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15 Mortgage Tips for First-Time Homebuyers

If you’re buying your first home, you need to know certain things about the mortgage process.
Consider these tips

If you’re in the market for your first home, the process may seem pretty daunting, especially getting your first mortgage. However, the more you know about mortgages, the better prepared you’ll be, so here are 15 things you should know that can get you ready for the application process and possibly save you money.

  • Know your credit score and what it means to your mortgage
    Your credit score can make a big difference in how much home you can afford and how much interest you’ll end up paying. Before you start the homebuying process, it can be a good idea to check your credit report and to do damage control if necessary.
  • Estimate how much you can borrow
    Lenders generally use two different debt ratios to determine how much you can borrow. The short version is that your monthly housing payment (including taxes and insurance) should be no more than 28% of your pre-tax income, and your total debt (including your mortgage payment) should be no more than 36%. The ratio that produces the lower payment is what the lender will use. Many lenders have more generous qualification ratios, but these are traditionally the most common.
  • Don’t overextend yourself
    If qualify for a certain mortgage amount doesn’t mean that you have to max out your budget. Be sure that your new mortgage payment not only fits your bank’s standards but your budget as well.
  • Get your documentation in order
    When you apply for a mortgage, you’ll need to document your income, employment situation, identity, and more, so it can be a good idea to start gathering the necessary documentation before you walk into a lender’s office.
  • Get a mortgage pre-approval before you start shopping
    To be clear, you don’t need a pre-approval to start looking at houses. However, since a pre-approval is essentially the same as a full mortgage approval, just without a specific home in mind, it can be an extremely valuable shopping tool. Specifically, if you submit a pre-approval along with your offer, it tells the seller that you’re a serious buyer who is not likely to run into trouble when obtaining financing. One caveat: A pre-approval and pre-qualification are two different things. A pre-qualification is based solely on the information you provide and is not a commitment to lend money, therefore it doesn’t carry nearly as much weight.
  • How much of a down payment do you have?
    The mortgage industry standard is a 20% down payment. However, you may be able to get a conventional mortgage with significantly less money upfront — as low as 5% of the purchase price in many cases. The point is that while a higher down payment will lower your monthly housing costs, you may be able to get into a home with less money in savings than you think.
  • Closing costs don’t have to add to your out-of-pocket expenses
    Generally speaking, you can expect closing costs to be in the neighborhood of 2%-3% of your mortgage principal amount. So, on a ₦20,000,000 mortgage, you can expect a bill of up to ₦600,000 that must be paid when you get the keys.
    However, it’s perfectly acceptable to work seller-paid closing costs into your offer to reduce your out-of-pocket expense. In other words, if you want to offer ₦19,500,000 on a home, you can offer ₦20,000,000 and ask the seller to pay up to ₦500,000 in closing costs for you. This can be an excellent strategy for first-time buyers with limited savings to improve their ability to get a mortgage.
  • Consider an NHF loan if your credit history isn’t great
    Another option is the NHF mortgage, which is designed for borrowers with qualifications that don’t meet the standards of conventional lenders.
  • Budget for mortgage insurance, if necessary
    If you put less than 20% down on your mortgage, you’ll probably have to pay private mortgage insurance or PMI, so be sure to budget for this when shopping. Mortgage insurance rates can vary significantly, depending on your credit, the length of your mortgage, how much your down payment is, and other factors. However, it can add a significant amount to your payment, so be sure to consider it.
  • Shop around for a low rate
    One common mistake among first-timers and repeat buyers alike is accepting the first mortgage that’s offered. A seemingly small difference in rates can save you money for a 30-year mortgage, and as long as all of your mortgage applications take place within a short period, the additional inquiries won’t hurt your credit score.
  • Don’t forget about smaller lenders
    When you’re shopping around, don’t just check the big national mortgage lenders. Some regional or local banks may offer unique lending programs, especially for first-time homebuyers.
  • Consider a 15-year mortgage
    If you can afford the higher payments or are willing to buy a less expensive home, a 15-year mortgage can save you hundreds of thousands of nairas in interest and can allow you to own your home free and clear in half the time. Fifteen-year interest rates are about one percentage point lower than 30-year rates, and you might be surprised how much the combination of a lower rate and shorter amortization period can save you.
  • Fixed or adjustable?
    For the majority of homebuyers, a fixed-rate loan is the best choice, especially in a low-interest environment. However, if you don’t plan on being in the home you buy for more than a few years, an adjustable-rate mortgage could save you thousands of dollars in interest.
  • Expect a few hassles before closing
    In a perfect world, you could apply for a mortgage, have the home inspected, and show up at the closing table a month later to wrap things up. Sometimes that happens, but it’s rarely that easy. More often than not, there are some hassles along the way.
  • After you apply, don’t use your credit until you have the keys in hand
    It’s a good practice not to use your credit for anything out of the ordinary between the time you’re approved for your mortgage and when you close on the home.

Mortgage Refinancing and its Benefits

1000 and 500 naira denomination notes

Refinancing your mortgage can help you save money (or at least lower your payments), but sometimes it’s just an expensive mistake. If you’re considering refinancing, study up before you pull the trigger.

What is Mortgage Refinancing?

A refinancing transaction happens when you swap out an old loan for a new (ideally better) one. Your new loan pays off the old one, and you start making payments to the new lender.

Benefits of Refinancing

A new, properly structured loan can improve your financial situation. In particular, you can:

  • Lower your monthly payment
  • Lower lifetime interest costs
  • Reduce risk, if you have an adjustable-rate mortgage
  • Get cash out for other purposes
  • Consolidate debt and possibly get tax benefits

Costs to Refinance

Of course, mortgage refinancing is not free. You’ll pay fees to your new lender to compensate them for offering the loan. You may also pay for legal documents and filings, credit checks, appraisals, and more.

Even if a loan is advertised as a “no closing cost” loan, you’re paying those fees (even if you don’t notice them). Generally, this happens through a higher interest rate.

Does Refinancing Make Sense?

You need to weigh the pros and cons of your old loan and a new loan to decide. In general, mortgage refinancing is a good move when you can save money by locking in a lower interest rate or payment, shorten your loan term, or restructure debt optimally.

Once you understand the costs, evaluate how much you’ll save over time and how long it will take to recoup any up-front costs associated with mortgage refinancing. Will you keep the loan (or live in the home) long enough to make it worthwhile?

One way to look at this is with a basic break-even analysis – when will you come out ahead? But there is a lot more to consider.

When It’s a Good Idea

Mortgage refinancing is a good idea when you’ll truly benefit from a new loan. Some clues that it might be a good idea are:

  • Interest rates are low
  • Your credit has improved since you got your first loan
  • You will keep the loan for a long time
  • You can avoid getting stung by a high-risk mortgage
  • You can get an amortizing loan instead of an interest-only loan

When It’s a Bad Idea

You should avoid refinancing your mortgage if you’ll waste money and increase risk. Sometimes having a lower interest rate and monthly payment can cost more in the long run – even if they help you today. You also need to be sure you can recoup all the fees before you pull the trigger.

Boost for agric financing as CBN rolls out new rules

The amendment of the Commercial Agriculture Credit Scheme (CACS) and the pegging of the maximum loan intake for any project under the scheme at N2 billion are some of reforms being introduced by the Central Bank of Nigeria (CBN) to stimulate activities in the agricultural sector. More commercial banks are also being encouraged by the apex bank to lend to farmers at single digit interest rate. COLLINS NWEZE writes on the renewed drive by the financial institutions and its implication on the economy.

IN times past, any credit facility granted to a farmer was considered lost from the date of approval. Ten years ago, no lender would give depositors’ funds to farmers as loans. But, things are changing. Today, the lenders scramble for agribusinesses, having seen the potential, and knowing how much a well-priced loan can add to their profitability. Many lenders are buying into the agriculture financing scheme.

To make this happen, the Central Bank of Nigeria (CBN) has amended the Commercial Agriculture Credit Scheme (CACS). The apex bank has pegged the maximum loan intake for any project under the scheme at N2 billion. It has equally pegged the maximum interest rate to the borrower under the scheme at not more than nine per cent, inclusive of all charges.

Besides, the apex bank has approved the participation of all Deposit Money Banks (DMBs) under the scheme. The banks have a mandate to sponsor projects from any of the target areas indicated in the guidelines and bear all the credit risk of the loans they grant.The CACS is being financed from the proceeds of the N200 billion three-year bond raised by the Debt Management Office (DMO).  The fund will be given to the participating bank to finance commercial enterprises agriculture.

“The single obligor for any project from a participating bank under the Scheme shall be N2 billion while for state governments shall be N1 billion. However, for special schemes and programmes for agricultural development, state governments may be granted concessionary approval for more than N1 billion”, the CBN said.

The scheme is expected to help  fast-track  growth in the  agricultural  sector  of  the  economy  by  providing  credit  facilities  to  farmers at a single digit interest rate; enhance  national  food  security  by  increasing  food supply;  and effecting  lower  agricultural  produce  and  product  prices,  thereby promoting low food inflation.

CBN Governor Godwin Emefiele, said that agric financing is the way forward for the economy. He explained that the CBN has, as part  of  its  developmental  role and in collaboration with the Federal Government of Nigeria, represented by the Federal    Ministry of Agriculture    and    Rural Development established  the  CACS for  promoting local commercial agricultural enterprises, which is a sub–component of the Federal Government’ Commercial Agriculture Development  Programme (CADP).

The fund, Emefiele added, will complement other special initiatives of the CBN in providing concessionary funding for agriculture such as the Agricultural Credit Guarantee Scheme (ACGS),   which  is   mostly   for   small   scale farmers, Interest Draw-back Scheme (IDS), Agricultural Credit    Support    Scheme  (ACSS)  and    other    similar developmental initiatives.

The CBN chief said: “It makes no sense to allocate scarce forex to rice importers when vast amounts of paddy rice of comparable quality locally produced by hardworking farmers across the rice belts of Nigeria are wasted, and the farmers are falling deeper into poverty while we export their jobs and income to rice producing countries abroad?

“Few decades ago, Nigeria was one of the world’s largest producers of palm oil, but today, we import nearly 600,000 metric tonnes while Indonesia and Malaysia combine to export over 90 per cent of global demand.

“Under these circumstances, I believe it is appropriate, and in fact, expected, that the CBN contributes to protecting the jobs and incomes of local farmers, using some of the same principles Western Economies use to justify the protection of their farmers through huge subsidies.”

“Agriculture remains the largest employer of labour in Nigeria and it contributes about 24.2 per cent of our GDP (Gross Domestic Product). In addition, a good share of the demand for forex today go directly to importing agricultural produce.

“So, the CBN has both a direct and indirect rationale to ensure that this sector is revived in a significant way. In this regard, we are gratified that the CBN’s Anchor Borrowers’ Programme, together with other initiatives like the CACS and NIRSAL, are proving to be successful in several states.”

He explained that in Kebbi State alone, over 78,000 smallholder farmers cultivate about 100,000 hectares of rice farms. It is expected that over one million metric tonnes of rice would be produced in that state alone this year.

Emefiele said: “This is the bedrock of the recently-launched Lake Rice, which is an innovative partnership between the governments of Lagos and Kebbi states. The CBN remains committed to do more in the identified crops such as rice, maize, sorghum, tomatoes, cassava, cocoa, cotton, dairy, and groundnut.

“We also need to find ways to make land tilling much easier especially for smallholder farmers. In this regard, the Nigeria Incentive-based Risk Sharing System for Agricultural lending (NIRSAL) can assist with technical knowledge and deployment of relevant GIS and Satellite imaging that will realise this within a short period of time.”

Speaking in Lagos at a workshop on innovative agricultural insurance products, he said that the agricultural sector provides up to 70 per cent of employment in Nigeria and accounts for about 42 per cent of the country’s GDP.

Emefiele said the large import of food products, include: wheat, rice, flour, fish, tomato paste, textile and sugar.

He said: “We are confronted, as a nation with a wide range of development challenges especially with the dwindling global crude oil prices and the nation’s dependence on it as its major source of revenue.

“There is the need to diversify the mono-cultural tendencies of the economy by developing other sectors of the economy especially agriculture.”

Nigeria’s formal financial system according to Emefiele, was lending about four per cent of all formal credit to the agricultural sector compared to three years ago, when only about one per cent of all credit went to agriculture. He insisted that lending remained low given the lingering perception by banks that agriculture is highly risky. Emefiele said the development and expansion of the agricultural insurance sub-sector would go a long way in mitigating against natural disasters and eventually encouraging banks to lend to agriculture.


Bankers’ Committee


The CBN and DMBs, under the aegis of the Bankers’ Committee, also restated its commitment to expanding bank lending in agro-business in order to discourage importation of goods that can be produced locally.

The bankers stated their resolve to explore large corporate bodies as anchors to lend to participants across the value chain to improve Nigeria’s agro-businesses capacity so as to create sustainable jobs and inclusive growth.

The bankers also affirmed their commitment to financial deepening of the economy, improving financial access to key sectors of the economy, innovative solutions for the critical finance of generation, provide finance for small and medium enterprises, among others.

The committee said: “We note that four basic commodities that are consumed by Nigerians – rice, wheat, fish and sugar jointly account for a significant amount of the country’s annual import bill. We are convinced that the nation has the capacity to produce these consumables in required amounts to meet our domestic consumption needs. With its attendant impact on Gross Domestic Product (GDP) and job creation, agriculture remains a critical focus sector of the financial system.”


Apex bank’s roles


The CBN set the tone with its introduction of NIRSAL to the banks. By that single policy, commercial banks can lend to the agricultural sector and its value chains without fear of losing such funds.

The NIRSAL, expected to drive agricultural revolution in the country, is already being implemented by the banks. The CBN explained that NIRSAL, unlike previous schemes which encouraged banks to lend without clear strategy to the entire spectrum of the agricultural value chain, emphasises lending to the value chain and to all sizes of producers.

The Federal Government plans to double agriculture’s share of banks’ credit to 10 per cent in two years. It has made a fundamental shift that agriculture is not a developmental activity, but a business.

“The CBN has changed the banks’ mindset. It’s a new agriculture sector in which they can actually invest money and make money”, the bank said.


The agric potential


Already, banks and the CBN are discussing how to increase lending to the sector. To the apex bank, the government needed to pay more attention to agriculture, which still has one of the greatest potentials to grow the economy.

The CBN said that one way of achieving this, is by collaborating with the banking system to fix the value-chain problems in the agricultural sector.

It said the economic development was about enhancing the productive capacity of an economy by using available resources to reduce risks, remove impediments, which otherwise could hinder investment.


NIRSAL performance


According to the CBN, NIRSAL will be the catalyst for innovative risk management strategies, long-term financing for agribusiness and significant job creation by new entrepreneurs.

It said: “The mandate of NIRSAL is to act as the custodian of all credit guarantee schemes, interest draw back schemes, and commercialisation initiatives related to an integrated value chain approach to agriculture and agribusiness in Nigeria.”

Under NIRSAL, there are five pillars to be addressed by an estimated $500 million investment by the CBN, according to the programme document.

There is also a risk-sharing facility of $300 million, planned to address banks’ perception of high-risks in the sector by sharing losses on agricultural loans.

It also has an insurance facility of $30 million intended to expand insurance products for agricultural lending from the current coverage to new products, such as weather index insurance, new variants of pest and disease insurance.

Besides, there is also a technical assistance facility amounting of $60 million meant to equip banks to lend sustainably to agriculture, producers to borrow and use loans more effectively and increase output of better quality agricultural products, among others.

The improvement in the sector has been linked to access to credit through the new policy on increasing Private Sector Participation (PSP) with emphasis on the entire agriculture value chain and using agriculture to boost employment, wealth creation and food security.

Analysts have commended the performance by the banks as a demonstrating of their belief in the ability of agriculture to transform the economy.

The CBN said that with the credit trend in the banks, Nigeria may be close to realising its economic diversification objectives that will lead to less dependence on oil.


Stakeholders speak


Chairman, the Tractor Owners & Hiring Facilities Association of Nigeria (TOHFAN), Danladi Garba, said Nigeria could produce food, noting the profitability of agribusiness. He said the era when borrowers beg banks for loans to the agricultural sector was gone for good. “Today, the tides have turned. The buzz for agric financing is on, and no lender wants to be left behind”, he said.

Some banks have also bought into agriculture. For instance, Sterling Bank Plc has financed the purchase of tractors by TOHFAN members. The bank noted that its involvement in the agricultural sector was based on the need to reposition the sector as the main stay of the economy given the dwindling oil revenue.

The bank’s Managing Director, Yemi Adeola, said it finances the purchase/acquisition of tractors from reputable manufacturers such as Massey Ferguson, Mahindra, New Holland, John Deere and Tak Tractors, who will also provide basic training on utilisation and offer after-sales maintenance services.

The tractors, which have been distributed to members of the association following the first disbursement, would promote mechanised agriculture, leading to additional hectare coverage, higher yields and enhance food security in the country.

Adeola said: “Sterling Bank Plc has continually restated its commitment to the strategic growth of the agricultural sector by providing adequate funding in alignment with the ongoing reforms in the sector aimed at repositioning it as an attractive business proposition, an input provider for the manufacturing sector and a key foreign exchange earner.

“The best bank in Agric Award was conferred on the bank in recognition of its critical role in the dispensing of financial services to actors in the agricultural value chain. This we have demonstrated again with the financing of the tractors which will add value to the sector.”

First City Monument Bank has also renewed its pledge to intensify support to the agricultural sector and its value chain, including lending more to the subsector in the interest of the economy.

It said: “We note that four basic commodities that are consumed by Nigerians – rice, wheat, fish and sugar jointly account for a significant amount of the country’s annual import bill.

“We are convinced that the nation has the capacity to produce these consumables in required amounts to meet our domestic consumption needs. With its attendant impact on GDP and job creation, agriculture remains a critical focus sector of the financial system.”

The bank said it remained is focused on being a strategic partner to the government and other stakeholders in the agricultural sector to ensure food sufficiency, employment and revenue generation.

Buyer beware! The top 10 investment scams

Securities Fraud #1 – Penny Stocks

The micro-cap stock market (ie: penny stocks) has a long history of fraud, yet it attracts new investors every day.

The dream of owning the next Microsoft, Yahoo, or eBay at the start-up stage and riding it to easy riches is enough to make even a skeptic’s greed glands salivate.

The other allure of micro-cap stocks is the false feeling of big time investing that comes from buying more shares with less money.

For example, $1,000 will only buy ten shares of a $100 stock, but it will buy 10,000 shares of a 10 cent stock, and 100,000 shares of a penny stock.

Many inexperienced investors prefer 100,000 shares of dubious value over ten shares of real value. They love the idea that a single penny change in the price can double their wealth. Exciting stuff … sort of.

Unfortunately, there are two fundamental problems with penny stocks that make them ripe for securities fraud.

  • Minimal information: Many micro-cap stocks fall below minimum asset and shareholder requirements for SEC reporting. Lack of information disclosure and regulatory oversight invites fraud because the risk of discovery is lower. Additionally, there’s seldom any legitimate analyst coverage or press scrutiny for many of these stocks, which further reduces information flow and lowers the risk of discovery for scam artists. Con artists will always gravitate where the risk of getting caught is lowest – which includes penny stocks.
  • Low liquidity: The second problem with penny stocks is low prices, small daily volume, and minimal stock float, making them ripe for unscrupulous promoters to control the stock and artificially manipulate prices. See the example of “Pump and Dump” below for how this manipulation works. In addition, low liquidity can also make selling a large position without negatively impacting price a difficult taskwhen it’s time to exit.

The two most common forms of securities fraud in penny stocks are “pump and dump” and “bogus offerings”.

  • Pump and Dump: This fraud occurs when someone acquires control of a large amount of a company’s stock and then pumps up the price. They then provide misleading and false information in press releases, spam email, internet discussion group postings, and other unverified sources. The sudden burst in promotion temporarily increases demand for the stock, causing the price to rise, which creates additional demand from momentum buyers jumping on the bandwagon, leading to further price increases. Once price momentum is established, the scam artist sells his shares and walks away from the promotion, causing the stock to tank.
  • Bogus Offerings: This fraud is sold in the form of an unverifiable breakthrough technology or forthcoming large contract announcement for some unknown company. Often, the company will have no operations, earnings, or audited financial statements, and may in fact be little more than an idea or a shell.

The general rule for penny stock investing is to avoid it unless you’re an investor with specialized expertise in the business.

“You may be deceived if you trust too much, but you’ll live in torment if you don’t trust enough.”– Frank Crane

Penny stocks have higher risk for investment fraud than conventional securities, and they require unique investment skills and experience that few investors possess in order to earn reliable profits. They’re best avoided.

Securities Fraud #2 – Prime Banks

Prime bank fraud is designed to attract conspiracy theorists who believe the Rockefeller’s, Rothschild’s, Saudi Royalty, and other members of the privileged class have secret access to highly lucrative investments that a mere commoner like you and I can’t normally invest in.

Triple digit returns may be promised for becoming a “privileged investor” with access to the world’s elite bank portfolios: “prime banks”.

The only problem is prime bank securities don’t exist.

Neither do other related forms of this type of fraud which include “standby letters of credit,” “revolving credit guarantees,” and other legitimate-sounding euphemisms for fictitious high yielding debt.

Avoid all forms of unconventional, high-yielding debt issued through non-verifiable sources. Be particularly cautious when the investment includes nonsense about being given access to something normally reserved for the privileged few.

Securities Fraud #3 – Institutionalized

Bull markets are often associated with a permissive social culture that can lead to brazen investment business practices resulting in institutionalized securities fraud.

Few investors take notice of lapses in integrity as long as everyone is making money and the markets continue to rise. When the punch bowl is removed, then the hangover that follows can reveal institutionalized securities fraud.

Examples include:

  • Accounting Fraud: Enron, WorldCom, and other big name corporations defrauded millions of investors through “creative” accounting and inadequate disclosure during the late 1990’s bull market. Under normal conditions, an entire regulatory and oversight system exists to catch these problems, but during great bull markets, the scrutiny of regulators and auditors produces insufficient results.
  • Unethical Mutual Fund Practices: Late-trading and front-running are two privileges that were granted by many mutual funds during the late 1990’s to insiders and large institutions. This gives them an unfair advantage while betraying their fiduciary responsibility to individual shareholders. The total cost of this fraud to Main Street investors will never be known.
  • Analyst Research Conflicts: A long history of investment fraud can be found in brokerage firms co-mingling investment banking to institutions with investment sales to individuals under one roof. Individual investor recommendations by in-house analysts are often tainted by lucrative investment banking relationships.

You wouldn’t trust medical advice from your doctor if he was biased by sales commission kickbacks from drug companies, so why would you make the same mistake with your investment advice?

Unfortunately, many investors aren’t even aware of the biases inherent in the investment advice they receive.

“Honesty: the most important thing in life. Unless you really know how to fake it, you’ll never make it.”– Bernard Rosenberg

For example, Merrill Lynch settled with the New York Attorney General’s office for $100 million for this misleading practice (without admitting any wrongdoing, of course). Other big name brokerage firms ran into similar conflict of interest charges.

The fundamental problem causing institutional securities fraud is the greed and easy-money character of major bull markets that can result in a promiscuous business culture.

In the search to maximize bottom line profits, there’s always the risk that one bad apple will place expediency in front of integrity, resulting in fraud.

Just because an institution is large and reputable doesn’t make securities fraud impossible.

Securities Fraud #4 – Unlicensed Sales Agents

Investment scam artists use the lure of high commissions to enroll independent insurance agents, financial advisors, investment seminar speakers, and accountants as sales representatives for securities fraud.

Independent agents are the perfect sales outlet because they’ve already earned your trust, but lack sophisticated compliance departments and due diligence procedures to uncover illegitimate investments.

The result is a trusted expert who actually knows little more than you about sorting fraud from legitimate investments.

Be wary if your agent offers high returns with little or no risk on viatical contracts, brokered CD’s, equipment leases, factoring, promissory notes, or other unconventional investments.

Just because you trust your independent insurance agent or accountant for the professional services they regularly provide doesn’t necessarily qualify them as an investment expert.

Securities Fraud #5 – Affinity Groups

Affinity group fraud is another example of mistaken trust. Investment fraudsters will exploit their victim’s age, religious, ethnic, sexual, or professional identity to gain your confidence knowing that it’s human nature to trust people who are like you.

Affinity fraud bypasses the natural distrust we have for schemes promoted by strangers.

The usual method of selling the fraud is to enroll a trusted, leading member of the group (who’s seldom an investment expert) into selling the fraud to the remainder of the group.

The lure to invest is the supposed profits that will somehow benefit the church or professional organization that you want to support.

“We have to distrust each other. It’s our only defense against betrayal.”– Tennessee Williams

For example, a respected church leader is sold an investment. The scam artist then informs this leader that if church members also purchase the investment, then profits can benefit the church or its favorite charity.

The leader unwittingly promotes the fraud to the congregation with the good intention of benefiting the church. The congregation invests based on their trust for the leader and their desire to support the church.

The con man bypasses the usual distrust he experiences by using the affinity of the group.

Senior fraud is a specialized form of affinity fraud. Seniors are natural fraud targets because they’ve accumulated significant assets from a lifetime of saving and investing.

Low interest rates, rising health costs, and increased life expectancy have forced many seniors to seek higher returns than conventional investments provide.

In addition, their age gives them a common set of interests and concerns for fraud promoters to exploit through affinity.

This is an unfortunate combination of circumstances that makes this group a prime target for investment fraud.

Securities Fraud #6 – Stock Brokers

Always scrutinize your brokerage statements for unexplained fees, unauthorized trades, or other financial irregularities.

In addition, your broker may have recommended investments unsuitable for your particular needs.

For the complete story on what to look out for, see the article in our investment fraud series titled “Stock Broker Fraud”.

Securities Fraud #7 – Promissory Notes

Promissory note fraud takes the form of short-term debt obligations issued by bogus companies. Typically, they’re sold through independent insurance agents and offer above market returns with little or no risk – “guaranteed”.

Always beware of any investment offering above market interest rates and guarantees. It’s a potentially lethal combination.

Also, beware of trusted professionals selling investment products that aren’t their ordinary field of expertise (such as insurance salespeople or accountants promoting investments).

Securities Fraud #8 – Advance Fees

The objective of this fraud is to steal the advance fees you pay to participate in some larger objective.

For example, you might be asked to make a series of upfront payments for a bargain shipment of heating oil, coal, or some other commodity that ultimately never arrives.

Alternatively, you might be offered an interest-free loan from an off-shore bank if you pay an application fee in advance.

Regardless of the service or product promised, the formula is for you to pay an entrance fee now for something you’re supposed to receive later – but never arrives. The fee paid is the scam artist’s profit.

Securities Fraud #9 – Inappropriate Investments

Certain legal investments cross the boundary into securities fraud when they’re sold to the wrong person without adequate disclosure.

The most common investment in this category is variable annuities because of their costly surrender charges, steep commissions, and high expense structures.

For the complete story on variable annuity investment fraud see the related article “Variable Annuities Explained – What You Must Know”.

Similarly, callable CD’s are higher yielding, longer-term certificates of deposit that can be redeemed by the issuing bank. The problem with these securities is the potentially high penalty fee for early withdrawal if the investor needs liquidity.

The long-term nature and high surrender charges make them inappropriate for investors needing current access to their money.

“You may deceive all the people part of the time, and part of the people all the time, but not all the people all the time.”– Abraham Lincoln

Securities Fraud #10 – Viatical Settlements

Viatical settlements were originally created to help seriously ill people pay medical bills by selling the death benefit from their life insurance policy to an investor for immediate cash.

There’s nothing illegal about viatical settlements, but when they’re misrepresented, they can become a type of securities fraud.

For example, the health condition of the seller could be falsified or even improve over time, thus impairing the return on investment.

Alternatively, the insurance could be invalid due to fraudulent applications, or there could be no actual insurance or greatly reduced benefits making the investment essentially worthless.

Viatical settlements are complicated investments requiring specialized due diligence skills. They’re not for the inexperienced.

Here are 20 easy ways to save some money every day

These days, in our world of instant gratification, it’s more important than ever to be able to stay focused on saving money any way you can. So to help you monitor your spending habits and cut expenses, here are 20 easy ways you can save every day—starting right now. How’s that for instant gratification?


1. Make a weekly “money date.” Commit to sitting down with your money once a week for a money date. During this time, update your budget, review your accounts and track your progress against your financial goals. Like any relationship, if you want your financial life to improve, you must spend time with your money.

2. Plan out your meals for the week. Taking a few hours every weekend to grocery shop and meal plan for the week will definitely save you money, as dining out is the No. 1 expense for most households. By eating at home, you save money that would otherwise be spent on tax and tip—and you usually save calories, too.

3. Cut out cable. Gasp! Cut out TV?! Never! But with services like Hulu, Netflix and Amazon Prime, you can now watch your favorite TV shows and movies for a fraction of the cost of cable TV.

A study by market research firm NPD Group shows that cable bills will soon grow to an average of $123 per month, or $1,476 per year. By switching over to an online service or cutting out TV altogether, you can save that money for another financial goal—such as paying off debt, traveling or saving for a down payment on a home.

4. Switch to an exercise pass program. If you love working out, an exercise pass program such as Class Pass is the way to go. By paying a membership fee of $99 per month, you are welcome at many of the best studios in your area. And classes—like cycling, yoga, Pilates, barre, strength training, boot camp, dance and more—are unlimited. This beats having to pay for each studio’s monthly membership or individual class fee, which can add up to hundreds of dollars a month.

5. Host a potluck. The more friends you have, the more money you spend on lunch dates, birthday parties and gifts. Switch it up and, instead of meeting over a fancy dinner, host a potluck and have everyone bring his or her favorite dish. That way, you can save money you’d spend on restaurant extras, such as tax, tip and parking—and you’ll usually have a more intimate meal together, too.

6. Leverage lodging rental websites. Finding a place to stay while traveling is so convenient when you use a lodging rental website such as Airbnb, Travelmob or Housetrip. You can often find a place that has a kitchen (so you can cook meals at home to save money) at a rate that’s comparable to hotels. You can even rent out your own place on sites such as Airbnb while you travel to make some extra cash to pay for your own travel expenses. It’s a win-win scenario.

7. Make coffee at home. This one’s not my favorite, as I absolutely love going to coffee shops and drinking delicious organic coffee. However, spending $4 to $5 on coffee every day definitely adds up. So try my approach and allow yourself a few days a week to buy coffee at cafés, and make it at home the rest of the time.

 8. Work more. When you’re working a lot, there’s not much time left to shop and spend money. So stay busy and pursue a career you love.

9. Wait 48 hours before you click “buy.” Since we can have anything we want these days with just the click of a button (there’s that instant gratification again), you need to find a system to help buffer your impulse purchases.

Example: Wait 48 hours before spending money on things that cost more than a certain amount. When you do, you will find that, most of the time, the item was more of a “want” than a “need.” Plus, you’ll save money and work toward being more mindful with your spending.

10. Use blogs and Pinterest to learn DIY beauty treatments. Self-care is important—but going to spas and getting pedicures, massages, etc., can really add up. Allow yourself a certain amount to spend on these things; then use blogs and apps like Pinterest to find at-home beauty treatments to help you save money. Often you can find a DIY organic option using common household or kitchen products.

11. Outsource online. Time is a commodity, and your time is precious and valuable. And these days, there are so many tasks you can outsource that will save you time and money. But how do you figure out if outsourcing something is worth the expense?

A great thing to do is to actually calculate the cost of your time, which will help you figure out if you can pay someone to do something for less than your hourly rate. Here’s an example: A monthly net income of $3,000 divided by a total of 160 hours worked equals an hourly rate of $16.75. Now that you know the value of your time, you can strategically outsource it using a service like Fiverr or Task Rabbit for a fraction of your own hourly rate.

12. Get creative with gifts. Find creative ways to express your love to friends and family members with free, lower-cost or handmade birthday and holiday gifts. After all, a handwritten note explaining why you love someone can be more sentimental than some expensive gift he or she may never even use. Most people will appreciate the thought behind your gifts more than anything, so don’t be afraid to save money and find free ways to celebrate birthdays and holidays.

13. Choose quality over quantity. This can apply to food, clothes, electronics and much more. Although it’s tempting to choose the more budget-friendly version of an item, sometimes choosing quality over quantity will save you more in the long run. Save up your money and get the best-quality product you can afford, and leverage the cost-per-wear philosophy with more expensive clothing and shoes.

This applies to food, too: Buying quality organic food can nourish you in ways that fill you up more than the prepackaged, processed stuff and potentially save you money on health-care expenses in the future, since you’re taking good care of yourself. Find a balance that is right for you and choose quality whenever you can.

14. Deal with your emotions. Excessive spending is often a way to avoid feeling certain emotions. If you check in with yourself before you go on a major spending spree, you may be able to identify if you’re feeling bored, lonely or stressed and are therefore spending money as a means to avoid the underlying emotion. Check in with yourself before you buy, and be mindful with your spending.

15. Stop trying to keep up with the Kardashians. It’s hard to keep your blinders on and not compare your financial life to that of others, especially celebrities. However, it is really important to be clear about what matters most to you and make sure you build a financial plan that supports that vision. This will keep you moving toward your financial goals and stop you from spending money on things you don’t need, to impress people you don’t like.

16. Read a personal finance book. When you learn about personal finance, you’ll learn even more strategies to help you save money for your goals in life. Knowledge is power, and the more you know, the more you can save.

17. Balance your “FOMO/YOLO” mind-set. With social media controlling our lives like never before, people often fall victim to the “fear of missing out” phenomenon and instead go overboard with a “you only live once” mentality.

While it is important to live in the present and soak up each precious moment of life, make sure you balance that out by saving for your financial future, too. Without checks and balances in place, you can find yourself saying yes to everything and spending more money than you have—all due to the fear of missing out.

18. Map out your financial goals. Be very specific with your financial goals. For example, saying, “I want to save for a home down payment” is not enough. You need to map out how much you need, by when and what you need to save every month in order to reach the goal. When you know what your targets are, you’re more likely to stay the course and continue saving for them for the long term.

19. Keep your eye on the prize. Staying focused on your goals takes discipline and determination. Saving can be easy and exciting at first, but after a while you may lose that initial motivation and start to find other things you can spend that money on. To avoid veering off course, check in with your goals regularly and keep your eye on the prize.

“The truth is, there are many ways to save money. Find the ways that work for you, and slowly start incorporating the strategies into your life.”

20. Track your progress. Americans save only 5.5 percent of their money compared to the 20 percent that personal finance indicates you should put away. But instead of feeling ashamed about your lack of savings, just start by saving something.

Even 1 percent is better than nothing. Track your progress and continue to increase the number year after year. Step by step, day by day, you can get to that 20 percent savings level.

The truth is, there are many ways to save money. Find the ways that work for you, and slowly start incorporating the strategies into your life.

—By Brittney Castro, founder and CEO of Financially Wise Women.