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  Finance | Financial advice | Immigration | Special Needs | Accounting | Business | Labor Law | Asset Protection

Francis Vayalumkal

Refinancing your mortgage may not be as easy as it used be. That’s troubling news for some homeowners who bought during the last few years using payment-option plans or adjustable-rate mortgages that allowed for quick escalation of the interest rate.

Thanks to an upswing in delinquencies and foreclosures – and new scrutiny from federal regulators and Congress – mortgage lenders have tightened their standards for granting loans. And with home prices rising modestly, if at all, appraisers are tightening their opinions on value. Borrowers stuck with mortgages that are more expensive than they had expected can no longer count on a quick home sale to bail them out of the deal. It’s pay up – or refinance into a loan with better terms.

If you’re looking for a refinance, you can expect lenders to be more demanding about your credit, your ability to document your income and the appraised value of your home. Even if you’re not looking to take cash out, lenders are unlikely to approve a loan account close to 100 percent of your home’s current value, even if you bought it only a couple of years ago with a zero-down-payment loan.

Any one who is considering a refinance should first determine if their current mortgage includes a prepayment penalty. Prepayment penalties are common and it could vary from 1-year, 3-year or 5-year terms.

Borrowers trying to escape difficult loans before their payment adjusts to an even higher rate need to be careful that a refinance would truly offer more than temporary respite. Even if you had subprime credit before, don’t assume that’s all you can qualify for now. There’s no need to start your search with lenders that target credit-challenged borrowers; begain with mainstream lenders and see what they can offer you.

If you are considering a refinance, you also should take into account all the costs involved with getting a new mortgage. Even if a loan is billed as a “no-cost” refinance, it may mean the transaction expenses have been rolled into either the new interest rate or into your new loan balance. Refinance expenses usually include appraisal fees, document processing expenses, and fees for a new title search and title insurance. You may be able to snag a cheaper “re-issue” rate on the title insurance if you go with the same company that did the title work just a couple of years ago. Be sure to ask for it.

Keep in mind that with a refinance, up-front mortgage-interest points cannot be deducted from your taxable income in the year of the refinance, but can be spread over the life of the loan. Consult your loan officer to make sure that refinance is the right option for you.

Francis Vayalumkal is a mortgage banker with Regions Bank and can be reached at (813) 719-0303 cevaya@gmail.comm

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Nitesh Patel

Living into your early 70s used to be common; now increasingly more people are living into their 80s and 90s. Improved medical care combined with better nutrition and a more active lifestyle tends to result in longer and healthier lives.

While it is encouraging, an extended life brings with it the increased likelihood of experiencing a long-term illness. To effectively preserve our dignity and freedom of choice tomorrow means carefully considering our options today.

Most of us might resign ourselves to the idea that if we live long enough we will experience some long-term illness. In the end, how well you protect your assets could have much to do with the future happiness and material security of your family.

Long-term care refers to a broad range of services available to individuals who have lost some level of independence and need help with daily activities that most healthy people take for granted. This necessary assistance is often the result of a chronic illness – one in which modern medical science has developed treatments but no cures.

Arthritis and Alzheimer’s disease are two common, chronic illnesses. Rehabilitative medical care due to acute conditions is different from long-term care. When medical care is the result of an acute or short term, medical condition (e.g. hip replacements, strokes, or cancer), a hospital stay is often necessary to help stabilize the condition.

With these types of conditions, Medicare (for qualifying individuals) or private-pay health insurance will usually pay for rehabilitative care, but not care that is chronic. There is no single way to identify when or if someone will need long-term care. Every case is different due to the type of illness or injury, who can provide the necessary care, and the financial resources available.

Understanding the types of illnesses and injuries that create the need for long-term care is important. A chronically ill individual generally has either a physical or a cognitive impairment.

Physical impairment

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) recognizes six activities of daily living (ADLs) as they apply to long-term care insurance.

These activities of daily living include:


When assistance is needed with ADLs, some individuals may simply require that a health care practitioner remain within arm's reach to ensure that the activity completed safely. This is referred to as standby assistance. As the care recipient’s needs increase, someone may be needed to physically assist with completing the required activity. This is referred to as hands on assistance. In general, the inability to perform at least 2 ADLs must last at least 90 days.

Cognitive impairment

Cognitive impairment is a condition that usually requires care and protection due to loss of intellectual capacity, attention and /or memory. When a cognitive impairment exists, individuals are frequently able to complete the physical activities but may not remember how or when to complete them. Common examples of a cognitive impairment are Alzheimer’s disease, senility, or dementia.

Maintaining a healthy lifestyle and receiving annual check-ups at your doctor's office are effective ways of minimizing that risk. However, even these steps can not eliminate a long-term care event from happening to otherwise healthy people, or prevent the normal effects of aging.

It is important to take the time to educate yourself about your options for accessing long-term care and how you can plan for the future. A good place to start is by visiting and go to the Long Term-Care section, or consult with your state’s insurance department for additional information, including a buyer’s guide that can further explain long-term care insurance.

One option is to consider purchasing long-tern care insurance. By working with a knowledgeable and trusted financial professional, you can learn how long-term care insurance may help protect you against some of the costs of long-term care. Today's long-term care insurance policies offer freedom of choice when it's needed most – and at a fraction of the cost, which might be incurred by paying out-of-pocket.

Nitesh Patel is a financial representative with the Northwestern Mutual Financial Network based in Clearwater for The Northwestern Mutual Life Insurance Company, Milwaukee, Wisconsin). To reach Patel, call (727) 799-3007 or e-mail

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Kamlesh Patel
CRUNCHING ‘EM NUMBERS: IRS warns about vehicle deduction errors


The IRS recently announced that more than $30 billion in taxes are lost annually due to overstating deductions. One of the deductions the IRS believes is being overstated is the deduction for business vehicles. The IRS has issued a fact sheet reminding taxpayers about the business vehicle deduction rules that you can read on the IRS Web site. Here are some of the highlights.

Vehicle use. Not all travel is deductible. Driving from your home to your office is generally nondeductible commuting. Deductible travel includes driving from one work location to another, visiting clients or customers, attending business meetings, or driving to a temporary workplace.

Standard mileage method. Certainly the easiest method to use to deduct your vehicle expenses is the standard mileage method. You receive a flat rate deduction (48.5 cents a mile in 2007) for every business mile traveled. You can use this method even if you lease your automobile.

Actual costs method. Using this method for your vehicle deduction will likely generate a larger deduction if your vehicle is expensive to operate, but it also requires more documentation. To use this method, you divide your business miles by the total miles driven for the year. That computation gives you a business-use percentage. You then use this percentage to deduct the actual expenses that you incur to operate the vehicle, such as gas, repairs, insurance, depreciation, and in some cases interest expense.

Recordkeeping requirements. Regardless of the method you use, you’re required to maintain a log of business miles traveled. If you choose to use the actual method, you’ll also have to maintain records for all of the actual auto expenses incurred during the year. Understand that you can use whichever method provides the larger deduction.

The business vehicle deduction rules can be complicated. Don’t lose your deductions under IRS audit by poor recordkeeping or a misunderstanding of the rules.

Kamlesh H. Patel, CPA, can be reached at (813) 289-5512 or (813) 846-5687 or e-mail or

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Satya Shaw

A successful retirement does not just happen; you have got to plan for it. The long ramp toward retirement focuses on saving and investing, but once retirement starts emphasis shifts to spending and safeguarding. Even though the greatest challenge in retirement, and probably your greatest fear, is outliving your money, most people spend less time planning their retirement than they do planning a vacation.

What does retirement planning involve? Here are the steps: First, determine what you would ideally like to do in retirement, and then discuss it with your spouse and other loved ones. Will you spend your time traveling, enjoying hobbies, helping others, working part time, or what? Second, estimate the retirement income you'll have from savings, Social Security, pension and all other sources. Third, estimate your expenses making sure to take account of inflation, taxes and health care costs, which are likely to be an increasing part of your budget.

Steps two and three should be done for each five-year period of your retirement and then revised annually. Fourth, if you have more income than needed, you only need to safeguard your investments to make sure they're not lost or shrunk by bad decisions. If you have insufficient money for retirement (expenses exceed income), then you'll need to postpone retirement, work part-time or possibly use a Reverse Mortgage to access the equity in your home. Either way, it is highly recommended that you minimize your exposure to loss and maximize the full potential of your financial resources by working with a financial adviser. They can help you determine the risk you can afford, investment options and how to position your money for best results without sacrificing safety. Retirement is going to be long, filled with uncertainties, including emergencies, and going it alone is one of the greatest risks you can take.

Be realistic in your planning. For example, be aware that for a couple age 65, there is a 50 percent probability that one will live beyond age 90. Acknowledge that even a low rate of inflation can make a big difference in prices over the 20 to 30 years you'll be in retirement. For example, average inflation of 3 percent means $1 today will be worth only 55 cents in 20 years and 41 cents in 30 years. Since 78 million boomers are entering retirement over the next two decades, the price of everything related to retirement, especially health care, is likely to rise faster than overall inflation. Inflation is a cruel tax for those on fixed incomes, and chances are your income in retirement will increase a lot slower than prices.

The boomer explosion is going to overwhelm government-provided services and benefits. This means that the relative benefits of Social Security and Medicare are going to shrink under the pressure of increased retirees. There will simply be more people receiving entitlement benefits than workers paying the bills. Every study, government and private, indicates there will be a shortage of money to support these programs. To pay for this shortfall, the government must raise taxes of all types. The increased taxes, inflation, relative decrease of benefits combined with escalating medical care costs will be especially burdensome for those in retirement without rising incomes from wages and salaries.

If you haven't evaluated it yet, investigate the risk you're taking with your retirement money. Would you have a loss if the stock market lost ground? You might if your money is still in your ex-employers 401(k) plan, or if you own securities, even mutual funds, whose value is determined by the market. Generally, investments in stock have done well long term, but you may need your money before a long time. From November 1973 to October 1974, the S&P stock market index fell 48 percent, and it took over six years to recover. The last bust in the stock market was 2000-2002, and we have yet to fully recover. In the meantime, inflation marches forward with the shrinking dollar purchasing less. Much of your income in retirement is likely to be derived from your savings and investments, and you simply can not afford risk of loss and the compounding of inflation. If you lose some or all of your retirement money to bad investments, you'll increase dramatically your chances of realizing your greatest fear: outliving your money.

How do you safeguard against the challenge of too many years and not enough money? Like law and medicine, financial planning is best left to professionals. Your job in retirement is to enjoy life free of investment worries.

Satya B. Shaw, CPA, can be reached at (813) 842-0345.

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