Home buyers often get “deposit” and “down payment” mixed up when thinking about the home purchase process. Today I explain the difference between them and why each is important. A “deposit” (or “good faith deposit”) refers to an amount of money that is promised to the seller as part of the sales agreement. Usually, that money is a check handed to the listing agent for deposit into that brokerage’s escrow account (an account mandated by Pennsylvania State to discourage possible misuse of funds). This money is held as potential damages for the seller should the buyer default on the agreement (that is, “walk away” for no contractual reason). While getting the funds out of escrow requires the signatures of both parties, the money is out of the buyer’s reach and acts as an encouragement for the buyer to complete the sale. A “down payment” is the amount of liquid funds the buyer needs to complete the mortgage arrangement when closing on a home. This amount can vary – for example, an FHA mortgage requires a down payment of 3.5% of the purchase price, and an 80% loan requires 20% of the purchase price from the buyer at settlement. The deposit is returned to the buyer at settlement (“closing”) from the listing broker. How this is done is the listing broker makes out a check from the escrow account to the title company performing the settlement. The title company then adds the deposit amount the closing statement as a credit back to the buyer. So, if the buyer needs, say, $20000 to …
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The StructuredSettlement Protection Act states that certain transactions regarding the sale of a structuredsettlement need the approval of a judge in your state’s court before they can be completed. It is also stipulated that the responsible insurance company making the payments need to be part of the process prior to the sale.
Prior to the inception of the protection act it was not necessary that insurance companies be informed of change of ownership of a structuredsettlement, and quite often did not know of the change until after the fact.
So, whether you are comfortable with the payment setup of your settlement or are considering selling your annuity, it would be in your best interests to learn more about the protection act.
Requirements of the Protection Act
The act now requires that any interested parties be notified of a sale or partial sale of a structuredsettlement twenty days prior to any court hearing seeking approval for any changes.
Prior review by a judge is required before any sale takes place. This is done to insure that the sale is in the best interest of the person or client receiving the annuity.
This requirement exists for the protection of the client. Before the implementation of the act there were companies that unscrupulously took advantage of many people who wanted to sell their settlements by offering paltry and unfair amounts to purchase their annuities and settlements.
Many clients, either because of the lure of a large lump sum of money or lack of knowledge on the subject, fell prey to these tactics.
Benefits and Safeguards of the Protection Act
The client selling the settlement must disclose the arrangements associated with the sale along with their personal financial affidavit describing their current financial status. This usually must be submitted three days prior to any finalization of the sale or contract signing.
It is now the responsibility of the buyer of the settlement or annuity to disclose all information relative to the purchase and sale of the annuity or settlement, not the insurance company, issuer or client.
A company that is proposing or trying to buy your settlement must also advise you to seek legal advice before proceeding with sale. This also must be given in writing, and must be done before any information can be presented in court,
Once all documents have been signed, the seller or client still has three days to change their mind about the decision to sell.
Structured settlement factoring transactions involve the sale of future structured settlement payments. In fact, such transactions involve selling the right to receive a future structured settlement payment. There can be many different reasons why someone would want to enter into such transactions.
Were you awarded a settlement in a lawsuit or in a case that never made it to court? If so, you might want to cash it out for one lump sum of money. Some structuredsettlements can be paid out over as many as 30 years and that can be very inconvenient if you need the money now. Selling structuredsettlements is not difficult anymore, but you do have to know how to get the most out of it. Here is a little advice to help you get top dollar for your settlement.
First, never accept the first offer. Shop it around with at least two other companies that will buy settlements. This will ensure that you get the top bid and get more value out of your legal settlement. It is kind of like an auction since you will be taking a bid from one company and telling another that they have been outbid. Do this until one company backs down, then accept the final offer from the company with the highest bid.
Second, make sure you start by consulting your attorney to find out what your tax ramifications are going to be if you sell all or part of your settlement. This will also give you peace of mind to know that someone is there watching over your shoulder to make sure you make the right decisions and don’t get a raw deal.
Last, check the references of the company you choose. Also, check the better business bureau to make sure there are not complaints against them. It is necessary to make this transaction with a very reputable company so check them out thoroughly to give yourself peace of mind.
You can cash out your settlement by following these tips on selling structuredsettlements. Use the lump sum to pay off medical bills, debts, your home, or to invest for a rainy day. It is your settlement so if you decide to sell it make sure it is your decision to do so and not someone else talking you into it.
A StructuredSettlement Company such as J.G. Wentworth, Stone Street, America’s Note Buyer, or Novation Capital are leading structuredsettlement companies available to assist individuals as well as other companies who have received a large judgment in a court settlement case or large winnings as in a lottery, by purchasing the whole amount of the settlement at a discounted price.
For example; you’ve been fortunate to win a large cash amount from a lottery win, you originally accepted your winnings payable over several years. Then as time has elapsed, you suddenly realize you could use a larger payment now by selling your remaining balance for a lump sum amount.
The structuredsettlement company is willing to buy your balance at a discount. The discounted buyout is still a considerable amount and you could use it sooner verses the slower installment amounts over time. A note buyer is a good solution to an immediate need for capital.
Structuredsettlements are a win/win business for all parties involved. Structuredsettlements have solved many financial crisis over the years and they obviously benefit themselves as well. When you need a large buyout it’s comforting to know there are structuredsettlement companies available.
A note buyer stands to make their return over a long period of time and they too can sell off the structuredsettlement note in order to reinvest in other more lucrative structuredsettlement notes.
Your assets may be a structuredsettlement or a private mortgage note or even an inheritance stuck in probate. It also pays to shop your structuredsettlement with funding companies specializing in turning future payments from structuredsettlements, annuities, real estate notes and other assets into cash. This business is not unlike any other, competition drives there customer base, so don’t jump at your first offer. It would also be advisable to let each structuredsettlement note buyer be aware that you have contacted other note buyers and you are wanting the best deal you can receive.
Structuredsettlements are funded by annuities, they are purchased to provide a payment in increments over time to the payee. Structuredsettlements are similar to investment annuities yet they differ in nature as to who actually owns the note. Before you approach a structuredsettlement company make sure you know that in fact you own the right to sell. Some annuities are owned by an insurance company and you cannot sell that which is not yours to sell. Investigate your settlement with your own financial advisor or attorney first.
You are never too young or too old when it comes to knowing if an annuity is right for you. Thinking about purchasing an annuity as an investment vehicle? Perhaps you are in the process of settling a lawsuit and have been presented with a structuredsettlement annuity. Then here is some important information to help you if you are considering one of these products.
What is an Annuity?
An annuity is a financial contract or insurance product purchased from an insurance company that will pay you at regular intervals over time in exchange for the lump sum or premium that you used to buy the policy. The regular intervals from the annuity can be paid to you monthly, in lump sums, for as long as you are alive or a combination of all three.
What is a StructuredSettlement?
A structuredsettlement is a financial arrangement that allows court-awarded compensation to be paid in regular installments rather than in one lump sum. Typically these payments provide money for a fixed period or lifetime through an annuity purchased by the defendant or their insurance company. Every structuredsettlement is tailor-made and may also include some money upfront. Used in settling personal injury or malpractice suits, structuredsettlements terms vary. The payments are considered tax-free under the Internal Revenue Code.
Is an Annuity or StructuredSettlement Right for You?
First and foremost the annuity should be part of an overall financial picture. When purchasing an annuity, you should take into account your level of risk and how much money you are comfortable allocating when buying the annuity.
If you are a Senior or Generation Xer then a retirement plan should be on the horizon. The sooner you start saving for retirement, the more time your investment will have to grow toward your goals. Someone belonging to Generation Y will want to start planning for the purchase of a house, car, and college funds for their kids, as well as retirement. Most structuredsettlement recipients will want the money to fund their education or their kids, to replace income that was lost as a result of their personal injury, or to provide guaranteed long term income.
In determining whether the annuity is right for you ask yourself the following questions:
How much money will you need in addition to what government benefits or pensions you are entitled to?
Are you supporting yourself or will you be supporting others in addition?
What type of lifestyle are you trying to maintain or achieve?
Does the annuity allow you to withdraw from it if you need the money now?
What will be the penalty if you do withdraw early?
Are there any provisions that prohibit you from selling the annuity to a third party?
What is the interest rate and for how long is it guaranteed?
What happens to the annuity if you die? Who will your beneficiary be?
Know before you Sign
With any financial decision or the purchase of an insurance product, always review the contract or purchase agreement carefully before you sign. Be sure you understand the terms and conditions. Ask the agent and/or company to explain what you don’t understand. Don’t be afraid to have it reviewed with another agent or attorney. Obtain multiple quotes or offers to ensure you are receiving the most for your money.
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