06/25/2009
Take Precautions Against Identity Theft
Identity thieves will steal your wallet, purse, garbage, mail, and hack into your computer. This type of theft is increasing exponentially and victims rarely find out until after the fact. Let’s discuss some ways to protect yourself against this growing crime.
Review your credit report periodically. Check to make sure that all the information contained in it is correct, and look for fraudulent activity. You can do this for free once a year by contacting the Annual Credit Report Request Service online at www.annualcreditreport.com or calling (877) 322-8228. If you need to correct any information or dispute any entries, contact the three national credit reporting agencies:
Your most important personal identifier is your Social Security number (SSN). Never carry your Social Security card or other forms of identification that display your SSN with you. Don't have your SSN preprinted on your checks, and don't let merchants write it on your checks. Don't give it out over the phone unless you initiate the call to an organization you trust.
Don’t carry your checkbook and all of your credit, debit, and telephone cards with you all the time. Carry only the cards or checks you'll need for any one trip. Keep a written record of all your account numbers, expiration dates, and the telephone numbers of the customer service and fraud departments in a secure place.
When you make a purchase with a credit or debit card, keep the receipt. Don't throw it away because it may contain your credit or debit card number. Save your receipts until you can check them against your monthly credit card and bank statements, and look for purchases you didn't make. Before you throw out credit or debit card receipts and statements, cancelled checks, or even offers for credit you receive in the mail, shred the documents with a cross-cut shredder.
The more your personal information is available to others, the more likely you are to be victimized by identity theft. Keep a low profile and consider doing the following:
- List your telephone number with the Federal Trade Commission's National Do Not Call Registry by calling (888) 382-1222 or registering online at www.donotcall.gov
- Write the Direct Marketing Association at 1120 Avenue of the Americas, New York, NY 10036-6700, or register online at www.dmachoice.org to stop credit offers by mail
- Remove your name from marketing lists of the three national consumer reporting agencies, call (888) 567-8688 or register online at www.optoutprescreen.com
- Opt out of allowing creditors to share your financial information with other organizations
- Remove your name and address from the telephone book
Protect your privacy on your computer. If you have high-speed internet access, install a firewall to prevent hackers from obtaining information from your hard drive and install virus protection software and update it on a regular basis.
Don’t open e-mails from people you don't know, especially if you download attached files or click on hyperlinks within the message. This can expose you to viruses and infect your computer with "spyware" that captures personal information. Visit business websites by typing the URL address directly into your browser. If you provide personal or financial information about yourself over the Internet, do so only at secure websites that begin with “https”. And always use a “wipe” utility program when discarding your old computer to remove all personal information you may have stored on it.
Contact your friendly home town banker for more ideas on how to protect your personal information from identity theft.
06/18/2009
Help for Homeowners with Distressed Mortgages
Part of President Obama’s stimulus package provides assistance to homeowners with mortgages that are in trouble. This initiative is The Making Home Affordable (MHA) Plan and is made up of two separate plans:
- The Home Affordable Refinance Plan provides access to low-cost refinancing for responsible homeowners suffering from falling home prices.
- The Home Affordable Modification Plan will assist homeowners in danger of losing their homes to foreclosure.
The Refinance Plan helps homeowners with high mortgage rates to refinance even though their house has lost value and their equity has disappeared. Under current rules, Fannie Mae and Freddie Mac cannot guarantee a mortgage that exceeds 80 percent of the home's value.
The Refinance plan removes this restriction until Jun1 1, 2010, allowing qualified homeowners to refinance their mortgages if:
- The property is owner-occupied and the existing mortgage is current
- The existing mortgage is owned by Fannie Mae or Freddie Mac
- The new mortgage balance will not exceed 105 percent of the home’s current value
- The mortgage balance must not exceed $729,750 for single-family homes
The Modification Plan will assist responsible homeowners who are now struggling to afford their mortgage payments and who cannot sell their homes because prices have fallen. The intent of the program, which is available until December 31, 2012, is to offer loan modifications that will make homeowner's monthly payments more affordable. To qualify, a homeowner must:
- Be an owner-occupant
- Have a mortgage created on or before January 1, 2009
- Be in financial hardship or in immediate danger of financial hardship
- Have a current mortgage payment (including taxes and insurance) that exceeds 31 percent of monthly gross income
- Have a loan amount that does not exceed $729,750 for a single-family home
Homeowners with total debt including housing, car loans/leases, and credit cards equal to or greater than 55 percent of their gross income must enter a HUD-certified credit counseling program as a condition for loan modification.
Lenders must reduce the borrower's monthly mortgage payment to not more than 38 percent of monthly gross income. The U.S. Treasury will then share the costs of reducing the payment dollar-for-dollar to a debt-to-income ratio of 31 percent. This may be accomplished by adding past due payments back to the loan balance, dropping the interest rate to as low as 2 percent, or extending the loan term to up to 40 years. The modified payments must be kept in place for five years, and then the interest rate can be stepped up only one percent per year to the 30-year fixed conforming loan rate in place at the time of the modification. No modification fees may be charged to the borrower and unpaid late fees to the borrower will be waived. Certain tests may be performed to determine if modification is likely to prevent foreclosure.
Incentives are offered to mortgage lenders and servicers to accomplish modifications:
- Mortgage servicers are offered an up-front fee of $1,000 for each delinquent loan modification meeting the guidelines. As long as the borrower stays current on the loan, the servicer will also receive a Pay for Success payment of up to $1,000 annually for 3 years.
- Mortgage servicers will be paid $500, and mortgage holders will be paid $1,500, for each at-risk loan modified before the borrower falls behind on payments.
- Borrowers who make timely mortgage payments will receive Pay for Performance principal balance reduction payments equivalent to $1,000 a year for up to 5 years.
- To encourage lenders to modify more mortgages, cash payments to partially offset probable losses from home price declines will be made on each modified loan that remains active in the program.
Consult your friendly home town banker if you need help applying for either of these MHA programs.
06/11/2009
About Annuities
Many people are beginning to show interest in annuities as an alternative investment to CDs. Annuities are popular because they pay higher rates than CDs and earnings are tax deferred. Let’s look at how annuities work to help you determine if they fit your investment profile.
An annuity is a contract between you (annuitant) and an insurance company. You agree to pay a lump sum or a series of payments to the insurance company and it agrees to pay you an income beginning now or at a later date. The money you pay in grows tax-deferred and the earnings on the money you pay in are taxed as ordinary income when you begin receiving monthly payments. Taking monthly payments is called annuitization. You can specify a time period to receive payments, or you can receive them for the rest of your life. You and your spouse can receive payments for life, if you choose this option.
Annuities may be placed in a variety of investment instruments by the insurance company. The insurance company invests your money to accumulate enough to safely pay out the annuitization schedule given to you. While life insurance pays your family cash benefits when you die, annuities pay you a guaranteed income for as long as you live. The monthly amount you receive depends on how much you paid in, the tax-deferred term, the rate it carried, and the estimated number of payments you will receive. Mortality tables are used to determine how long you are expected to live and how long the insurance company will be making payments to you.
Many annuities are sold with no up front fees or annual fees. However, it’s important to know about early termination penalties or other charges that could be levied during the term of your investment. Some annuity contracts allow up to 10% to be withdrawn per year without penalty. Verify this before making early withdrawals.
Annuity advantages include: annuities can provide you with a guaranteed lifetime income with no contribution limitations like you have with IRAs and other plans. Annual no-penalty withdrawals may be made on a restricted basis. Annuities allow retirees to shelter investment earnings that might otherwise lead to taxation of Social Security benefits.
Always consult a trusted financial advisor when purchasing annuities. Your friendly home town bank can help you make the best choices for your investment profile.
06/04/2009
Basics of Financial Aid for College
Financial aid is money distributed by the federal government and colleges in the form of student loans, grants, scholarships, and work-study jobs. Loans and work-study must be repaid, while grants and scholarships do not. A student can receive both federal and college aid.
Financial aid can be either need-based, which is dependent on your child's financial need, or merit-based, which is awarded according to your child's academic, athletic, musical, or artistic merit. Most financial aid is need-based.
The FAFSA (Free Application for Federal Student Aid) uses a formula to determine need for financial aid. Your income and assets and your child's income and assets are tallied and assessed at certain rates. You're granted certain deductions and allowances against income, and you're able to exclude certain assets from consideration. The result is a figure known as your expected family contribution, or EFC. This is the amount of money you must contribute to college costs to be eligible for aid. To calculate your child's financial need, subtract your EFC from the cost at a given college.
Colleges have their own way of determining financial aid. The process works similarly as with the federal government, except that the college formula takes a more in-depth look at your income and assets to determine how "needy" your child really is. Just because your child has financial need doesn't mean that colleges will meet 100% of that need. Some colleges meet only a portion of that need, which is called getting "gapped." If this happens to you, you'll have to cover the gaps, in addition to paying your EFC.
The FAFSA can be completed online at www.fafsa.ed.gov. This method takes only one week to process. The FAFSA can't be filed before January 1 in the year that your child will be attending college. After your FAFSA is processed, your child will receive a Student Aid Report in the mail highlighting your EFC. Then, the financial aid administrator at each school will try to craft an aid package to meet your child's financial need. In early spring, your child will receive financial aid award letters from colleges. If you'd like more aid from a particular school, your chances are best if you can document a change in circumstances that affects your ability to pay, such as a job loss, high medical bills, or an unforeseen event.
Here are some financial aid products you should know:
- Stafford Loan--The most common low-interest, federal student loan for college students. The interest rate is fixed at 6.8% for new loans.
- Perkins Loan--A low-interest, federal student loan for college students with the greatest financial need. The interest rate is fixed at 5%.
- PLUS Loan--A federal education loan for parents of college students that’s available through financial institutions. Parents can borrow the full cost of their child's education, less any financial aid received. Their credit history must be good to qualify. The interest rate is fixed at 8.5% for new loans.
- Pell and SEOG Grants--These grants are available to undergraduate students with exceptional financial need.
In recent years, merit aid has been making a comeback at colleges. Many groups offer merit scholarships to students meeting certain criteria. Your child can apply online and input his or her background, abilities, and interests and receive a free matching list of potential scholarships. Then it's up to your child to meet the various application deadlines.
Consult your friendly home town banker to design a plan for you to pay for college expenses. Start early by saving and use need and merit-based financial aid when it’s time to apply.
Back to President's Articles
06/25/2009
Take Precautions Against Identity Theft
Identity thieves will steal your wallet, purse, garbage, mail, and hack into your computer. This type of theft is increasing exponentially and victims rarely find out until after the fact. Let’s discuss some ways to protect yourself against this growing crime.
Review your credit report periodically. Check to make sure that all the information contained in it is correct, and look for fraudulent activity. You can do this for free once a year by contacting the Annual Credit Report Request Service online at www.annualcreditreport.com or calling (877) 322-8228. If you need to correct any information or dispute any entries, contact the three national credit reporting agencies:
Your most important personal identifier is your Social Security number (SSN). Never carry your Social Security card or other forms of identification that display your SSN with you. Don't have your SSN preprinted on your checks, and don't let merchants write it on your checks. Don't give it out over the phone unless you initiate the call to an organization you trust.
Don’t carry your checkbook and all of your credit, debit, and telephone cards with you all the time. Carry only the cards or checks you'll need for any one trip. Keep a written record of all your account numbers, expiration dates, and the telephone numbers of the customer service and fraud departments in a secure place.
When you make a purchase with a credit or debit card, keep the receipt. Don't throw it away because it may contain your credit or debit card number. Save your receipts until you can check them against your monthly credit card and bank statements, and look for purchases you didn't make. Before you throw out credit or debit card receipts and statements, cancelled checks, or even offers for credit you receive in the mail, shred the documents with a cross-cut shredder.
The more your personal information is available to others, the more likely you are to be victimized by identity theft. Keep a low profile and consider doing the following:
- List your telephone number with the Federal Trade Commission's National Do Not Call Registry by calling (888) 382-1222 or registering online at www.donotcall.gov
- Write the Direct Marketing Association at 1120 Avenue of the Americas, New York, NY 10036-6700, or register online at www.dmachoice.org to stop credit offers by mail
- Remove your name from marketing lists of the three national consumer reporting agencies, call (888) 567-8688 or register online at www.optoutprescreen.com
- Opt out of allowing creditors to share your financial information with other organizations
- Remove your name and address from the telephone book
Protect your privacy on your computer. If you have high-speed internet access, install a firewall to prevent hackers from obtaining information from your hard drive and install virus protection software and update it on a regular basis.
Don’t open e-mails from people you don't know, especially if you download attached files or click on hyperlinks within the message. This can expose you to viruses and infect your computer with "spyware" that captures personal information. Visit business websites by typing the URL address directly into your browser. If you provide personal or financial information about yourself over the Internet, do so only at secure websites that begin with “https”. And always use a “wipe” utility program when discarding your old computer to remove all personal information you may have stored on it.
Contact your friendly home town banker for more ideas on how to protect your personal information from identity theft.
06/18/2009
Help for Homeowners with Distressed Mortgages
Part of President Obama’s stimulus package provides assistance to homeowners with mortgages that are in trouble. This initiative is The Making Home Affordable (MHA) Plan and is made up of two separate plans:
- The Home Affordable Refinance Plan provides access to low-cost refinancing for responsible homeowners suffering from falling home prices.
- The Home Affordable Modification Plan will assist homeowners in danger of losing their homes to foreclosure.
The Refinance Plan helps homeowners with high mortgage rates to refinance even though their house has lost value and their equity has disappeared. Under current rules, Fannie Mae and Freddie Mac cannot guarantee a mortgage that exceeds 80 percent of the home's value.
The Refinance plan removes this restriction until Jun1 1, 2010, allowing qualified homeowners to refinance their mortgages if:
- The property is owner-occupied and the existing mortgage is current
- The existing mortgage is owned by Fannie Mae or Freddie Mac
- The new mortgage balance will not exceed 105 percent of the home’s current value
- The mortgage balance must not exceed $729,750 for single-family homes
The Modification Plan will assist responsible homeowners who are now struggling to afford their mortgage payments and who cannot sell their homes because prices have fallen. The intent of the program, which is available until December 31, 2012, is to offer loan modifications that will make homeowner's monthly payments more affordable. To qualify, a homeowner must:
- Be an owner-occupant
- Have a mortgage created on or before January 1, 2009
- Be in financial hardship or in immediate danger of financial hardship
- Have a current mortgage payment (including taxes and insurance) that exceeds 31 percent of monthly gross income
- Have a loan amount that does not exceed $729,750 for a single-family home
Homeowners with total debt including housing, car loans/leases, and credit cards equal to or greater than 55 percent of their gross income must enter a HUD-certified credit counseling program as a condition for loan modification.
Lenders must reduce the borrower's monthly mortgage payment to not more than 38 percent of monthly gross income. The U.S. Treasury will then share the costs of reducing the payment dollar-for-dollar to a debt-to-income ratio of 31 percent. This may be accomplished by adding past due payments back to the loan balance, dropping the interest rate to as low as 2 percent, or extending the loan term to up to 40 years. The modified payments must be kept in place for five years, and then the interest rate can be stepped up only one percent per year to the 30-year fixed conforming loan rate in place at the time of the modification. No modification fees may be charged to the borrower and unpaid late fees to the borrower will be waived. Certain tests may be performed to determine if modification is likely to prevent foreclosure.
Incentives are offered to mortgage lenders and servicers to accomplish modifications:
- Mortgage servicers are offered an up-front fee of $1,000 for each delinquent loan modification meeting the guidelines. As long as the borrower stays current on the loan, the servicer will also receive a Pay for Success payment of up to $1,000 annually for 3 years.
- Mortgage servicers will be paid $500, and mortgage holders will be paid $1,500, for each at-risk loan modified before the borrower falls behind on payments.
- Borrowers who make timely mortgage payments will receive Pay for Performance principal balance reduction payments equivalent to $1,000 a year for up to 5 years.
- To encourage lenders to modify more mortgages, cash payments to partially offset probable losses from home price declines will be made on each modified loan that remains active in the program.
Consult your friendly home town banker if you need help applying for either of these MHA programs.
06/11/2009
About Annuities
Many people are beginning to show interest in annuities as an alternative investment to CDs. Annuities are popular because they pay higher rates than CDs and earnings are tax deferred. Let’s look at how annuities work to help you determine if they fit your investment profile.
An annuity is a contract between you (annuitant) and an insurance company. You agree to pay a lump sum or a series of payments to the insurance company and it agrees to pay you an income beginning now or at a later date. The money you pay in grows tax-deferred and the earnings on the money you pay in are taxed as ordinary income when you begin receiving monthly payments. Taking monthly payments is called annuitization. You can specify a time period to receive payments, or you can receive them for the rest of your life. You and your spouse can receive payments for life, if you choose this option.
Annuities may be placed in a variety of investment instruments by the insurance company. The insurance company invests your money to accumulate enough to safely pay out the annuitization schedule given to you. While life insurance pays your family cash benefits when you die, annuities pay you a guaranteed income for as long as you live. The monthly amount you receive depends on how much you paid in, the tax-deferred term, the rate it carried, and the estimated number of payments you will receive. Mortality tables are used to determine how long you are expected to live and how long the insurance company will be making payments to you.
Many annuities are sold with no up front fees or annual fees. However, it’s important to know about early termination penalties or other charges that could be levied during the term of your investment. Some annuity contracts allow up to 10% to be withdrawn per year without penalty. Verify this before making early withdrawals.
Annuity advantages include: annuities can provide you with a guaranteed lifetime income with no contribution limitations like you have with IRAs and other plans. Annual no-penalty withdrawals may be made on a restricted basis. Annuities allow retirees to shelter investment earnings that might otherwise lead to taxation of Social Security benefits.
Always consult a trusted financial advisor when purchasing annuities. Your friendly home town bank can help you make the best choices for your investment profile.
06/04/2009
Basics of Financial Aid for College
Financial aid is money distributed by the federal government and colleges in the form of student loans, grants, scholarships, and work-study jobs. Loans and work-study must be repaid, while grants and scholarships do not. A student can receive both federal and college aid.
Financial aid can be either need-based, which is dependent on your child's financial need, or merit-based, which is awarded according to your child's academic, athletic, musical, or artistic merit. Most financial aid is need-based.
The FAFSA (Free Application for Federal Student Aid) uses a formula to determine need for financial aid. Your income and assets and your child's income and assets are tallied and assessed at certain rates. You're granted certain deductions and allowances against income, and you're able to exclude certain assets from consideration. The result is a figure known as your expected family contribution, or EFC. This is the amount of money you must contribute to college costs to be eligible for aid. To calculate your child's financial need, subtract your EFC from the cost at a given college.
Colleges have their own way of determining financial aid. The process works similarly as with the federal government, except that the college formula takes a more in-depth look at your income and assets to determine how "needy" your child really is. Just because your child has financial need doesn't mean that colleges will meet 100% of that need. Some colleges meet only a portion of that need, which is called getting "gapped." If this happens to you, you'll have to cover the gaps, in addition to paying your EFC.
The FAFSA can be completed online at www.fafsa.ed.gov. This method takes only one week to process. The FAFSA can't be filed before January 1 in the year that your child will be attending college. After your FAFSA is processed, your child will receive a Student Aid Report in the mail highlighting your EFC. Then, the financial aid administrator at each school will try to craft an aid package to meet your child's financial need. In early spring, your child will receive financial aid award letters from colleges. If you'd like more aid from a particular school, your chances are best if you can document a change in circumstances that affects your ability to pay, such as a job loss, high medical bills, or an unforeseen event.
Here are some financial aid products you should know:
- Stafford Loan--The most common low-interest, federal student loan for college students. The interest rate is fixed at 6.8% for new loans.
- Perkins Loan--A low-interest, federal student loan for college students with the greatest financial need. The interest rate is fixed at 5%.
- PLUS Loan--A federal education loan for parents of college students that’s available through financial institutions. Parents can borrow the full cost of their child's education, less any financial aid received. Their credit history must be good to qualify. The interest rate is fixed at 8.5% for new loans.
- Pell and SEOG Grants--These grants are available to undergraduate students with exceptional financial need.
In recent years, merit aid has been making a comeback at colleges. Many groups offer merit scholarships to students meeting certain criteria. Your child can apply online and input his or her background, abilities, and interests and receive a free matching list of potential scholarships. Then it's up to your child to meet the various application deadlines.
Consult your friendly home town banker to design a plan for you to pay for college expenses. Start early by saving and use need and merit-based financial aid when it’s time to apply.
Back to President's Articles