota. Which court do we petition and what's the format for doing this? -- Nancy Slator, neslator@amherst.edu - ------------------------------------------------------------------------------- From: Iron Foot Subject: Credit Card Woes Date: 05 Nov 1998 15:12:14 -0500 (est) Greetings all! I recently discovered that I had been a victim of credit card fraud - I noticed two suspicious charges on my October bill, and so I contacted the credit card issuer about them. They put me in touch with the people who charged me and they agreed to credit me with those charges. There is another charge that I have not yet been billed for, which I can only challenge after I've been billed, so I have to wait for my next bill. I think I've gotten this card squared away. My question for the list members is this: Are there pro-active steps that I can take to prevent identity theft? Someone out there has my credit card number and i don't want them to start opening up lines of credit in my name. How do I prevent that? Also, should I consider doing stuff like getting my social security number changed? Thanks! Elliott - ------------------------------------------------------------------------------- From: paul.j.stadnik@exgate.tek.com Subject: RE: rollover IRA's Date: 05 Nov 1998 14:27:13 -0800 On Nov. 3 Ken Stone wrote: >> What are the major considerations between rollover and non-rollover IRA's? >> What are the concerns if I make a contribution of non-rollover money into >> an account that was created by a rollover? I would like to expand on the question. I have funds in contributory as well as rollover IRA's (from several different employers). In order to minimize recordkeeping, I would like to consolidate these accounts. I recall there were at least two issues involved. 1. comingling prevents rollover to another qualified employers plan (401k). 2. comingling prevents the use of some sort of income averaging. Can anybody confirm and / or expand on this? Are there any other issues involved? Have recent tax law changes affected these items? Regarding the first issue, these IRA's are in self-directed brokerage accounts where I am happy with the range of investment opportunities (I'm invested primarily in mutual funds), and I feel comfortable with my ability to manage these funds. I do not anticipate wanting to rollover to an employer's plan, so this limitation does not concern me. I am unclear on the second issue. What income averaging is allowed? I recall 5 and 10 year averaging mentioned, but there were age and other limitations to using this. Is this only for total withdrawals, or does it also apply to partial withdrawals? Does it only apply to withdrawals from employer plans? If so, this means the rollover IRA needs to be placed back into an employer plan before income averaging is allowed. How advantageous is averaging?; it seems one would prefer to extend IRA withdrawals over time in order to minimize taxes. If so, averaging may be of limited use. Is my thinking correct on these issues? I welcome your comments. Thanks in advance, Paul - ------------------------------------------------------------------------------- From: Rich Carreiro Subject: Re: Account Fees Date: 05 Nov 1998 18:29:13 -0500 >Hello everyone, >If my mutual fund company takes their annual IRA maintenance fee out of my >account, (instead of me paying it with a separate check) does that reduce >the amount I can contribute? Yes. >For example: Say I've sent them $1000 so far this year for my IRA >contribution. If they take the $10 fee out now, can I send them $1010 more >(since my contribution is reduced to $990), No. >or only $1000 more? Yes. To not count as part of the contribution, the annual fee needs to be separately billed and paid from outside the IRA. In addition, if this is done, the fee is a deductible expense, subject to the 2% of AGI floor on miscellaneous deductions. Rich Carreiro rlcarr@animato.pn.com P5-100/RedHat Linux 4.1 - ------------------------------------------------------------------------------- From: Rich Carreiro Subject: Re: Roth IRAs Date: 05 Nov 1998 18:31:47 -0500 >It is my understanding that to make an Roth IRA contribution, earned income >must be used for the contribution. Correct. The same for traditional IRAs, too. However... >If a married couple files jointly, one >has earned income and the other has passive income (retirement, investment >checks, etc.), can an IRA account be established for both using the earned >income of one spouse? There is no such thing as a joint IRA (it's a contradiction in terms, given what IRA stands for). So "an IRA account" cannot be established for both in any case. If what you are asking is can each spouse have his/her own IRA account, funded by the earned income of one spouse, the answer is "yes." Rich Carreiro rlcarr@animato.pn.com P5-100/RedHat Linux 4.1 - ------------------------------------------------------------------------------- From: "Peter & Karen Diamond" Subject: CG Rates Date: 06 Nov 1998 15:35:38 -0500 Hello, If I sell a mutual fund that I have been dollar cost averaging into, how do I determine what my holding period is for capital gains rates? Let's assume the DCA continues up until the sale date and all shares are sold. Thanks. Peter Diamond - ------------------------------------------------------------------------------- From: BOB FORD Subject: MORTGAGE RATE VERSUS DUE ON SALE CLAUSE Date: 08 Nov 1998 23:06:24 -0500 Never underestimate the power of the Internet or this list. When I sent my previous post about the interest rates versus due on sale clause on this list and invited people to e-mail me for more information, a lot of people took me up on the offer. At their request I am making it available to everyone. Sorry it is so long. When a mortgage does not have due on sale clause, anyone can assume the loan. A more correct statement is they can buy the property "subject to the loan". That is the lender can not call the loan due when the ownership of the property changes. Once there is a mortgage on a home, the mortgage stays on the home until it is paid off no matter who owns the house. It is the home that secures the loan, not the people that are making the payments. However some states will allow a lender to try to collect from the original borrower if they foreclose and sell the property for less than the amount owed. My state ,California, does not allow this except for government insured loans (FHA, VA, ETC). = When a house is sold, the seller normally gets cash for their equity. That is the home loan amount is subtracted from the sales price and this cash goes to the seller. If the mortgage has a due on sale clause, the lender must also be paid off when a home is sold. = If the mortgage does not have a due on sale clause, the buyer can start making payments on the loan. In this case , the lender does not have to approve the buyer making these payments. The lender has no choice but to accept the new buyers payments. = = Another option is to have the buyer give the seller a "Wrap Around Mortgage" for all or part of the sales price of the home. In this case the buyer pays the seller payments on the "Wrap Around Mortgage" and the seller pays the lender on the original mortgage. = A home with no due on sale clause in the mortgage makes the property very easy to sell and when you sell it, you can get top price. Most people can sell this kind of property without a broker because there are so many buyers to choose from. However, if you plan to sell your home without a broker, I urge you to get legal advice from an attorney in your state. No one likes to pay points and fill out a loan application and the buyers do not do that when the seller finances the sale. This saves you a sales commission although your legal advice will cost you some small portion of the commission you save. I like to sell properties with a low down payment. This gives me the pick of the buyers. I take back a wrap around mortgage for most of the sales price. = The wrap around mortgage will ALWAYS have a higher interest rate than the 1st mortgage. More about why this is good for the seller later. = Because the mortgage does not have a due on sale clause I can get top dollar when I sell and 1 to 2 percent additional interest for up to 30 years on money that was not mine to start with. I had borrowed it. Someone can try to figure the rate of return on that money but you may have a problem because the rate of return is so high. I also collect a prepayment penalty of 6 months interest if the loan is paid off sooner than 30 years which it probably will be. I ALWAYS put a due on sale clause in my wrap around mortgages. Is there any risk in selling for a low down payment? = Sort of. The risk is that the people don't pay the mortgage. However I always get some down payment when I sell a property and each payment lowers the risk that the buyers will not pay the future mortgage payments. If the buyer gets behind in their payments I am very quick to foreclose and sell the property again. You may loose a little time and money getting the property clean and ready to sell but you will gain the loss back soon plus a whole lot more. Wrap around mortgages are a wonderful way to make money. If interest rate have gone up since the first mortgage was created, the new wrap around mortgage for the next buyer will have an even higher interest rate than the previous one. = What you are really doing with a wrap around mortgage is borrowing money a X percent and loaning it at X+2, 3, 4 percent. That is what banks do. Did you ever notice who has the biggest buildings in a town. Could it be the banks? = You will have to hunt for a mortgage broker that will create a loan with no due on sale clause. Most will not. I made a lot of calls until I found one that would create these loans. Once I found one, I give her all of my loan business and refer all of my friends to her. = The best way to get a home loan with no due on sale and all of the other good features is to let the owner finance your property purchases. No fees, no points, and no credit applications are needed when the owner finances the sale of property. If seller wants cash, they can sell the note you give them when you buy the property. I always ask the sellers what they are going to do with the cash I could give them if I buy their property. If they are going to put it in a CD or something like that and live off of the income, I say "A CD will pay you 3 percent. A note I will give you will pay you double that. Are you interested". Often times they are. = If anyone needs more information, let me know. = BOB FORD BOB_FORD@COMPUSERVE.COM I hope this post does not contain a lot of =3D After a lot or research, I found the reason = for the =3D was a problem with some list servers. - ------------------------------------------------------------------------------- From: NEGross@aol.com Subject: Re: persfin-digest V5 #65 Date: 09 Nov 1998 11:27:40 EST In a message dated 98-11-09 11:10:57 EST, you write: << A relative set up UGMA accounts for my sons, 10 and 15, with herself as the custodian. The relative has since passed away. The accounts are in the form of CDs. We have the CDs, but the bank says we can't cash them unless we "petition the court" to be named custodian for my younger son, and unless my older son does his own petition. We live in Massachusetts and the relative lived in Minnesota. The bank is in Minnesota. Which court do we petition and what's the format for doing this? - -- Nancy Slator, neslator@amherst.edu >> Putting aside the legal issue for a moment, this question raises a very important planning issue - the naming of a custodian for UGMA/UTMA accounts. One should NEVER have the person that establishes the account (ie contributes the money) also be the custodian. If they are one and the same,the account balance goes into the estate of the custodian (if he/she dies before the minor reaches the age of majority). So in addition to the problem Nancy is facing, there could be estate tax problems if Nancy's relative left a sizeable estate. - ------------------------------------------------------------------------------- From: Marlene Subject: Using FF for magazines Date: 09 Nov 1998 14:39:58 -0500 A while ago, someone posted a message saying that they had bought magazines using Frequent Flyer points. Can you tell me which airlines participate in this? Thanks. I use Northwest but so far haven't seen anything but I may have missed something. Thanks, Marlene - ------------------------------------------------------------------------------- From: "L. Chen" Subject: Re: Roth IRA Date: 09 Nov 1998 18:51:07 -0500 (EST) > ....................... > As a general rule, for what it is worth, the higher the return, the longer > the time period until you need the money, and the smaller the tax rate > differential, the more attractive the conversion is. Many brokerage firms > and mutual fund companies have internet site devoted to doing the math for > you. If you use those calculations, make sure you know the assumptions behind the numbers. Different companies can use different assumptions; with different results. Chen - ------------------------------------------------------------------------------- From: Rich Carreiro Subject: Re: CG Rates Date: 09 Nov 1998 18:23:49 -0500 >If I sell a mutual fund that I have been dollar cost averaging into, how do >I determine what my holding period is for capital gains rates? It depends :-) >Let's assume the DCA continues up until the sale date and all shares are >sold. It still depends :-) It depends on what method you use to compute your basis, and whether or not you DCA is irrelevent to the problem. The basis methods are: (1) First-in-first-out: This is the default method. You are deemed to be selling shares in the order you bought them (i.e. oldest shares first). The basis of each block of shares is what you paid for it (modulo the rare occasion of a return-of-capital distribution), and you compute holding period of each block separately, based on when you purchased it. (2) Specific identification: You must specify AT TIME OF SALE which blocks of shares you are selling. It must be acknowledged in writing by the broker/fund company (preferably on the trade confirmation slip). Again, the basis of each block is what you paid for it (adjusted by any return-of-capital distributions) and you compute the holding period of each block separately, based on when you purchased it. (3) Average cost, single category: This is the method people talk of when they say "average cost" and is what fund companies use when they give you basis statements. The basis of every share is the average basis of all shares on hand (i.e. total basis divided by number of shares). All the blocks of shares "lose their memory" of their original basis and take on the average basis. However, for the purpose of computing holding period, you are deemed to be selling the oldest shares first and you compute the holding period of each block separately. (4) Average cost, double category: This is very rarely used, and to get any advantage from it you'd have to work with a broker/fund company that essentially takes specific share orders, and if that's the case you're better off with (2) anyway. See IRS Pub 564 for more details. You can switch between (1) and (2) at will. You can switch from (1) or (2) to (3) or (4), but once you switch to (3) or (4) you are locked into it for that security until you liquidate your position or get IRS permission to change (not bloody likely). Now, even though you have to compute holding period block-by-block, thankfully you don't have to report the sales block-by-block (unless you want to :-) on your Schedule D. Once you figure out which blocks are long-term and which are short-term, you can report all short-term sales of a single mutual fund on a single line on Part I of Sched D and you can report all long-term sales of a single mutual fund on a single line of Part II of Sched D. Just aggregate the basis, proceeds, and gain/loss, report "various" as the acquisition date and the date of sale as the sales date. For more details, see IRS Pubs 550, 564, and the Schedule D instructions. Rich Carreiro rlcarr@animato.pn.com P5-100/RedHat Linux 4.1 - ------------------------------------------------------------------------------- From: "Atanu K. Deb Baruah" Subject: Employer-funded Education exceeding IRS ceiling of $5250 Date: 10 Nov 1998 01:27:05 -0600 This one's for the Tax gurus at Persfin Digest: I've been told (by our Payroll) that IRS has a ceiling of $ 5250 for employer funded tuition/educational expenses for graduate education, which is non-taxable.. any tuition/ educational expense paid by the employer beyond $5250 will appear as gross income on my W-2 and I'll be responsible for the taxes (at my marginal tax rate!).. I've heard about Education credits for 1998 tax year - I think in 1998 Form 1040 draft, line # 44 is for education credits.. I'm curious if there's any provision for graduate education credit.. and what's the AGI limit for such credits, if any?? (seems unlikely that single-filers with AGI > $60k will be elligible for any credit).. What are other other alternatives? Itemize as miscellaneous deductions (subject to 2% offset) and include books and stationery and mileage to the excess tuition over $5250??? Or should I buy an Education IRA this year?? I'd appreciate some suggestions.. Thanks! - ------------------------------------------------------------------------------- From: David Cay Johnston Subject: Roth IRA story Date: 10 Nov 1998 18:38:49 -0500 For a story top run in The New York Times Sunday Money & Business section, I would like to interview pers-fin readers who have converted their traditional I.R.A. to a Roth I.R.A. -- and to people who decided against conversion. I am especially interested in finding young people (teens? early 20s?) who have opened a Roth I.R.A. If you are interested, and we can photograph you, please email me at davidcay@nytimes.com or call me at 212.556.3605. I will call you back on our dime. David Cay Johnston Reporter - ------------------------------------------------------------------------------- From: "alkon" Subject: Where can I get AM Best Ratings Date: 10 Nov 1998 19:53:23 +0000 I work for a small nonprofit agency and we are searching for a new health insurance carrier. I am involved with the search and I know that the am best ratings are one guideline I would like to use to evaluate the carriers. I would like to know if there is a way I can some basic data on some of the carriers without straining our budget. Please help. Thanks, Al Kondo - ------------------------------------------------------------------------------- From: "Steve Foulks" Subject: Re: Tax considerations in financing business Date: 11 Nov 1998 00:59:21 -0500 >From: "Melinda Johannes" >Subject: Tax considerations in financing business > >I've got the cash necessary for my startup, but am considering >different ways to fund my business. > >I can either pay in the capital, just transfer the cash from my >personal accounts to the business books in exchange for owner equity, >or I can loan the S corp the cash, in which case the business can >take a write off for the interest expense, and I'll claim interest >income on my personal return, right? Assuming you are going to establish an S corporation, then the lending approach is meaningless. Because an S corp. is a tax "conduit" (i.e., it tax attributes flow directly to the owners) the interest you earn from the loan will be offset by your share of S-corp separately stated interest expense. >What other considerations are there in determining whether to >loan or "give" my new business capital? Your question should be, "How should I best organize my business from a tax (or wealth maximization view)?" Should I use an S, or C Corp, a sole proprietorship, a LLC (limited liability company), a trust, etc.? There is no easy answer. It is a function of your particular context and your view of the business future. You need to consult a local CPA who is knowledgeable in business formation tax issues. Steven M. Foulks, CPA, CFP        Professor of Accounting Northern Michigan University http://www-instruct.nmu.edu/business/sfoulks/ - ------------------------------------------------------------------------------- From: Bill La Mar Subject: Re: Where can I get AM Best Ratings Date: 11 Nov 1998 06:51:22 -0600 alkon wrote: > I work for a small nonprofit agency and we are searching for a new > health insurance carrier. I am involved with the search and I know > that the am best ratings are one guideline I would like to use to > evaluate the carriers. I would like to know if there is a way I can > some basic data on some of the carriers without straining our budget. > Please help. You might try your local public library as they often have a subscription to Best Reviews. Bill La Mar - ------------------------------------------------------------------------------- From: "Dill, Mary" Subject: re: Subject: Using FF for magazines Date: 11 Nov 1998 13:52:59 -0500 >A while ago, someone posted a message saying that they had bought magazines >using Frequent Flyer points. Can you tell me which airlines participate in >this? Thanks. I use Northwest but so far haven't seen anything but I may >have missed something. I was one of the posters. In my case the airline was United. I called them and asked if they had such a program. In the case of United, I was told to call a second number and was helped over the phone. On other occasions, other airlines have sent me order forms for magazines unsolicated. I'd call the Northwest Frequent Flyer program number on your statement and ask if they have such a program in place. - ------------------------------------------------------------------------------- From: "Dill, Mary" Subject: landlord URL's Date: 11 Nov 1998 14:04:13 -0500 Hi - Someone has very kindly posted URL's for persons who are landlords. I did not think that was of interest to me, but I just heard that a friend is buying a doubledecker, so could these URL's be sent along again? Thanks - ------------------------------------------------------------------------------- From: "Melinda Johannes" Subject: Re: Tax considerations in financing business Date: 11 Nov 1998 11:03:23 PST >Date: Wed, 11 Nov 1998 00:59:21 -0500 >From: "Steve Foulks" >Subject: Re: Tax considerations in financing business >Assuming you are going to establish an S corporation, then the lending >approach is meaningless. Because an S corp. is a tax "conduit" (i.e., it >tax attributes flow directly to the owners) the interest you earn from the >loan will be offset by your share of S-corp separately stated interest >expense. Thank you for your comments, Mr. Foulks. The reason I had considered loaning capital to the S Corp is so that I have the option of taking a loan payment from the store via an on demand note, if my own personal finances warrant it, since I won't be drawing a salary for the first two years. I have substantial emergency funds, but wanted to use the loan approach to leave my options as flexible as possible. Is this necessary? Can I just take a draw if I need to? Thanks again. mjb ______________________________________________________ Get Your Private, Free Email at http://www.hotmail.com - ------------------------------------------------------------------------------- From: ANDREA WELCH Subject: landlord URL's Date: 11 Nov 1998 13:44 -0600 --- Received from ACE.AWELCH 630-990-6645 11-11-98 144= p Here's a copy of the original post concerning the Landlord Discussion Group. Please tell me though, just what is a "doubledecker"? Is it perhaps what we know in the midwest as a two-flat? Regards, Andrea =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D ns A landlord group I am involved with just created a web community called Landlord Discussions. Below is their message. I just went in and signe= d up. Since it is new there are only a couple of messages there from the folks that have started it up, but sp read the word to your fellow landlords - this is a much needed resource. ------------- It's part of a leading web service called Delphi that specializes in helping people create their own discussion groups, chat rooms, and personal homepages. To join our discussion, simply go to http://forums.delphi.com/m/main.asp?sigdir=3DlandlordsinNH&isp=3Dif&pic=3D= in-LAN DLORDS4568 If you've never used Delphi before you'll need to go through a quick registration (so you can post messages). It only takes a minute and it's free! - -- Hi - Someone has very kindly posted URL's for persons who are landlords. I d= id not think that was of interest to me, but I just heard that a friend is buying a doubledecker, so could these URL's be sent along again? Thanks - - ------------------------------------------------------------------------------- From: "Jeff Salisbury" Subject: Magazine Subscriptions from Frequent-Flyer Miles Date: 11 Nov 1998 12:29:18 -0800 I have British Air, and their magazine-subscription program only provides for taking out subscriptions in some cases for just a few months (i.e., couldn't "pay" for a whole year), so it wasn't worth the bother. Regards, Dave Churchill - ------------------------------------------------------------------------------- From: "Jeff Salisbury" Subject: Re: persfin-digest V5 #66--FF miles for magazines Date: 11 Nov 1998 22:30:10 EST A while ago, someone posted a message saying that they had bought magazines using Frequent Flyer points. Can you tell me which airlines participate in this? Thanks. I use Northwest but so far haven't seen anything but I may have missed something. --I recently received some info in the mail from TWA that they were offering this exchange of FF miles for magazine subscriptions. Jim Hoehns - ------------------------------------------------------------------------------- From: "Jeff Salisbury" Subject: Magazine Subscriptions from Frequent-Flyer Miles Date: 11 Nov 1998 12:29:18 -0800 I have British Air, and their magazine-subscription program only provides for taking out subscriptions in some cases for just a few months (i.e., couldn't "pay" for a whole year), so it wasn't worth the bother. Regards, Dave Churchill - ------------------------------------------------------------------------------- From: "Jeff Salisbury" Subject: Magazine Subscriptions from Frequent-Flyer Miles Date: 11 Nov 1998 12:29:18 -0800 I have British Air, and their magazine-subscription program only provides for taking out subscriptions in some cases for just a few months (i.e., couldn't "pay" for a whole year), so it wasn't worth the bother. Regards, Dave Churchill - ------------------------------------------------------------------------------- From: "Jeff Salisbury" Subject: Re: persfin-digest V5 #66--FF miles for magazines Date: 11 Nov 1998 22:30:10 EST A while ago, someone posted a message saying that they had bought magazines using Frequent Flyer points. Can you tell me which airlines participate in this? Thanks. I use Northwest but so far haven't seen anything but I may have missed something. --I recently received some info in the mail from TWA that they were offering this exchange of FF miles for magazine subscriptions. Jim Hoehns - ------------------------------------------------------------------------------- From: Subject: Are these NPNC Fees Reasonable Date: 12 Nov 1998 14:51:41 -0500 (EST) Dear Persfin Members: I have a 30 year Mortgage that was Just bought by PNC Mortgage Corp. I have 25 years left with a balance of approximately 98,000. My current interest rate is 8.125%. I asked PNC could they refinance my Loan in house without any closing cost and Points. They could refinance the loan today 10/12/98 at 7.25 % with the following Fees. $500.00 out of pocket fees: * covers cost of application, appraisal and Lock in Fee. 0.25% ($245) origination fee ( I still don't know what this is) $375.00 Attorney Cost. Total $1120.00 My Questions are: 1. Are these fees above reasonable for refinancing a NPNC mortgage ? 2. Is 7.25 a good interest rate to refinance a 8.125 interest mortgage ? This would give me a annual savings of about 600.00 per year. 3. In refinancing my 30 year mortgage in which I have paid 5 years into, should I get a new mortgage with a lower rate for the 25 years or should I refinance for 30 years ? 4. Is there ever a situation you would refinance a mortgage for a longer period than you have left of your you current mortgage, even if the NEW interest rate is lower ? IF so why ? 5. Based on the Prime Interest rate at anytime what would be considered a good and fair mortgage loan rate ? Prime + ? - ------------------------------------------------------------------------------- From: "Jeff Salisbury" Subject: Re: persfin-digest V5 #66 Date: 13 Nov 1998 01:58:52 EST In a message dated 98-11-11 13:57:06 EST, you write: << A while ago, someone posted a message saying that they had bought magazines using Frequent Flyer points. Can you tell me which airlines participate in this? Thanks. I use Northwest but so far haven't seen anything but I may have missed something. Thanks, Marlene >> Marlene, I know that U.S. Air has such a program and believe I also utilized Delta's FF program for excess miles as well. Not sure I've seen anything on Northwest. Den - ------------------------------------------------------------------------------- From: Suresh Sharma Subject: Stock Options/Insider treatment Date: 17 Nov 1998 11:38:25 -0800 (PST) I have some stock options in my company and the company has not yet gone public. If I leave my present job and chose to exercise some of these options, would I still be considered an insider when the company goes public? In particular, I am interested in knowing if the restriction of not being able to trade exercised shares for a period of 6 months will apply to me in this case. Thanks for any information. Suresh _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - ------------------------------------------------------------------------------- From: PowellFamily Subject: Educational position Date: 17 Nov 1998 15:44:01 -0500 I have volunteered for the schools for the past 7 years. This year I would really like a paid position in addition to volunteering. One position that is really needed (but of course there is no funding for) is a resource person. Someone who will find funding for special projects, get donations of special equipment (such as computers), and procure other necessary items, particularly at the end of the year when funding is running out. Is there a way I could do this, pay myself a reasonable half time salary, and not be liable for any of the equipment, etc. that I got donated to the school? Sherri Powell Powellfamily@tri-countynet.net - ------------------------------------------------------------------------------- From: PowellFamily Subject: NPNC Mortgage Date: 17 Nov 1998 15:52:06 -0500 From looking at this mortgage, it seems to me that the costs are rolled right in dues to the fees and higher interest rates. There is no such thing as "no cost". If you plan to keep your loan for a longer period of time, this method may not be worth it. Sherri Powell - ------------------------------------------------------------------------------- From: Subject: Re: persfin-digest V5 #67 Date: 17 Nov 1998 17:12:19 -0500 persfin-digest Tuesday, November 17 1998 Volume 05 : Number 067 >Date: Thu, 12 Nov 1998 14:51:41 -0500 (EST) >From: >Subject: Are these NPNC Fees Reasonable >I have a 30 year Mortgage that was Just bought by PNC Mortgage Corp. >I have 25 years left with a balance of approximately 98,000. My current >interest rate is 8.125%. I asked PNC could they refinance my Loan >in house without any closing cost and Points. They could refinance the loan >today 10/12/98 >at 7.25 % with the following Fees. >Total $1120.00 >My Questions are: > 2. Is 7.25 a good interest rate to refinance a 8.125 interest mortgage ? This would give me a annual savings of about 600.00 per year. >3. In refinancing my 30 year mortgage in which I have paid 5 years into, >should > I get a new mortgage with a lower rate for the 25 years or should I >refinance for > 30 years ? I'm going to guess that your payments are currently about $750 a month ? Over the next 25 years, you will have paid about 136k in interest and 98k in principal. If you take that 1120 and make a lump payment now in addition to your mortgage payment, you will knock one year off and the result will be 129k interest paid and 98k principal. If you refinance at 7.25% over 25 years you will pay about 119k in interest and 98k in principal. Your monthly payment will be approximately $695. Keeping your monthly payment at $750 a month (since you are used to it anyway) you will have your mortgage paid off in about 20 years 2 months and will have paid about 93k in interest and 98k in principal. Is there even such a thing as a 25 year mortgage ? I've seen only 30 or 15 year residential with differrent flavors (fixed, variable, jumbo, balloon, front-loaded, back-loaded,etc.) > 4. Is there ever a situation you would refinance a mortgage for a longer >period than you > have left of your you current mortgage, even if the NEW interest rate >is lower ? IF so why ? If you really desired your monthly payments to be lower (about $670 per month) and: a) did not plan on making additional payments to principal or care that you were paying about $147k in interest or b) planned on making the same monthly payment as you are currently ($750) , thereby turning it into the same as the 20 year 2 month mortgage or c) planned on making a monthly payment that is more than specified in the mortgage but less than you are currently paying, thereby turning it into a shorter-than-30-year mortgage. or d) planned on making the $670 per month payment and investing the $80 per month you would otherwise spend on the current mortgage payment ($750 - 670) into a fairly risk-free fixed income fund earning more than 7.25% (if you can find one), then by the end of your mortgage you will have done better than scenario b). then yes, I would finance longer because it would give me an option to mimick the shorter-term mortgage. This assumes you do not have a prepayment penalty. Some (most ?) mortgages have an embedded option in them to the borrower: you have the ability to fully pay the balance due any time you want without penalty. Stephen Foulks, does this generally agree with your experience in personal finance ? Most of my experience has been with securities trading, institutional investing, and portfolio analysis. If you are reading this one, I'm going to defer to your advice. > 5. Based on the Prime Interest rate at anytime what would be considered a >good and fair mortgage loan rate ? > Prime + ? As far as I know, this really varies from state to state. I've seen Pennsylvania rates recent;y as low as 6.5%, 0 points, 5% down. The information transmitted is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited. If you received this in error, please contact the sender and delete the material from any computer. - ------------------------------------------------------------------------------- From: Rich Carreiro Subject: Re: Stock Options/Insider treatment Date: 17 Nov 1998 18:53:07 -0500 >I have some stock options in my company and the company has not yet >gone public. If I leave my present job and chose to exercise some of >these options, would I still be considered an insider when the company >goes public? In particular, I am interested in knowing if the >restriction of not being able to trade exercised shares for a period >of 6 months will apply to me in this case. Look to the actual text of your stock option agreement, articles of incorporation of the company, and your employment agreement (if any). If there's a stand-off provision, it should be in one or more of those agreements. Also check the agreements to see if the company has the right to buy the stock off you when you leave. Many not-public companies have such provisions, so don't assume you'll be able to leave the company and continue to hold the stock. Rich Carreiro rlcarr@animato.pn.com P5-100/RedHat Linux 4.1 - ------------------------------------------------------------------------------- From: Purplvegas@aol.com Subject: Stocks Date: 17 Nov 1998 20:46:40 EST I have several stocks which are no longer listed. Can you help me locate this stock to tell me if it is valuable any longer. The company name is is Pyramid Industries. Thank you. - ------------------------------------------------------------------------------- From: "Ken Bozzi---Excalibur" Subject: Fw: FF miles Date: 17 Nov 1998 20:04:50 -0500 you wrote== A while ago, someone posted a message saying that they had bought magazines >using Frequent Flyer points. Can you tell me which airlines participate in >this? Thanks. I use Northwest but so far haven't seen anything but I may >have missed something. I was one of the posters. In my case the airline was United. I called them and asked if they had such a program. In the case of United, I was told to call a second number and was helped over the phone. On other occasions, other airlines have sent me order forms for magazines unsolicated. I'd call the Northwest Frequent Flyer program number on your statement and ask if they have such a program in place. ========================================================== IF YOU HAVE UNUSED MILES, PLEASE LET ME KNOW. I AM IN DESPERATE NEED FOR TICKET FOR MY DAUGHTER. Kenneth J. Bozzi---President Excalibur Commercial Mortgage Company 1 Mill Park Lane Little Mill Woods Marlton, NJ 08053 voice 609-983-1556 fax 609-983-2267 email bozzi@excal.com - ------------------------------------------------------------------------------- From: hic@world.std.com (Howard I Cohen) Subject: Closed on No Points, No Closing Refinance. Date: 21 Nov 1998 23:06:33 -0500 Hello: A few weeks ago I mentioned my fondness for the No Points, No Closing cost mortgage, and generated a brief thread. Anyway I'm pleased to announce that I finally closed this past Thursday, 6 3/4%, 30 year fixed. The only charges were $30 for the bank to close out my old mortgage, and $15 for someone to FEDEX papers to me. The broker even picked up a $200. appraisor's fee. And best of all, I met with the lawyer in a Starbuck's and she paid for the coffee. Howard I. Cohen - ------------------------------------------------------------------------------- From: BobWo@aol.com Subject: No Points, No Closing Cost Loan Date: 22 Nov 1998 01:02:55 EST Howard Cohen wrote: >A few weeks ago I mentioned my fondness for the No Points, No >Closing cost mortgage, and generated a brief thread. Anyway I'm >pleased to announce that I finally closed this past Thursday, 6 >3/4%, 30 year fixed. >The only charges were $30 for the bank to close out my old >mortgage, and $15 for someone to FEDEX papers to me. >The broker even picked up a $200. appraiser's fee. And best of >all, I met with the lawyer in a Starbuck's and she paid for the >coffee. Howard, There is no free lunch or free coffee. The interest rate on your new loan seems competitive, but I wonder how much higher your new loan was than the old loan balance? Any difference, other than interest, is the costs of the new loan. These cost were just added to the new loan. - ------------------------------------------------------------------------------- From: hic@world.std.com (Howard I Cohen) Subject: Re: persfin-digest V5 #67-answers to NPNC questions. Date: 21 Nov 1998 23:06:26 -0500 > From: > Subject: Are these NPNC Fees Reasonable > > Dear Persfin Members: > > I have a 30 year Mortgage that was Just bought by PNC Mortgage C > I have 25 years left with a balance of approximately 98,000. My > interest rate is 8.125%. I asked PNC could they refinance my Lo > in house without any closing cost and Points. They could refina > today 10/12/98 > at 7.25 % with the following Fees. > > $500.00 out of pocket fees: > * covers cost of application, appraisal and Lock in Fee. > > 0.25% ($245) origination fee ( I still don't know what this is) > > $375.00 Attorney Cost. > > Total $1120.00 > > My Questions are: 1. Are these fees above reasonable for refinancing a NPNC mortgage ? I'm not a broker, I'm a home owner. BIMHO, they are not. A true NPNC should be just that. I never paid any of the charges you list except on one or two occasions (just completed my 6th NPNC) I paid $200. appraisers fee. But see my latest posting to Pers-fin. I've cc'd you on it. Sounds like the bank is 'at it again.' I'm sure they sit around and think up ways to get into your pocket. 2. Is 7.25 a good interest rate to refinance a 8.125 interest mortgage ? This would give me a annual savings of about 600.00 per year. Today it is probably okay. I just closed for 1/2 a point less, but my broker says rates have inched up a bit since I locked in. Also remember, the important tactic is to spend nothing and lower your rate. The lower the better, but with a true NPNC, it really doesn't matter. Of course it effects your monthly interest charges, but you're not trading off anything. Get any lower rate you can for NPNC, then do it again as soon as you can get a better rate. After all, it isn't costing you anything. 3. In refinancing my 30 year mortgage in which I have paid 5 years into, should I get a new mortgage with a lower rate for the 25 years or should Irefinance for 30 years ? Asking for 25 years might simply confuse the lender. Sort of like asking the Super Market manager to sell you 5/6th of a can of soup. Take the whole can and use what you need. The metaphor isn't perfect, but in reality, take the 30 year and pay it off at the 25 year rate. This procedure means generating your own amortization schedule to follow (or approximately follow), but there's lots of software around to do that for you. Or you can simply pay into the principal as much as you want. The interest charge is always P times I-rate. That's primarily all the bank wants. The rest is principal, and you could (and should) pay in as much as you can afford each month. 4. Is there ever a situation you would refinance a mortgage for a longer period than you have left of your you current mortgage, even if the NEW interest rate is lower? Yes - see above. IF so why ? Other compelling reason is referred to above. Namely, how fast YOU CHOOSE to pay it off. Saying it another way, on the longer term you are paying less P (like 1/30th instead of 1/25th - speaking very approximately - but correct in principle). Note that the interest is always the same (P x I-rate). And changes only when P is reduced, and has NOTHING to do directly with the term. Now here is the real 'killer answer' to you question. Take the mortgage for as long a term as reasonable - typically 30 years. Be committed to as little principal as possible but pay more each month than is required. Then you are reducing the principle faster, and best of all, if you have a tough month, simply pay the lessor amount. It thus becomes entirely YOUR choice, not the bank's.. 5. Based on the Prime Interest rate at anytime what would be considered a good and fair mortgage loan rate ? Prime + ? That's really a question for an ecomomist with a strong financial background. But here is my simple ssessment. I think the mortgage rates tend to track the 30 year bond which is rather remote from the prime. The prime generally influences short term rates. Like credit cards, business borrowing - 60 days, 6 months, etc. Also to complicate things, the rate the FED sets is called the 'over-night' rate which is what banks charge each other to lend one another money overnight to have the cash to meet banking requirements for capital availability. On the one hand that's even shorter than the prime, and on the other hand - I'm not really sure exactly what it is and how it works. Maybe a more scholarly pers-finner would amplify these several interest rate concepts more accurately that I have. My mortgage broker said that the FED just lowering the overnight rate and doesn't immediately effect mortgage rates. It takes a while. I think a good estimate to use is to pay maybe 1 1/2 to 2 points more than the 30 year bond - now at about 5 1/4%. My bottom line advice is to simply shop around. If you're near Boston I'll give you the name of my broker. Tt also seems that brokers are more direct with the NPNC than banks. My broker - whom I've never personally met - never talked charges like that. All the 'dickey-shit' fees you described are, IMO just that. Shop around, tell the person you talk to that you want a true NPNC with none of the d-s. One of them will respond. Good luck. Howard I. Cohen If you want to contact me directly, i'm hic@world.std.com - ------------------------------------------------------------------------------- From: Scott Barnett Subject: Re: Refinancing Date: 22 Nov 1998 22:47:22 -0500 >I have a 30 year Mortgage that was Just bought by PNC Mortgage Corp. >I have 25 years left with a balance of approximately 98,000. My current >interest rate is 8.125%. I asked PNC could they refinance my Loan >in house without any closing cost and Points. They could refinance the loan >today 10/12/98 >at 7.25 % with the following Fees. > >$500.00 out of pocket fees: > * covers cost of application, appraisal and Lock in Fee. > >0.25% ($245) origination fee ( I still don't know what this is) > >$375.00 Attorney Cost. > >Total $1120.00 > >My Questions are: > > 1. Are these fees above reasonable for refinancing a NPNC mortgage ? > Yes. Although there are some people on this list that will tell you it is not really a NPNC mortgage. That means literally 0 costs. > 2. Is 7.25 a good interest rate to refinance a 8.125 interest mortgage ? > This would give me a annual savings of about 600.00 per year. > No - I'm refinancing now at 6.625% for 15 years. The 30 year rate was 6.75%. You should be able to do half a point better, if you're going to pay the > $1000 for title/survey/fees/etc. > 3. In refinancing my 30 year mortgage in which I have paid 5 years into, >should > I get a new mortgage with a lower rate for the 25 years or should I >refinance for > 30 years ? > This could be a long answer - but some very smart people on this list can explain that the length of the mortgage doesn't matter - you can pay off the 30 year mortgage in 25 years by prepaying the principle. One thing to consider though is if you shorten the term, you may be able to reduce the interest rate. For example, the bank I'm refinancing with has different rates for 10 (6.5%), 15 (6.625%), and 30 year (6.75%) mortgages. > 4. Is there ever a situation you would refinance a mortgage for a longer >period than you > have left of your you current mortgage, even if the NEW interest rate >is lower ? IF so why ? > See answer above. The length of the mortgage is really just the *maximum* time you have to pay it back. You can reduce it by paying off the principle faster than the amortization schedule for the term you negotiate with the bank. > 5. Based on the Prime Interest rate at anytime what would be considered a >good and fair mortgage loan rate ? > Prime + ? Again, I've seen rates between 6.5 - 6.75% here in NJ. Not sure if this goes nationwide, but that shouldn't matter either, since a lot of banks can provide mortgages in most states! -- Scott Barnett sab@crisp.net - ------------------------------------------------------------------------------- From: Max_Basch@SMTP.NYNEX.COM Subject: No Fee No Points Mortgage Date: 23 Nov 1998 15:15:11 -0500 I bought a house in Tenafly NJ and looking for a no fee no points mortgage ($335,000) 30 years fixed Can somebody help - ------------------------------------------------------------------------------- From: hic@world.std.com (Howard I Cohen) Subject: Re: NPNC Refinance Date: 23 Nov 1998 16:51:46 -0500 > From: rlee@muse.sfusd.k12.ca.us > Subject: NPNC Refinance > Mr. Cohen, > > Congratulations on your latest deal in refinancing! I am also very > interested in refinancing with NPNC deal. Can you please email > regarding the lenders and the broker you've used so I may be able > contact them? That's if you don't mind sending me the info. I > regularly subscriber of the personal finance bulletin in which you > posted your refinance discussion. From what I read, you seem to > you are doing; how else would you be getting a NPNC deal which you > less than $100 out of pocket? I am currently paying 7.125% for > fixed, and the prinicipal is about 170K. The property is in SF, > Dear Ron: Thank you for the above. I would be perfectly comfortable giving you the name of my broker, Joe Lucido, Bay Mortgage Services, Inc. located in Plymouth, MA. 1-800-742-3001. But I would be very surprised if he would or could do anything in CA. I would encourage you to inquire locally. Look in the yellow pages or the local newqspaper for mortgage brokers, make a list, and start calling. Also check the web. www.ctt.com/mortrate.htm or mortgage-x.com or simply search on 'Mortgages.' I would guess that 7 1/8 is not considered a high rate. So whether there is much to be gotten by refinancing is the question to answer. My understanding is that I lucked out. Got in on a short dip in rates and since then they have inched up a bit. Note that you are only 3/8 of a point higher. For what it's worth, here is a simple rule of thumb that might be useful. With a principal of $170,000. every 1/8 of a point you can shave off your mortgage rate is worth approx. $18. ($17.70) each month. (At least in the early years.) You can also use this number when doing the points vs no points trade off. If you save 1/2% by paying 2 pts. + closing costs - approx. $4500 to $5000, you are saving $72./mon. Thus it would take you about 65 to 70 months to earn it back. That's close to 6 years. But note that you are in pretty good shape right now, at least by Boston standards. But by all means, try. After a few calls you'll know what the street is offering. Even if you get 7% that's a $18. saving, at no cost to you. Have taken the liberty of CC'ing Ms. Sherri Powell who also raised questions about NPNC, as well as Ron Lee whose query I am answering. Sincerely, Howard I. Cohen - ------------------------------------------------------------------------------- From: hic@world.std.com Subject: Re: persfin-digest V5 #68/Reply to NPNC Mortgage. Date: 23 Nov 1998 16:51:36 -0500 > > Date: Tue, 17 Nov 1998 15:52:06 -0500 > From: PowellFamily > Subject: NPNC Mortgage > > >From looking at this mortgage, it seems to me that the costs ar > right in dues to the fees and higher interest rates. There is no such > thing as "no cost". If you plan to keep your loan for a longer period > of time, this method may not be worth it. > > Sherri Powell Dear Ms: Powell: Yes, you're quite right. No free lunch and all that. At the price of repeating myself let me sum up my 'model' of NPNC financing. The lender and you make a wager. The bank says 'if you pay me a chunk up front I'll give you a lower rate.' The bet is that the mortgage will no longer exist before you've broken even. The bank will sell it, or you'll refi., or sell the property, or God forbid, drop dead. I argue that I'd rather bundle in the up front costs (no free lunch) with a slightly higher rate -usually about 1/2 % - and bet that the mortgage wont survive till the break even point. That way I win the bet, not the bank. Agreed, I might loose the bet. But it's your choice on how you want to bet. In my case I've refi'd 6 times - all NPNC - and lowered my payments from over 9 down to 6 3/4%, in about 3 1/2 years. All my mortgages had 'no prepayment' penalties, and are renewed for 30 years. I then control the payoff rate. If you need actual numbers to compute the crossover point, tell me your numbers and I'd be happy to calculate it for you. It is an important factor in judging the value of the wager. Sincerely, Howard I. Cohen - ------------------------------------------------------------------------------- From: owner-persfin@lists.xmission.com Subject: RE: landlord URL's Date: 23 Nov 1998 12:23:34 -0500 These weren't mentioned at the time, but you can check out http://www.rentalprop.com/ http://www.massrha.com/ and on the usenet misc.invest.real-estate Rick Schafer - ------------------------------------------------------------------------------- From: BATTA@stsci.edu Subject: Message Received Date: 24 Nov 1998 17:48:58 -0500 (EST) I am going to be away from the Institute beginning Tuesday November 24, 1998 through Friday December 4, 1998. If you need to reach someone in the Grants Administration Office, please call (410) 338-4201 for Elyse Wagner or send e-mail to wagner@stsci.edu I will return all messages beginning Monday December 7, 1998. Thank you and have a happy Thanksgiving! - ------------------------------------------------------------------------------- From: "Gary M. Oppenheimer" Subject: Disability Insurance Date: 24 Nov 1998 19:21:12 -0500 (EST) How does one find the best price for Disability Insurance? Is one company known for better prices than others? Any guidance would be appreciated. Thanks - ------------------------------------------------------------------------------- From: Howard I Cohen Subject: Change in ISP. Date: 25 Nov 1998 00:19:40 -0500 This week has been very busy for me. Besides my mortgage refi I also got a new Internet Service Provider. I started using MediaOne, paying approx. $40 a month more over my cable bill. But my personal comment, and a fact I am happy to share is that the service is GREAT. A bit pricey but GREAT. Now the only time I wait on the net is waiting for some distant server to 'reply.' But then the web connections come in like I'm leafing through pages of a letter. Boom, boom, boom. No delays, no waiting for a screen to complete. And downloads that are unbelievable. The simple fact is that I am paying for what in telephony jargon is called 'T-1 Carrier' service. In actual numbers that is 1.5 Megabits or 150K Bytes/sec., compared to 28.8K bits (equivalent - 2.8K Bytes) or even 56K Bits (= 5.6K bytes/sec). Yes, it is 30 to 60 times faster. I bought a regular cheappy PnP LAN card - $30. The installer put a splitter on my video cable, complete with RF filter (keeps computer noise out of my TV), one leg to the house video, other to a modem box they supply. Then he connected the modem box to the LAN card - an RJ 45 connection. A little software hanky-panky and I saw the web the way it was intended to be seen. What a joy. And note that I am connected all the time - my own little video feed. No more 'dial-up,' hope it rings, hope it answers - then waiting for the home page to evolve. Also note that I am not tying up a phone line. I click on Netscape on my desktop, and INSTANTLY I am at the home page. Bye-bye TIAC, bye-bye World, bye-bye modem, ungodly modem screams and all that old stuff. Incidentally, I set up Eudora to let me access any of my three services (MediaOne, TIAC, World) through the one mail manager and everything goes through MediaOne at T-1 speed. I'll drop the others as usage drops off, but keep them for a 'cut-over' period. The bigger issue that I find interesting is that a cable company is actively, and effectively competing with good old Bell Atlantic and the ISP crowd. I used to pay $.05/minute (after the first 3 hours) to browse the web. I will not have that expense any more. The cost figures breakdown as follows: I will be giving $40 to MediaOne, some of which ($22.99) would have gone to the ISP and some x-hours at $3.00/hour to BA. If you're good at numbers you'll quickly realize that if I spend 10 minutes a day browsing and doing e-mail, than the service will have paid for itself. That's what I call real competition. Better service for 'cheaper.' Next I want to try phoning and video conferencing over the net. Should be very good. A friend of mine says he can phone voice duplex (talk and listen simultaneously) through his sound card and it sounds better than the regular phone. I'll report on it when I've tried it. The 'downside,' and it could be serious, is this: since they let your machine act like a workstation on their LAN, you can only relate with one machine. Note that they address your LAN card's ethernet number. No notebook by the bedside or in the car, or anything like that. I'm not sure about telnet-ing. Will have to try it. Also I want to try PC-Anywhere. Certainly if it's important you can always pay for a second line. BTW - Be well assured that I have not prior interest in MediaOne or any of the companies involved. I am a paying user, no more, no less. Sincerely, Howard I. Cohen, - ------------------------------------------------------------------------------- From: "Howard I. Cohen" Subject: More - NPNC Conversation Date: 28 Nov 1998 18:42:32 -0500 >> Dear Mr. Cohen, >> >> Your piece in the "persfin-digest" on the above subject was quit >> interesting. I have a few questions though. First of all, are >you sure >> the customary charges such as loan origination fees/points were >not >> included in the amount refinanced such that if your outstanding >> was $96K, the refinanced amount now is say $100K? Most lenders >or their >> representatives I have come across insist on such other charges >as >> title search, transfer fees for the rerecording of the new deed, >> How do you explain the $30 total fee charged? Another thing is >did you >> have the refinance done by the same bank that has the first >mortgage? > >Thank you for your query. Yes, I have become quite expert at >reading the HUD Settlement sheet, and also after 6 refi's have >learned to confirm all the relevant parameters, like partial >payments of the mortgage because I've changed banks in the middle >of the month, starting a new escrow account - and getting back >the balance in the old one, and on and on. > >My understanding of NPNC is precisely that. No charges to me for >origination fees, title search, credit check, transfer fees, the >bank president's retirement fund or anything else. Also on the >last three times I've always refinanced the same amount. The >accrued (paid down) principal is applied to the partial interest >due because we usually don't close on the end of the month, and >since mortgages are paid in arrears the old bank must receive a >partial for the days that the instrument existed and wasn't paid. >I had a disagreement on the daily rate of a few pennies, but I let >that one slide by. It may have cost me $1.52 (19 days at @.08/day) >but I was talking to an attorney who represented the broker who >represented the bank. That's not the path to argue $1.52. Also I >usually have to lay out some cash to cover the opening of a new >escrow account. Usually 3 months, sometimes 4 months payment. But >I don't mind because I get back the balance from the old one plus >we're talking escrow. > >I never talk to a bank. I talk to a mortgage broker who earns his >fees from the bank. I've inquired about refinancing through the >bank that holds the mortgage, but they neither sounded interested, >nor offered any competitive rates. Most of the time they sell the >mortgage anyway. > >The $30. was a 'closing out the account' charge the x-bank laid on >me. I didn't expect it, but the b--s (as in banks) get you every >way they can. The FEDEX charge was a given, the broker sends out >the application kit that way. I've suggested he use US mail, but >had two sound comments. He has a tracking receipt, and wants to >give the customer as much time as possible to fill out the papers. >Sometimes that's a real chore. > >Where do you live? Mortgage brokers are like real estate people >and car dealers. They are the 'middle-men.' The commodity they >sell is the 'money' offering of a bank that has a product and rate >that might be right for you. Its always been a different bank, >and I don't care. > >I don't pay any of the bank charges up front. And I've never had >charges carried into a new mortgage. I do pay about 1/2% more >interest. But at my level I'm saving over $4000. and a little >'mortgage' math shows that I would have to hang in there for 5 >years or more to break even. > >At the price of repeating myself, try the web, try the yellow >pages, try making a few phone calls (not to banks) and try asking >a lot of questions. > >Good luck, >Howard > > >> I appreciate your quick response. >> >> Thank you, >> Tom Batta >> - ------------------------------------------------------------------------------- From: "Cal Lester" Subject: Re: persfin-digest V5 #70 Date: 29 Nov 1998 09:01:53 -0500 persfin-digest Saturday, November 28 1998 Volume 05 : Number 070 In this issue of the Personal Finance Digest: Message Received Disability Insurance Change in ISP. More - NPNC Conversation How does one find the best price for Disability Insurance? Is one company known for better prices than others? Any guidance would be appreciated. Thanks If your PRIMARY concern is PRICE, then you in all probability do NOT need Disability Insurance. You should be looking at the stock market instead. IF you are interested in Disability Insurance, then some of the area's that you need to be concerned about are: Stability of company Claims paying capability Claims paying (time length) Definition of Diasability in the Contract Renewability / Cancelability of the contract Various types of Riders available Underwriting requirements Comparative cost of various waiting periods Some (but not all) of the above can be found at your public library. Generaly speaking any info that you can get over the internet (other than price) is promotional & slanted to the company (since they pay for it). Cal Lester Insurance Course Coordinator Broward Community College Cal_Lester@msn.com - ------------------------------------------------------------------------------- From: "Peter & Karen Diamond" Subject: Local Bank IPO Date: 29 Nov 1998 11:35:07 -0500 Hello everyone, The bank that holds our mortgage is going public and we have the option of buying into the IPO before it is listed. I understand that many other bank stock conversions have been very good investments. This is a small local bank, concentrating on single family residential mortgages (>70% of loans). They are doing more commercial and construction loans, but they are only about 15% of the business. The mortgage default rate is under 1%. They have been very highly rated in terms of assets and security for many years and are financially sound. The proxy they sent looks good and many insiders are buying in. Is there anything in particular to look our for when evaluating this investment? Thanks. Peter Diamond - ------------------------------------------------------------------------------- From: "Peter & Karen Diamond" Subject: Dividends Date: 29 Nov 1998 11:24:19 -0500 Hello everyone, I own some Bell Atlantic stock. I like the stock and would be happy to keep it. The problem is that the stock pays a nice dividend and through dividend reinvestments, I now own enough that the dividends are becoming a tax problem. As far as I can tell, there are only two options to avoid the taxes on the dividends; 1. Sell it. 2. Sell $2000 of it every year and repurchase it into my Roth IRA. I'm not inclined to sell, without a better investment in mind. I'm also not thrilled with option #2, since it would take quite a few years to complete the repurchase. There is also the capital gains issue. Does anyone know of any other options? Does the IRA purchase make sense after paying the capital gains taxes? I have held it long enough to pay the 20% CG rate. The stock dividend is about 3%. My basis is about 50% of the current value. I am in the 28% bracket for the dividends. Thanks. Peter Diamond - ------------------------------------------------------------------------------- From: Scott Holloway Subject: Selling Mutual Fund shares Date: 30 Nov 1998 16:11:40 -0500 Dear Persf-List, I apologize if this is a novice's question, but I'm still learning = the ins and outs of mutual funds and how they are taxed. I recently decided to change mutual funds for my monthly dollar cost = averaging. These 2 funds belong to the same fund family. I left the = majority of the money in the first fund and purchased $500 worth = (minimum required) of the second fund to start my account. I assume that = I "sold" $500 worth of the first fund to purchase into the second fund. = Am I correct in assuming this to be a taxable event? Will I get = documentation from the fund family detailing this for my income taxes = for this year? I didn't specify which shares to sell so do I take an = average share price to figure out my gain/loss? How do I go about doing = this? I just want to make sure I get it right the first time. Thanks for = any help you can give me. Scott Holloway -