Resources: Retirement Benefits

Today we post some contact addresses and resources related to retirement benefits.

Obviously, our first stop should be the
Social Security Administration (800) 772-1213
which has 1,300 offices across the nation and might be the fastest route to your question or to order printed material related to your retirement.

National Organization of Social Security Claimants’ Representatives
(800) 431-2804 is a referral service directing callers to attorneys who handle Social Security Cases.

For an explanation of your rights under federal law you may visit
Pension and Welfare Benefits Administration, Department of labor,
(202) 219-8840.

Pension Benefits Guaranty Corporation (PBGC) (202) 326-4040
answers questions and offers advice on pensions.

Pensionrights.org (202) 296-3778
is a legal referral service for pension related problems.

Mortgage Rates Fall Down

According to the weekly report from Freddie Mac, the average rate for a 30-year fixed-rate mortgage dropped to 3.98% in the week that ended July 30, falling to the lowest level in almost two months, from the prior week's reading of 4.04%. A year ago, the 30-year rate was at 4.12%. A record low of 3.31% for the 30-year mortgage was reached in November 2012.

The average rate for the 15-year fixed-rate mortgage fell to 3.17% in the latest week from 3.21% in the prior week.

Meanwhile, the rate for a 5-year Treasury-indexed hybrid adjustable-rate mortgage decreased to 2.95% from 2.97%.

The rate for a 1-year Treasury-indexed ARM declined to 2.52% from 2.54%.

HELOC & Home Equity Loan : They're Different !

If you own a home, you may be familiar witch the home equity line of credit (often called a HELOC). But perhaps you don't understand the difference between a HELOC and a home equity loan. Consider this the first step in determining what you need.

First, we'll tackle the difference between these two products. We'll start with the similarities: Both are secured loans, which means you're putting up your home as collateral for them once you borrow. Both offer fairly low interest rates, particularly right now, and allow for a tax deduction. And both require equity in your home. Essentially, these products are second mortgages: You're borrowing the equity in your home to use the cash.

The difference is that with a home equity loan, you receive a lump sum and pay it off on a monthly basis over a set period of time, generally between five and 15 years, although lenders may offer terms as long as 30 years. The interest rate and monthly payment will be fixed for the life of the loan. You may want a home equity loan if you need a large chunk of money at once, such as consolidating credit card debt (which is only a good idea if you trust yourself not to run the cards back up once you've cleared the debt off of them) or making home improvements, (which was the original purpose of this kind of loan).

A HELOC is a little more complicated. It's a pot of available money you can draw on as you need it. Similar to a checking account or, more accurately, a credit card, because you pay interest on the money you borrow. You'll be given a debit card or check book to access the money, and a maximum amount you can borrow, but you don't' have to use it all, and you won't pay interest on the portion you don't touch. The interest rate on a HELOC is generally variable, which means your monthly payment will vary as well. If you want some money in your bank in case you ever need it, such as an added emergency fund -- you may be a good candidate for a HELOC. They also tend to be a good fit for someone who has ongoing extensive home improvements, particularly if you want to borrow in increments over an extended period of time.

Margin Loan to Buy Home

Especially in high-price residential markets where demand outstrips supply (like in California), an increasing number of potential home buyers are looking for fast cash to close a deal or end a bidding war. The competition is also getting tougher because of large amount of cash flowing in such hot markets from Chinese investors.

Such home buyers are turning to margin loans for short-term financing, which are backed by a borrower’s investments. Typically, brokerage firms permit loan amounts of up to 50% of the portfolio’s value at the time the loan is originated. The money can be used for almost anything, including bridge financing—when a buyer needs cash to close on a new home before the current home is sold.

There are some pricing advantages of Margin loans over mortgages and other more traditional loans. There are no closing costs, no property appraisal and no prepayment penalties. Borrowers don’t even have to make monthly interest payments, though interest will then accrue on the unpaid interest, raising the borrower’s liability over time.

The downsides? Brokers fix a 'maintenance margin'; if the portfolio’s value drops below this threshold, the borrower is subject to a margin call and then must immediately deposit cash to bring their securities back to the maintenance margin percentage. Otherwise the brokerage firm will sell assets (at that lowered down value) to bring the portfolio back in line. Also, beware of the broker's charges and commission that needs to be paid for such sales.

That's why the margin loan should be used as a short-term strategy before applying for a jumbo mortgage or other financing after the home purchase closes. This reduces the risk of a margin call, a demand by the broker to immediately repay the loan if and when the portfolio’s market value falls.