Don’t Be Fooled By The Credit Agencies – Restore Your Credit

CREDIT RATINGS IN TODAY’S WORLD

In today’s economic climate, a growing number of Americans suffer from negative ratings in their credit file including delinquent payments, judgments, collections, foreclosures and bankruptcies. Not only do these items prevent consumers from obtaining new credit when they need it most, but it impact consumers in areas they never thought of before.

It’s also used to determine your interest rate, the amount of your down payment and the variety of mortgage types available to you if you’re buying a house, your ability to get a car loan, the premium on your auto or homeowner’s insurance, and even your ability to get a job. For example, some insurers are using low credit scores as indicators to identify individuals they believe are more likely to make claims against their insurance policies. If your credit score is on the low side, you’ll pay a higher interest rate on bank loans and credit cards, and may even see your credit limit decreased.

ABOUT THE REPORTING AGENCIES

There are three primary credit reporting agencies: TransUnion, Experian, Equifax and they track your credit information separately. These three reports tend to be slightly different and are used to derive the so-called tri-merge credit report.

Credit reporting companies are just that – companies. They are in business to make money, and they generate their income by selling credit reports to creditors. THEY ARE NOT PERFECT AND MAKE MISTAKES THAT CAN SERIOSLY IMPACT YOUR LIFE.

ABOUT THE CREDIT SCORES

720-850 – the ideal credit score
700-719 – access to favorable financing terms
675-699 – standard FICO credit
620-674 – access to financing with additional terms
560-619 – very limited financing options
500-559 – try to repair your bad credit score as soon as possible

The FICO credit score is computed from 5 different personal financial history (2 primary and 3 secondary) aspects with varying weightage of importance. These are given below:

Loan Repayment History – 35%
Total Owed Amounts – 30%
Loan Repayment Length – 15%
Inquiries or New Credit – 10%
Types of Credit Used – 10%

The two primary credit history details regarding payment history and total owed amounts to more than half of the total percentage. These two are the most crucial determinant of your final FICO score and it is important to pay more attention to them when trying to improve your credit standing.

MISTAKES AND CREDIT FILES

It is estimated that 80% of credit reports have some type of error, which can knock enough points off your score to cause you to be turned down for a mortgage or charged a higher interest rate.

Negative credit accounts, or trade lines, can remain on your credit report for up to 7 years, and bankruptcies and other public records for up to 10 years. Inquiries on your credit report may remain for 2 years. These are the maximum times that are permitted by federal law for reporting agencies to show negative items; however, these times are not mandatory. At any time, a creditor or credit bureau may remove a derogatory remark from your credit report if the consumer requests an investigation into remarks that they feel are incorrect.

CREDIT RESTORATION AND CREDIT SCORE IMPROVEMENT

Only the credit bureaus have the power to remove items from your credit report. But, as required by law, the credit bureaus must delete inaccurate, unverifiable, or outdated information. However, innaccurate, erroneous and obsolete information can be removed from your credit file including:

– Late Payments

– Charge Offs

– Foreclosures

– Judgments

– Repossessions

– Identity Theft

– Closed Accounts

– Bankruptcies

– Negative Settlements

– Liens

– Collections

Because your financial health revolves around your credit score, it is important that the information your credit report contains be as accurate and up-to-date as possible. Let my company help you.

Financing For Home Improvements

Financing for home improvements can also be considered housing costs. Housing costs is the term used to describe payments relating to your home improvement, which the financial institutions loan on the basis of your income statement. Not all of your housing costs will be met. Usually you will only be paid a standard rate of interest on mortgages, including second mortgages or other loans, which you are liable for and which were taken out in order to purchase or maintain your home.

You will not get any help with capital repayments or the cost of associated insurance premiums, including the insurance element of an endowment mortgage. If you have an endowment mortgage, it may be worth considering changing to a capital repayment mortgage, but you should seek advice first from one of the agencies. These agencies may also help you negotiate terms with your lender if you are unable to meet any shortfall between the payments due on your loan and the housing costs paid with your benefit.

The current rules on housing costs are far more stringent compared to previous years. However, if you have been claiming income-based finance continuously (apart from breaks up to 12 weeks, which are ignored) since then, your housing costs may be calculated in a different way. This is because of the fact that you may have been entitled to some transitional protection when the previous and more generous scheme was replaced.

The main change is that there is now a far longer waiting period before your full housing costs can be paid. Other significant changes include a standard rate of interest. Interest on arrears of interest, which accrue during the waiting period, or deferred interest accumulating under the terms of a low start mortgage, can no longer be met.

What’s This About Seller Financing?

Seller or owner financing is a good yet rare deal in most real estate markets. This deal essentially means that the seller arranges to fund the mortgages to quickly yield profit from sale of a house. It is a useful tool that enables easy closing of a deal.

This type of financing has similar attributes alike traditional loans. Both parties of the deal must comply with all the specifics of the transaction contract. The contract mainly allows the seller to end the deal in case the buyer does not pay what was asked. This financing is also used to serve as wraparound financing, meaning this is new funding enclosing another existent financing.

This also has two types – full loan for the purchase price and lease to own. The former pertains to a short term agreement where large balloon payment is projected. The latter option maintains a larger down payment. The buyer would lease the home for 2 to 3 years, and the negotiated fraction of the monthly payments would go to the price of the home.

There are many advantages this set up offers. First of all, both the buyer and the seller could easily negotiate on the terms of the deal as there is hardly an involved third party. And once the conditions are all laid out on the bargain table, the purchase deal could easily close. As for the expenses, there are less closing costs too. Since the two parties are the main concerned individuals, there is no need to allocate budget for further agent fees, escrow agent fees and other expenses. However, this financing could only be pursued by a homeowner who has extensive knowledge in the real estate field. Otherwise, both may encounter financial disasters.

Furthermore, here are some benefits for the seller:
1. Repayment schedule could be negotiated upon. Most sellers set the payment plan ranging from 5 to 10 years. At the end of the compensation period, a balloon payment is also demanded. Note that this expense could be shouldered by the buyer or a third party like a lending agency.
2. Despite financing the loan, the owner could gain higher yield because he would actually receive the equity with interest. When a third party lending agency, say, a bank is involved, the profits of the sale would then go to the lender’s pockets.
3. The down payment for properties backed up by this financing is relatively lower. Hence, asking for a higher price is possible.
4. The house could be sold without minding about major repairs. Conventional lenders require the property to be in very good condition before putting on the market. However, the property must still be in livable status.

Obviously, this type of deal mostly benefits the buyer. Below are a few of the advantages:
1. Unlike for traditional loans, qualifying as a buyer for owner-financed homes is easier. There are fewer requirements to become a capable buyer. As repayment plan is usually scheduled within a 5-10 year period, the buyer could budget properly. This span of time enables him to improve his credit score. He could then to qualify for other financial assistance to pay for the seller payment term.
2. In some cases, buyers are given the chance to request appliances and even vehicles to be thrown in the purchase deal.
3. The buyer could also benefit from this type of loan as there is no need to qualify with a loan underwriter.
4. Sometimes private mortgage insurance premiums are not required.

Both parties must ensure that the deal is done with full transparency to prevent occurrence of unfavorable circumstances. For example, the seller must give the property title once the full loan is repaid. On the other hand, the buyer must guarantee he could pay his dues on time. Anyway, in case he defaults on his payments, the home would be repossessed. It is then subjected to be on sale again as the seller wishes so.

All About Seller Financing

Imagine you are just about to buy a real estate property but find yourself in the difficult situation of falling short of the required funds. You are so close but yet so far. Don’t loose heart, seller financing can come to your rescue. Under the seller financing arrangement, the seller of the property provides a loan to the buyer in order to enable him close the sale transaction. The amount of loan provided by the seller would depend upon the need of the buyer. The other names of seller financing include owner financing or purchase-money mortgage. The loan provided by the seller could be as much as the buyer needs but under the normal situations it supplements the home loan availed by the buyer. The aim of seller financing is simple, enable an early closure of the deal so that both the buyer and seller can reap the benefits. In return for the benefits related to seller financing, the buyer and seller are exposed to a few risks related to this financial arrangement. Let us first look at the benefits of an owner financing deal enjoyed by the buyer:

o Enables the buyer and the seller to keep the closing costs under check.
o The buyer has a recourse to a convenient and hassle free method of financing to conclude the deal.
o The buyer of the property may avoid spending on PMI insurance premiums.
o The buyer may seek additional loan from the seller towards furniture, fixtures and accessories contained in the house at the time of purchase. At the same time, seller may also be more than willing to this arrangement.

On the other hand, the advantages enjoyed by the seller include:

o The interest rate charged by the seller on the loan made available to the buyer is at a premium to conventional loans
o The seller usually ends up receiving a premium over the market price of his property.
o The seller does not have to undertake the exercise of home improvement or repairs for the property that he intends to sell.

As far as the shortcomings are concerned, these are as under:

o The seller may not disclose the other encumbrance charged against the property. In such a scenario, the buyer of the property would not have a clear title to the property even after repaying the loan to the seller.
o Higher Foreclosure risk is attached to properties financed by way of seller financing transaction because of higher interest cost and incomplete credit appraisal by the buyer.
o Under a seller financing option, it is very usual for the buyer to be paying a higher price for the property compared to the market price because the buyer usually does not engage the services of a home inspection agency to assess the fair value of the property.

A Seller financing transaction can be a win-win situation for both the buyer as well as the seller but like all financial transactions, both the parties have to do their due diligence before signing on the dotted line.

A Few Ways To Lower Your Car Insurance Premiums

Insuring a vehicle means paying monthly premiums, and these can eat into your disposable income. Affordable car insurance can be obtained, if you know how to secure the lowest premiums. There are many different types of cover, and many competing agencies offer plans. Comparing quotes is a good idea, as this will give you an idea of the average cost of complete cover.

One way to ensure lower premiums is to develop good driving habits – the more accidents you have been involved in, the higher your monthly fees will become. Insurance agencies calculate drivers’ risk profiles to determine their fees, thus you will want to keep your risk profile as low as possible. It may be useful to take a certified defensive driving course prior to applying for auto insurance. Whether possession of a driving course certificate nets you lower premiums or not, defensive driving skills make accidents less likely.

There are many extras that can be added to most plans, but each addition will raise your premiums. For roadside assistance, for example, you might need to pay extra. Read through policies and individual benefits carefully so that you can decide which optional services you can do without. With a flexible plan, you can always add the extras you have not opted in for at a later date.

If you live in an area where crime is high, your premiums are likely to be higher than if you lived in a safer area. There are steps you can take to counteract this effect, however. Installing an alarm system, for example, will reduce your risk profile. When opening a new plan, it is wise to discuss your options with consultants. When in doubt, inquire whether there are any discounts available and find out what actions you need to take (if any), to become eligible.

It is likely that you will be given a better auto insurance quote if you insure your vehicle for a single driver. If a vehicle is driven by others who are under a certain age, the higher risk of accidents will translate into higher premiums.

The ‘excess’ is the agreed amount that a vehicle owner is expected to pay when claiming money for repairs. Premiums can be lowered substantially by choosing a higher ‘voluntary excess’. Should you choose a higher excess to lower your monthly fees, this does mean that repairs arising out of an accident will cost you more. Even so, in many instances it is possible to extract the excess from the auto insurance providers of the other party, if the other party caused the collision.

Some companies take drivers’ credit records into account when calculating premiums. A driver who has a poor credit record might be considered more reckless (and thus a higher liability). It is thus worth taking steps to improve your credit rating if you are planning to take out a new policy.

Whether you desire financial protection against medical expenses arising out of road accidents or you want to insure your car against damage or theft, comparing quotes and taking necessary steps to reduce your risk profile will ensure manageable premiums.

Insurance Brokers, Agencies, Agents, Carriers And Your Business

Insurance brokers, agencies and agents are terms which are somewhat confusing and sometimes used interchangeably though there are subtle differences. Both agents and brokers must pass the a similar licensing exam in order solicit or sell insurance, but their point of allegiance can differ. The broker represents the client and the agent can represents the insurance company. But this difference is often more vague than this definition conveys – both will provide businesses with excellent results as long as the business selects an agency or broker with the requisite expertise required. Agents are licensed and often have credentials such as CIC (Certified Insurance Counselor), but an agent working for a broker can have this designation too. An agency often connotes a group of agents working within the same organization, often with additional staffing and resources. The size of an agency or broker can vary dramatically, from under $1 Million in annual sales (commissions) to billions of dollars in sales for agencies like Marsh, Aon or Willis. The use of the title “insurance broker” may convey that the entity is larger in size and scope than an agency, offering a wide variety of businesses services including risk management, financing, investments and consulting services. Whereas an agency might focus on narrower offerings, though they can also provide a full spectrum of services. Once again, the line is blurred as the differences between these labels can be as vague as differences between political rivals.

Regardless of the broker versus agency designation, and as a broad generalization, businesses should seek an insurance agency or broker who is licensed in their state with expertise within their industry. If you own a California Restaurant, you should seek a local agency in California which is knowledgeable about restaurant coverage. If you run an agribusiness near San Francisco, the same advice holds true, though you may consider trading off location from a proximity perspective for expertise in your specific business niche, in this case agribusiness. It is important, when searching for business insurance, to select an insurance broker or agency that has access to a broad range of carriers. Major insurance companies are often well known names like The Hartford, Chubb, Allied, Zurich, St. Paul Travelers, Safeco, Everest National and Liberty Mutual. Most carriers sell their insurance through agencies and brokers. Think of carriers, agencies and brokers in the same way you might think of a PC computer company and their network of retailers. For example, you can purchase an HP, Dell, Compaq, or Toshiba from many retailers like Best Buy, Target, Wal-Mart or Sears. One key difference, however, is that insurance brokers and agencies must be licensed to sell insurance in their respective state(s) of operation. This provides us with the basis for a quick definition of insurance business terms. Carriers provide the actual insurance policies, whereas brokers and agencies sell the policies to a business. Brokers and agencies also provide guidance and expertise, and shop for the best combination of premium and coverages as they seek quotes from insurance carriers on behalf of their business clients.

In our analogy above, it’s important to note that retailers may or may not carry all types of PCs. By the same token a broker may or may not have access to all the carriers a business might need, and may or may not offer all the coverages a business wants. For example, if a business has a relatively traditional type of coverage need (and a good track record), it is likely they will be able to utilize A-rated carriers, and receive competitive quotes from multiple carriers. If a broker or agent has access to all the primary (best) carriers for applicable types of insurance; there is no need to shop through multiple brokers or agents – the rate for a business will be the same, regardless of which agent gets the quote. This is due to the fact that insurance carriers will only quote an applicant once. Once a broker submits an application on a company’s behalf to a carrier, all subsequent applications from other brokers are “blocked.”; Where the competition lies is between carriers, and with the specific risks applicable to that businesses, it’s important that companies do their homework when it comes to the selection of a broker, and the resulting policies and premiums for their business.

Finding a reputable agent is important to building a successful, long-term, business and insurance relationship. There are many important aspects of business insurance that vary by region. As such, it’s crucial to ensure that an agent knows the area, the specific business and its regulations. In the Midwest, there is snow, ice, white outs and blizzards, while in California there are earthquakes, mudslides and fire related hazards to consider. Thus California agribusiness insurance will require different guidance and expertise than snow, wind and ice related business insurance in North Dakota. Agents should be able to respond quickly and knowledgeably to questions via email or phone (the same or next business day). It’s a good idea to ask them how long they’ve been an insurance professional and if they hold industry certifications such as CIC (Commercial Insurance Consultant). Requesting a list of current references of business owners will also ensure the quality of an agent. For example, in California, a business can check the California Department of Insurance (Licensing Bureau) to determine if any complaints have been lodged by policyholders. And regardless of venue a traditional checkup with the Better Business Bureau can always help a business insurance review process.

Temporary Staffing Agency – How to Start

The temporary staffing industry continues to expand, with yearly double-digit growth being commonplace. Companies find it convenient and cost-effective to work with a temporary staffing agency to fulfill unforeseen demand, fill short-term vacancies, and assist with changing workloads due to restructuring or mergers. Additionally, employers are enticed by the idea of “test driving” new employees to minimize risk and ensure a good match for permanent positions.

Many a job seeker has reaped great rewards from temporary staffing. Skilled but yet-inexperienced workers are able to get a foot in the door at prestigious companies, where a weak resume would have made it very difficult to be considered. Similarly, “drifters” (those who tend to rapidly drift from job to job) may be plagued by an overly-long resume. Temporary staffing services can be ideal for drifters, as they have the opportunity to work on short-term projects and move on without the negative repercussions. Retirees and college students are also very common candidates. A retired nurse may find enjoyment and extra income from a temporary medical staffing firm. A computer science major can gain valuable experience working with a technical agency.

Only a small number of personnel is required to handle recruiting and clientele. Even the largest international firms tend to function with small, mostly-independent branch offices serving specific regions. This modular structure means it is quite possible for a one-office temporary staffing agency to compete effectively with established firms.

Overall, the triple-benefit to clients, associates, and entrepreneurs has contributed to the phenomenal growth of the temporary staffing industry. Because of these advantages, it will remain an integral part of the employment process through good times and bad.

Start Up Costs and Financing Sources:

$5,000 to $25,000

The startup and operating costs of a temporary staffing agency are much lower than many other businesses. The basic requirements are a small office with the typical supplies, a computer system with general accounting software and database software for organizing contracts, and the people skills to work with clientele and associates. It would not be impossible to start a temporary staffing agency on a shoestring budget of a few thousand dollars.

The largest business expense is payroll. It is common for associates to be paid by the agency before the agency is paid by the client. An account must be maintained with sufficient funds to cover payroll costs until bills are paid by the clients.

It is difficult – but not impossible – to get help from venture capitalists in covering part of the costs of setting up a temporary staffing agency. A well-researched, forward-looking business plan is essential.

Pricing Guidelines for Service:

Associates are paid by the hour, and the agency covers its costs by charging a premium to the amount billed to the client. The exact amount of the premium differs from case to case and can vary from 5% to 50% or more. Some associates are willing to work for less and some clients are willing to pay more, which when properly matched can result in very decent profits for the temporary staffing agency. The contract usually spells out a flat fee to be paid to the agency in the event that a client decides to permanently hire an associate.

Advertising and Marketing:

A competitive hurdle for small startups is that larger agencies already have established reputations and brand recognition. This is actually a minor obstacle because of the localized nature of the business. It is not necessary to wage a national marketing war to gain exposure for a new agency. An inexpensive and well-directed marketing campaign can quickly build a valuable reputation within the local operating region of the startup.

Essential Equipment:

An office (perhaps a home office) should be equipped with the standard office supplies and at least two telephone lines.

At least one computer system with accounting software and a database for keeping track of projects is mandatory. A printer is used for printing invoices and job listings, and a high-speed Internet connection connects the agency with online job search sites.

Many temporary staffing services have computers with tutorial software available to help associates to train their keyboarding and basic office software skills. These computers are also used to test the skills of applicants.

Income Potential:

Many billions of dollars are spent on temporary staffing services each year. A small, single-office agency can earn profits in the tens of thousands of dollars. The large, international firms rake in millions every year.

Target Market:

A temporary staffing agency is the middleman between two distinct markets: clients and associates.

It is usually not a difficult matter to reach hundreds of applicants with simple help wanted advertisements. More focus will probably be placed on connecting with client companies and convincing them that your services will help their businesses.

Certain industries seem more receptive to temporary staffing. Financial institutions and other office-centric companies are constantly seeking qualified office support staff. Factories frequently need labor for light industrial work, product assembly, and shipping and receiving tasks. Hospitals and clinics use temporary medical staffing to hire transcriptionists, certified nursing professionals, and other support staff. Increasingly, high-technology companies hire computer programmers, database specialists, and systems engineers on a temporary basis through agencies specializing in technical placements.

Tips for Success:

Develop a niche!

In larger markets, providers of temporary staffing services have found it useful to branch into niches such as temporary medical staffing, legal, financial, or technical fields. The focused nature of these agencies allows recruiters to build a pool of highly-educated, trained, and experienced associates who are able to provide the best service to clients within a particular industry.

A hospital executive would feel more comfortable contracting nurses from an agency dedicated to temporary medical staffing than from a one-stop-shop that also places welders, janitors, and filing clerks. This confidence also helps associates to command better wages than they might otherwise receive through a general-service temporary staffing agency.

Automate!

Much of the work of running a temporary staffing agency can be automated by computer software. Well-designed database software can ease the process of matching qualified associates with appropriate job openings. Accounting operations can be very heavily automated (but working closely with a good accountant is still advised). With these tools in place, just two major tasks remain: finding clients and finding associates.

Use your own services!

As the business grows, it will become necessary to add staff to handle the recruitment and marketing. That should never be difficult, since typically dozens or hundreds of qualified candidates are already in contact with the agency!

Training, Skills or Experience Needed:

Recruiters are at an advantage with a background in human resources, business management, and marketing. A degree is not essential for starting the business, but the knowledge gained through a business management program is immensely helpful. People skills are important, and can be learned through experience and self study. Numerous books have been published, specifically addressing temporary staffing as a business opportunity.

© Copyright Randy Wilson, All Rights Reserved.

Advantages of Financing a Cheap New Car

Financing a cheap new car offers a lot of benefits. This is the reason why most car buyers are doing their best to obtain some of the auto loans offered by lenders to finance this type of vehicle. However, not all car finders know these benefits. As a result, most of them would end up with bad credit. In case you are planning to finance a car, try to consider financing one of the available cheap new cars and obtain the following benefits.

1. A lot of financing offers

One of the most common benefits obtained from financing a cheap new car is the abundance of offers from banks and other lenders. As a matter of fact, a lot of financing agencies are willing to provide financing for creditors who are planning to finance affordable vehicles.

This is because cheap new cars are easy to finance and involve lesser risks on the part of lenders. In the event that you fail to provide the needed payments, the lender has lesser to lose since the vehicle costs less. In addition to this, the financing provider could easily repossess the vehicle that you are financing.

2. Lower interest rate

Aside from the abundance of offers, financing an affordable car also involves lower interest rates. Lenders usually provide lower rates on this type of vehicle since the risks as well as the amount of money involved are minimal.

This is also the reason why most car financing experts suggest that bad credit holders should finance cheaper cars since this could help them reduce the premiums that they pay each month.

3. Lower monthly premiums

Since the interest rate involved as well as the price of the vehicle is low, the monthly premiums involved in this financing are also low. Due to this, you have all the chances of paying the financing off on time.

In addition to this, you can also increase your credit score. However, you just need to provide the monthly payments on time. Any late or missed payments would surely ruin your credit score so it is better to provide prompt payments.

4. Lower down payment

Finally, financing a cheap car also involves lower down payments. Since the price of the car is cheaper, the percentage that will be calculated as your down payment would also be lower than those that are paid by creditors who preferred to finance high-end or more expensive vehicle types.

Marty Bay is an Automotive Journalist and publisher, widely known as a contributor writer, editor, and publisher for some well-known Automotive Properties in the US like Car Finder, Auto Financing, and AboutCar to name a few. His expertise is in writing news and publishing content that would help New Car Finders, and buyers seeking information about Auto Financing and other New Car related offers, deals, and changes in the industry. He also specialises in producing and publishing New Car Buying Guides for various automotive websites in the United States.

Are Debt Consolidation Agencies a Good Idea to Help Lower Debt?

No one likes to be burdened with debt. However, many of us find ourselves in that very position. This can prove to be a very constricting financial situation since excess debt and bills can serious drain a person’s finances. However, there several advantages if you consolidate your debts and this article will mention the positives of this debt management program.

The Way Debt Consolidation Works Is Simple:

The consolidation agency will pay off your existing debts with a new loan. This will then consolidate all your debts into this one. In some instances, the agency could even negotiate the balance you owe on your debts down to a lesser amount prior to the consolidation loan payoff.

Now, you would only have to make one monthly payment on your new loan and this will ensure that you have more financial freedom since you will no longer be saddled with paying so many monthly premiums.

The effect of having to pay only one monthly premium will have a very positive impact on your monthly budget, you will be able to divert more income towards family, household, and professional needs. You will also not be under the previous amount of pressure to come up with the multitude of minimum monthly payments that were previously required. This creates the necessary breathing room required to get out of debt safely and sanely.

So, are debt consolidation agencies a good idea to help lower debt? Yes, absolutely. Debt consolidation companies provide a very helpful service. With the help of a reliable debt financing agency, no borrower will need to be in such situation.

By the way, by researching and comparing the best debt consolidation companies in the market, you will be able to determine the one that meet your specific financial situation, plus the cheaper interest rates offered. Nonetheless, it is advisable going with a trusted and reputable debt counselor before making any decision, this way you will save time through specialized advise coming from a seasoned debt advisor and money by getting better results in a shorter span of time.

Hector Milla runs the Best Debt Consolidation Company website – where you can see his best rated debt consolidation company recommendation.

Visit for further information and read our full review of the best debt consolidation service, plus articles and video training about how to get the most of your debt consolidation process.

Condo, Coop and HOA Master Insurance Premium

I’m sure that a lot of condo/coop & HOA board members have the following question: how come on my Automobile & HO-6 Insurance policies I pay the premiums directly to the insurance carrier, and I have the option of monthly installments, whereas on the condo/coop or HOA master insurance policy I have to pay the premiums to my agent or broker, and the premium has to be paid in full upon binding of the policy and if I can’t afford to pay it in full then we have to get premium financing? That’s a very good question, and it all comes down to 2 main ways that insurance premiums are being charged:

Direct Bill
Agency Bill

Direct Bill

Most personal lines insurance policies, including personal automobile insurance, homeowners insurance, renter’s insurance and personal umbrella insurance are direct bill. This means that the insurance carrier is billing the policy holder directly. Most personal lines insurance policies come with the option of quarterly or monthly installments, you’ll have to pay a down payment (usually 20%) upon binding, and the rest will be split up to quarterly or monthly installments. In most cases you’ll be charged a small fee for every installment anywhere from $1 to $6 depending if you set up automatic withdrawals from your bank account. Once the policy is in effect, the agent or broker has nothing to do with the billing of your insurance policy (of course he’ll get a notice of cancellation if you don’t pay your premium and call you up to make sure that you’ll make a payment so your policy shouldn’t cancel). This is why on all your personal insurance policies you pay the insurance company directly and you have the options of installments.

Agency Bill

But when it comes to your condo/coop or HOA’s master insurance policy it’s a whole different story. Most condo/coop or HOA policies are agency billed, this means that the insurance carrier is billing the insurance broker the full policy premium, and the broker has to bill the condo/coop or HOA association. The broker usually has 30 to 90 days to pay the full premium to the insurance carrier. This is the reason why you pay the insurance premiums to the insurance agent or broker and why it has to be paid in full. But what if your condo/coop or HOA association can’t afford to pay the whole premium at once?

Premium Financing

Most condo/coop or HOA associations don’t have extra money lying around, so when your policy premium is more than $20,000 it’s kind of hard to pay the full amount up front, that’s when premium financing comes in to play. Your insurance broker should help you out with the premium financing; there are a lot of good financing companies out there. The interest rates are usually between 6 & 10%. They will only finance about 80% of the premium, which means that you’ll have to pay about 20% upon closing. How does the whole financing process work? The financing company sends a check of the full premium (minus your 20% down payment) to the insurance broker. Then the insurance broker sends to the insurance company the down payment that he got from the condo/coop or HOA and the check that he got from the financing company (minus his commissions). Then the financing company is going to bill you monthly or quarterly with a 6 to 10% interest rate. The following is something that unfortunately happens quite often: The insured made sure to have the policy paid up in full, whether by paying the full amount or by getting premium financing, and after a few weeks they get a notice of cancellation in the mail. What happened here? Very simple, your broker received the full amount, now he has up to 60 days to pay the company, and very often brokers neglect or on purposely delay paying the insurance company right away. This is wrong and illegal and you should stay away from such insurance brokers.

Izzy Green, CEO and co-founder of Evergreen Insurance, In working with real estate owners and managers, Izzy saw a need for a company that understands the needs of not only generic insurance products but insurance for real estate owners, managers and board members. His success in real estate and insurance gave him the natural competitive edge in addressing those needs and so Izzy and his partner launched Evergreen Insurance that specializes exclusively in real estate insurance and nothing more. Evergreen fast became leader in real estate insurance and Mr. Green is considered a leading expert in real estate insurance among board members and managing agents. Izzy writes articles on real estate insurance and is a regular contributor to leading publications and also gives educational seminars to board members, managing agents and insurance firms.