On Buying and Living in Condo

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

Are you in the market for a condo? Here are a few things to consider before taking the leap.

Buying a house and lot seems like the ideal scenario. But with prohibitive prices or distant locations, it’s not for everyone. And to be sure, some people would rather live in a condominium. For a growing number of Filipinos—whether by force or by choice—their condo has now become their home sweet home. 

If you’re looking for a condominium, you have to decide if you should buy a unit or just rent. Buying of course gives you a sense of ownership, as you own not just your condominium unit but your part of the common areas in the building. You’re in fact a co-owner of the condominium corporation itself.  

Your condo unit can also appreciate in value, making it an investment especially if you sell it later on. It also gives you permanency of address, compared to a renter. It also reflects well on you when you apply for loans. Plus, there are no hassles and headaches in dealing with a landlord (or landlady for that matter) since you’re not a tenant but an owner. Seguir leyendo On Buying and Living in Condo…

Brokerage Firms

Many stock brokerage firms will make personal or real state loans to customers who are willing to use the stocks and bonds they own as collateral.  Such loans are made at rates only one or two percent-age points higher than the call rate—the relatively low rate that brokers them selves pay to borrow money.  (The current call rate. Which fluctuates regularly, can be found in the financial pages of any major newspapers.)  As a result, interest on such loans may cost two to three percentage points less than a similarly secured loan obtained from a bank. Seguir leyendo Brokerage Firms…

LOAN ALTERNATIVES

Starting today our topic will be all about loan alternatives.

Banking alternatives are available not only for savings and checking activities but also for various kinds of loans.  But whereas the terms and conditions for savings and checking alternatives are relatively simple and straight forward—and hence readily comparable—the terms governing loan can be quite complex.  Any nonblank loan arrangement needs to be scrutinized with the greatest care.  In general, only one or two of the alternatives offer distinct advantage over a bank loan. Seguir leyendo LOAN ALTERNATIVES…

NONBANK BANKS

As we have noted, a number of investment companies and other corporations have, in recent years, began offering certain kinds of banking services to the general public.  Although these non banks are insured by the FDIC, they are not true banks because they do not offer commercial loans or accept commercial accounts.  Instead, they concentrate on serving the individual consumer and compete actively for his or her business.

The Dreyfus Corporation, for example, an investment company that manages a wide variety of mutual funds, has established the Dreyfus Consumer Bank, which offers credit cards, automobile and personal loans, and second mortgages at rates it claims are significantly lower than those charged by commercial banks.  Sears, Rebuck & Company has taken over the Greenwood Trust Company, which currently offers money market accounts and Discover credit cards without an annual fee.  In addition, charges incurred with the Discover card earn an annual rebate based on the amount charged.

ASSET MANAGEMENT ACCOUNTS

Asset management accounts, offered by brokerage houses in the hope of attracting customers for securities transactions, provide comprehensive financial services in a single account:  the buying and selling securities; a free checking account (with no limits on the number or size of the checks); money market fund for your cash balance; the safekeeping of your securities, with interest, dividends, and sale proceeds paid directly into your account; a credit card; automatic payment of mortgage and other constant-figure payments; and telephone payment of any other bills you specify.  Each monthly statement covers all these activities, and the year end statement provides you with most of the information needed for your tax return.  If you own a wide variety of securities or write large numbers of checks, you may find these accounts both convenient and economical, since the higher interest they earn on their cash balance usually offsets the services charges.

Eligibility requirements for these accounts, however, are fairly stringent.  The minimum balance required ranges from $5,000 to $25,000, although some firms will waive the minimum balance if the depositor transfers into the account $20,000 in securities.  In addition, annual service fee range from $25 to $100.  Seguir leyendo ASSET MANAGEMENT ACCOUNTS…

MONEY MARKET MUTUAL FUNDS

If your banking needs include a liquid savings account that offers a relatively high yield and limited check writing privileges, a money market mutual fund may be a very attractive alternative to the savings or money market accounts offered by banks.  Money market mutual funds are in many respects similar to bank sponsored money market accounts.  Indeed, the latter were established to stem the outflow of funds.  Although money market funds are not protected by federal insurance, most experts regards them as a safe investment, and they almost always offer lower fees and higher interest rate than the bank money market accounts.  In winter 1989, for example, the average bank money market account was paying 6.33 percent interest (before fees and minimum balance requirements).  At the same time, money market funds were paying a much higher interest average yield, even after management fees, of 8.76 percent.
 
Money market funds are operated by private investment companies that use their depositor’s money to invest in a variety of short term (usually under 30 days) high denomination debt obligations, the funds pay their depositors the interest thus generated, after deducting small amount (usually less than 1 percent per annum of the fund’s asset value) for administrative expenses and profit. Seguir leyendo MONEY MARKET MUTUAL FUNDS…

CREDIT UNIONS

A credit union is essentially a nonprofit financial cooperative that offers its members many, if not most, of the services provided by banks.  In theory, because credit unions are operated for the sole benefit of their members and have relatively low overhead expenses, both loan rates and savings interest rates should be more attractive than those offered by profit making financial institutions.  A 1988 survey of banking services by Consumer Reports confirmed this.

Small credit unions provide their members with basic services loans and savings accounts, certificates of deposit, automated teller machines, direct payroll deposits, auto and personal loans, bill payment services and credit cards.  About 10 percent of credit unions also offer mortgages. Seguir leyendo CREDIT UNIONS…

BANKING ALTERNATIVES:NEW COMPETITION FOR BANKS

In the same area of personal finance, the substantial changes that took place in the 1970’s in the structure and functions of financial institutions prompted a proliferation of alternatives for consumers. Perhaps nowhere have the changes been felt more than in banking. Early in the decade, federal laws limited banks in regard to the maximum interest they could pay and the services they could provide. As these restrictions gradually were lifted, banks gained more freedom to compete for depositors accounts, but—even more important—so did a number of competing institutions that had previously been barred from providing consumer financial services.

As a consequence, you are no longer captive to the low interest rates and high service charges of traditional banks and can take you savings accounts elsewhere; to credit union, money market funds, brokerage houses, and even your local sears, roebuck store. The banks new nonblank competitors are also vying successfully for a share of the loan and credit card business, and many provide their customers with checking accounts. Seguir leyendo BANKING ALTERNATIVES:NEW COMPETITION FOR BANKS…

CLOSE UP:LEGAL PROTECTION FOR CARDHOLDERS

The Fair Credit Billing Act of 1974 offers cardholders significant protection against billing errors made by the card issuer or the merchant and limited recourse if you are dissatisfied with the goods or services you have charged on your card.

Billing Errors

Billing errors for which the issuing bank is responsible include failure to record payments that you made and mathematical errors made in totaling your charges or calculating the finance charge.

Billing errors for which merchants are responsible include charges for items you did not order or never received; items delivered to the wrong address, in the wrong quantity, or so much later than promised that the bill arrived before the item; and items that turned out to be different from what you had ordered. Seguir leyendo CLOSE UP:LEGAL PROTECTION FOR CARDHOLDERS…

LOSS AND FRAUDULENT USE

Although MasterCard and Visa report annual losses of about $250 million resulting from the counterfeiting, theft, or fraudulent use of their cards, your personal responsibility as a cardholder is strictly limited.

If your card is lost or stolen, you are expected to report its loss promptly to the issuing bank through the 24 hour telephone hotline number the bank provides.  If you report the loss before a finder has made any use of the card, you are not responsible for any charges.  If unauthorized use has been made before you report the loss, you will waive the charge.  If, however, unauthorized use of your card was made without actual presentation of the card—as in the case of a telephone order—you are not liable for any amount.  Because if these limits, the various credit card insurance policies, which cost several dollars a year, may not be worth buying.

Although loss of a card will do you no major harm financially, it can inconvenience you seriously, because as soon as you report the loss, the bank cancels your card and may take as long as two weeks to set up a new account for you.  In the interim, your card is unusable, even if is should turn up at home or be returned by the finder.  For this reason, and to protect yourself against other unauthorized uses, we suggest you take the following precautions: Seguir leyendo LOSS AND FRAUDULENT USE…