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what is the u s department of veterans affairs | the u s department of veterans affairs was the name given to the previous veterans administration when it was elevated to a cabinet level executive department in 1988 this move which took effect in 1989 gave the department a new name that allowed it to still be referred to by its longtime initials the va the u s department of veterans affairs has three administrations the veterans health administration vha the veterans benefits administration vba and the national cemetery administration nca it provides medical care benefits and a variety of essential services to veterans of the u s armed forces and their families understanding the u s department of veterans affairsthe department of veterans affairs provides near comprehensive health care services to eligible military veterans at medical centers and outpatient clinics it also offers several non health care benefits including disability compensation vocational rehabilitation education assistance home loans and life insurance in addition the department provides burial and memorial benefits to eligible veterans and family members at national cemeteries like many other organizations the department of veterans affairs follows a mission statement which is to care for him who shall have borne the battle and for his widow and his orphan the values that the department follows match its mission it has five values which go by the acronym i care integrity commitment advocacy respect and excellence these values are intended to provide a baseline for the standards of behavior expected of all the department s employees below details about its three administrations the vha the vba and the nca veterans health administrationthe vha evolved from the first federal soldier s facility established for veterans of the union army after the civil war it was later joined by a system of veterans hospitals clinics and nursing homes the vha is the largest integrated health care system in the united states it includes 1 293 health care facilities 171 va medical centers and 1 112 outpatient sites it serves more than 9 million veterans enrolled in the va health care program vha medical centers provide a wide variety of medical services to eligible veterans ranging from surgery to rehabilitative care to receive health care benefits the va requires that you be a military veteran or former member of the national guard or reserve who served on active duty and was not dishonorably discharged specific eligibility depends on when you served and for how long veterans benefits administrationthe vba provides a variety of benefits and services that deliver financial assistance and other forms of help to service members their dependents and survivors the list includes disability compensation education and training life insurance vocational rehabilitation and job placement assistance the vba also overseas the va home loan program va loans are backed by the government and offer up to 100 financing on the value of a home among other benefits national cemetery administrationthe nca runs 155 national cemeteries across the country and puerto rico providing benefits for all eligible service members and family members burial and memorial benefits include opening and closing of the grave perpetual care a burial flag a headstone marker and a presidential memorial certificate the amount of the 2022 annual budget for the department of veterans affairs history of the u s department of veterans affairsthe beginning of the u s department of veterans affairs dates back to 1636 when the pilgrims of plymouth colony voted that the colony would support soldiers disabled by its war with the native american tribe called the pequot during the revolutionary war the continental congress of 1776 enacted pensions for disabled soldiers in the 19th century support was extended to the widows and dependents of veterans veterans benefits expanded during world war i with the first consolidation of world war i veterans programs occurring in 1921 when congress created the veterans bureau in 1930 president herbert hoover elevated the bureau to a federal administration in 1988 president ronald reagan further promoted the va to cabinet level the change took effect in 1989 and the va adopted the new title of the u s department of veterans affairs the current head of the va is denis richard mcdonough he was nominated by the biden administration and sworn in as the secretary of veterans affairs in february 2021 the bottom linethe u s department of veterans affairs also known as the va comprises three arms the veterans health administration vha the veterans benefits administration vba and the national cemetery administration nca collectively it provides near comprehensive health care services disability compensation vocational rehabilitation education assistance home loans and life insurance as well as burial and memorial benefits to eligible veterans and family members | |
what is the u s dollar index usdx | the u s dollar index usdx is a measure of the value of the u s dollar relative to a basket of foreign currencies the usdx was established by the u s federal reserve in 1973 after the dissolution of the bretton woods agreement it is now maintained by ice data indices a subsidiary of the intercontinental exchange ice the six currencies included in the usdx are often referred to as america s most significant trading partners but the index has only been updated once in 1999 when the euro replaced the german mark french franc italian lira dutch guilder and belgian franc 1 consequently the index does not accurately reflect present day u s trade understanding the u s dollar index usdx the index is currently calculated by factoring in the exchange rates of six foreign currencies which include the euro eur japanese yen jpy canadian dollar cad british pound gbp swedish krona sek and swiss franc chf the euro is by far the largest component of the index making up 57 6 of the basket the weights of the rest of the currencies in the index are jpy 13 6 gbp 11 9 cad 9 1 sek 4 2 and chf 3 6 2the index started in 1973 with a base of 100 and values since then are relative to this base it was established shortly after the bretton woods agreement was dissolved as part of the agreement participating countries settled their balances in u s dollars which was used as the reserve currency while the usd was fully convertible to gold at a rate of 35 ounce an overvaluation of the usd led to concerns over the exchange rates and their link to the way in which gold was priced president richard nixon decided to temporarily suspend the gold standard at which point other countries were able to choose any exchange agreement other than the price of gold in 1973 many foreign governments chose to let their currency rates float putting an end to the agreement history of the u s dollar index usdx the u s dollar index has risen and fallen sharply throughout its history it reached an all time high in 1984 at nearly 165 its all time low was nearly 70 in 2007 over the last several years the u s dollar index has been relatively rangebound between 90 and 110 3the index is affected by macroeconomic factors including inflation deflation in the dollar and foreign currencies included in the comparable basket as well as recessions and economic growth in those countries the contents of the basket of currencies have only been changed once since the index started when the euro replaced many european currencies previously in the index in 1999 such as germany s predecessor currency the deutschemark in the coming years it is likely currencies will be replaced as the index strives to represent major u s trading partners it is likely in the future that currencies such as the chinese yuan cny and mexican peso mxn will supplant other currencies in the index due to china and mexico being major trading partners with the u s 4the usdx uses a fixed weighting scheme based on exchange rates in 1973 that heavily weights the euro as a result expect to see big moves in the fund in response to euro movements interpreting the usdxan index value of 120 suggests that the u s dollar has appreciated 20 versus the basket of currencies over the time period in question simply put if the usdx goes up that means the u s dollar is gaining strength or value when compared to the other currencies similarly if the index is currently 80 falling 20 from its initial value that implies that it has depreciated 20 the appreciation and depreciation results are a factor of the time period in question | |
how to trade the usdx | the u s dollar index allows traders to monitor the value of the usd compared to a basket of select currencies in a single transaction it also allows them to hedge their bets against any risks with respect to the dollar it is possible to incorporate futures or options strategies on the usdx these financial products currently trade on the new york board of trade investors can use the index to hedge general currency moves or speculate the index is also available indirectly as part of exchange traded funds etfs or mutual funds for instance the invesco db u s dollar index bullish fund uup is an etf that tracks the changes in value of the us dollar via usdx future contracts the wisdom tree bloomberg u s dollar bullish fund usdu is an actively managed etf that goes long the u s dollar against a basket of developed and emerging market currencies invesco db also offers its u s dollar index bearish fund udn which shorts the dollar gaining in value when the dollar weakens | |
what does the dollar index tell you | the dollar index tracks the relative value of the u s dollar against a basket of important world currencies if the index is rising it means that the dollar is strengthening against the basket and vice versa | |
what currencies are in the usdx basket | the usdx tracks the dollar s usd relative strength against a basket of foreign currencies the weightings have been fixed since 1973 and later adjusted in 2002 when the euro replaced many european currencies 5 | |
how do you calculate the usdx index price | the usdx is based on a basket of six currencies with different weightings see above the index calculation is simply the weighted average of the u s dollar exchange rates against these currencies normalized by an indexing factor which is 50 1435 5usdx 50 14348112 eurusd 0 576 usdjpy 0 136 gbpusd 0 119 usdcad 0 091 usdsek 0 042 usdchf 0 036the bottom linethe u s dollar index usdx is a relative measure of the u s dollars usd strength against a basket of six influential currencies including the euro pound yen canadian dollar swedish korner and swiss franc the index was created in 1973 but remains useful to this day the usdx can be used as a proxy for the health of the u s economy and traders can use it to speculate on the dollar s change in value or as a hedge against currency exposure elsewhere | |
what is the u s house financial services committee | the u s house financial services committee is the congressional committee responsible for monitoring and writing legislation for the financial services and housing related industries in the united states all committee members are elected members of the u s house of representatives members of the committee oversee the government s financial aid to industry and commerce international finance the insurance industry securities and exchanges urban development and more 1 there are 60 congressional members on the committee the majority of whom are republicans the current chairwoman of the committee is maxine waters a democrat congresswoman from california patrick mchenry a republican from north carolina is the ranking member of the committee 2 understanding the u s house financial services committeethe house financial services committee also has oversight over several important federal departments such as the department of the treasury and the u s department of housing and urban development the federal reserve and the u s securities and exchange commission it also has oversight over government sponsored entities gses such as fannie mae federal national mortgage association and freddie mac federal home loan mortgage corporation 3 the u s government created the committee in 1865 to take over responsibilities previously held by the ways and means committee at that time it was known as the committee on banking and currency it was renamed the house financial services committee in 1968 4 the committee s work todayin 2018 the committee has several issues at the center of its focus one is replacing the dodd frank act this act signed into law by barack obama brought sweeping new regulation and oversight to the banking industry in the wake of the financial crisis of 2008 statements issued by the committee call for the replacement of the bill in order to lift regulations and make it easier for americans to procure home mortgages start small businesses and access bank services such as free checking another issue that the committee is focused on is bringing more oversight and transparency to the federal reserve the central bank of the united states the committee has finalized and introduced a bill to this effect though it has not yet been passed into law the committee also aims to crack down on waste of tax dollars abuse of power and fraud within all federal programs under its jurisdiction toward this end it has created an accessible way for citizens to confidentially report on any of these things directly to the committee as recently as may 2018 the committee has also held hearings focused on fighting money laundering examining the current state of homelessness in america and studying the impact that driverless cars may have on the auto insurance industry in the u s | |
what are u s savings bonds | a u s savings bond is a government bond offered to its citizens to help fund federal spending and which provides savers with a guaranteed although modest return these bonds are issued with zero coupon at a discount with an implied fixed rate of interest over a fixed period of time for instance series ee savings bonds are sold at 50 of their face value and mature to their full value after 20 years understanding u s savings bondsa u s savings bond is a common type of government bond which is a bond issued by a governmental body to raise funds from the public to fund its capital projects and other operations necessary to manage the economy when the government sells bonds it is in effect taking a loan from the public which it promises to pay back at some predetermined date in the future as compensation for providing it with capital the government makes interest payments to its bondholders many people find these bonds attractive because they are not subject to state or local income taxes these bonds cannot easily be transferred and are non negotiable history of the u s savings bondin 1935 during the great depression president franklin d roosevelt signed legislation that allowed the u s department of the treasury to issue federally backed savings bonds series a in 1941 the series e bond was first issued to help finance world war ii and were called defensive bonds after the attack on pearl harbor they were called war savings bonds and the money invested in them went directly toward the war effort after the war ended americans were encouraged to purchase savings bonds which provided a way for individuals and families to earn returns on their investments while enjoying the absolute guarantee of the united states government features of u s savings bondstypes of u s savings bondsthere are presently two types of u s savings bonds that can be purchased electronically are the series ee and series i bonds other considerationsin order to purchase or redeem a u s savings bond an investor must be a u s citizen official u s resident or u s government employee regardless of citizenship status u s savings bonds are among the safest types of investments as they are endorsed by the federal government and are therefore risk free although these bonds do not earn much interest compared to the stock market they do offer a less volatile source of income they offer a way to save for future expenditures as they cannot be cashed until at least 12 months after purchase and the longer you wait to cash the bond the more interest it accrues | |
what is the u s treasury | the u s treasury created in 1789 is the government department responsible for issuing all treasury bonds notes and bills 1 among the government departments operating under the u s treasury umbrella are the internal revenue service irs the u s mint the bureau of the fiscal service and the alcohol and tobacco tax and trade bureau 2key functions of the u s treasury include printing bills postage and federal reserve notes minting coins collecting taxes enforcing tax laws managing all government accounts and debt issues and overseeing u s banks in cooperation with the federal reserve 3 the secretary of the treasury is responsible for international monetary and financial policy including foreign exchange intervention 4understanding the u s treasurythe u s treasury is the cabinet level department responsible for promoting economic growth and security 3 it was established by the first congress of the united states which convened in new york on march 4 1789 following the ratification of the constitution 1 the secretary of the treasury is nominated by the president and must be confirmed by the u s senate establishmentthe u s constitution was ratified in 1788 replacing the articles of confederation under which the u s had functioned during and immediately following the american revolution 7 the constitution provided for a much stronger federal government and the establishment of a centralized treasury department was an important part of that 8alexander hamilton was the first secretary of the treasury and served until 1795 among his major accomplishments while he was secretary of the treasury were the federal government s assumption of the states debts related to the american revolution provisions for the payment of war bonds and the institution of a system for the collection of federal taxes 9internal revenue servicein 1861 president abraham lincoln implemented an income tax to pay for the civil war and in 1862 he created the position of commissioner of internal revenue 10 that tax was repealed in 1872 but the office lived on the income tax as it exists now began with the 1913 ratification of the 16th amendment to the u s constitution and the irs assumed responsibility for collection and enforcement 11treasury bills and bondsborrowing by the treasury is done through the issuance of shorter term notes called bills and longer term bonds the bonds have a maturity of as long as 30 years 12 treasury bonds are backed by the full faith and credit of the u s government and as such are popular investments by governments companies and individuals worldwide 13the federal reserve bank buys and sells the bills and bonds to control the country s money supply and manage interest rates 1415who runs the treasury department the treasury department is headed by the secretary of the treasury who is nominated by the president and confirmed by the senate janet yellen is the treasury secretary in the biden harris administration yellen was previously the chair of the federal reserve from 2014 2018 5 she is the first woman to hold either position 6yellen s top deputy at the treasury department is adewale wally adeyemo he is a veteran of the obama administration and an expert on macroeconomic policy and consumer protection with national security experience 16 | |
what is usance | in international trade usance sometimes called tenor is the allowable period of time permitted by custom between the date of the bill and its payment the usance of a bill varies between countries often ranging from two weeks to two months it is also the interest charged on borrowed funds usance is derived from the action of usury as well as the use of goods for economic purposes understanding usanceusance applies to many items purchased on credit for example a company that purchases materials from a supplier will receive the goods today the bill will be delivered today but the company might have up to 30 days to pay it the 30 days represents the usance for the sale | |
when a person lends money they will charge a usance in exchange for the service in this case usance relates to the profits made from the lending of principal | usance is the process of using goods to fulfill economic needs this involves refining materials into finished goods or the consumption of goods to satisfy needs | |
what is the marshall school of business | the marshall school of business is the business school of the university of southern california usc located in los angeles it offers a wide variety of both undergraduate and graduate courses conferring both business related b s bachelor of science degrees and several mba degrees history of the marshall school of businessfounded in 1920 the marshall school of business is one of the largest of the 17 schools that comprise the university of southern california a private academic institution it is the oldest accredited business school in southern california the school was known as the college of commerce and business administration it had 300 students its first graduate degree was offered in 1922 1usc renamed its business school the gordon s marshall school of business after its alumnus gordon marshall head of electronic components distributor marshall industries his donation of 35 million was the largest ever given to a business school at the time 2the marshall school of business boasts more than 90 000 alumni worldwide 3marshall school of business curriculumthe marshall school of business occupies five buildings on the usc campus in los angeles ca it has 243 full time faculty members 4 students can earn undergraduate degrees in business administration accounting and world business full or part time masters in business administration an online mba executive mba or one year international mba and ten specialized masters degrees which include entrepreneurship and innovation marketing global supply chain management and business analytics 5undergraduatemarshall degrees combine the theory and practice of business with a foundation in the liberal arts all undergraduate degrees are stem designated degrees conferred include 6usc lets students customize undergraduate degrees with 16 000 combinations of majors and minors 7mba and post graduatethe marshall mba and masters programs combine foundational knowledge across the business discipline and electives on a multitude of topics the curriculum and degrees include 8specialized masters degrees ph d degreeapplicantsthe usc student community has representation from 128 countries and marshall students participate in international programs each year the marshall school of business has approximately 4 000 undergraduate students and 1 200 individuals in various graduate programs 5usc requires undergraduate applicants to submit standardized test scores applications and resumes most admitted students are ranked in the top ten percent of their graduating class first year students can apply for early action or regular decision 9marshall does not seek a type of ideal mba candidate but looks for students from all walks of life and varying degrees of experience unlike other business schools it doesn t require application fees or references 10among the marshall school of business full time mba class of 2022 11 | |
how does the west coast location benefit usc s marshall school of business | the marshall school of business is known for its innovative programs and approach to business education its location in southern california supports its entrepreneurship courses and mba degrees that focus on silicon valley and cinematic arts | |
are study abroad programs available to freshman at the marshall school of business | marshall s global leadership program glp and learning about international commerce linc programs were the first of their kind available to freshman students 1 | |
what is the prime program at the marshall school of business | established in 1997 the school s prime program offers students a choice of six experiences in southeast asia working with multinational companies domestic enterprises and governmental institutions 12the bottom linethe marshall school of business is the business school of the university of southern california usc in los angeles ca and hosts students from 128 countries it offers undergraduate business degrees full and part time mba degrees specialized master s degrees and doctorate degrees the school is named for gordan marshall who endowed 35 million in 1997 | |
what does usd stand for | the usd is the currency abbreviation for the u s dollar the official currency of the united states of america and the world s primary reserve currency over the past several decades it is managed by the federal reserve america s central bank in foreign exchange forex markets the usd is the most common pairing in exchange with other currencies for instance eur usd usd jpy and gbp usd the u s dollar is also the official currency for a small number of other nations such as the marshall islands panama and ecuador and is unofficially accepted in local exchange in several other countries around the world understanding the usdthe usd is the currency of the united states and is denoted by the symbol one dollar can be divided into one hundred cents dollar banknotes are currently issued in denominations of 1 2 5 10 20 50 and 100 each feature the portrait of a president on the front with the exception of the 100 bill which depicts benjamin franklin and the 20 bill may soon feature abolitionist harriet tubman on its front 1notably 500 and 1 000 banknotes used to circulate in limited amounts but ceased in 1969 2 coins are minted in denominations of 0 01 cent 0 05 nickel 0 10 dime 0 25 quarter 0 50 half dollar and 1 00 banknotes and coins are produced by the treasury department and shipped directly to federal reserve banks and branches for distribution and circulation 3the usd is the most traded currency in the international foreign exchange market which facilitates global currency exchange and is the largest financial market in the world with a daily average volume for may 2022 of nearly 1 2 trillion 4 as such the usd is considered a benchmark currency and is readily accepted in transactions worldwide the usd accounts for approximately 88 of all foreign exchange transactions according to the bank for international settlements bis 2019 triennial report 5a brief history of the usdthe usd has been the official currency of the united states since the passage of the national currency act of 1785 before that the united states used a patchwork system of unreliable continental currency british pounds and various foreign currencies at first the dollar was denominated only in coins with paper currency introduced in 1861 and its value was keyed to the relative prices of gold silver and copper various acts of congress modified the usd s design value and underlying commodities until the currency s oversight was formalized with the federal reserve act of 1913 after this reform the dollar was technically a federal reserve note redeemable on demand for an equivalent value of precious metals at any of the federal reserve banks or the u s mint u s dollars ceased to be redeemable with the de facto abandonment of the gold standard in 1933 when president franklin d roosevelt prohibited the private ownership of gold in 1944 the bretton woods agreement effectively forced all of the major currencies of the world to convert from a precious metal based value system to one of the fixed exchange rates with governments allowed to sell gold to the united states for 35 an ounce payable only in u s dollars the gold standard was formally abandoned in 1971 when the bretton woods exchange rates were abandoned today the usd is a free floating currency on global forex markets in the post bretton woods world the u s dollar acts as the reserve currency of most countries instead of stockpiling gold and silver the central banks of the world keep a steady reserve of dollars as a hedge against inflation dollar bills sometimes go by the slang greenbacks in reference to the green colored ink that is characteristic of their reverse side measuring the usd valuethe value of the usd is broadly measured by the u s dollar index usdx which is comprised of a basket of currencies affiliated with the major trading partners of the united states these include the euro 57 6 of the index the japanese yen 13 6 the british pound 11 9 the canadian dollar 9 1 the swedish krona 4 2 and the swiss franc 3 6 the index goes up when the dollar gains strength against other currencies and falls when it weakens 6within the united states the amount of dollars in existence is measured by one of the several money supply money stock metrics put out by the fed the monetary base or m0 is the aggregate total amount of dollars in circulation in the form of cash banknote and coin as the monetary base increases the fractional reserve banking system expands the money supply via the money multiplier effect advantages of the usdseveral factors work to make the usd attractive as a reserve currency and in exchange but the dollar s long standing price stability might be the most important unlike some other major currencies the usd to date has never been devalued to handle the country s debt or seen bouts of hyperinflation moreover no u s dollar has ever been dishonored or refused as legal tender which vastly increases confidence in the soundness of the currency as a result the usd is used to denominate financial debt and commodity transactions all over the world because of its strength and stability many foreign governments and central banks hold onto u s dollar reserves to help keep their own economy and local currency stable this may be in the form of actual usd currency holdings or more commonly as u s treasury bonds example of usd petrodollarsa good example of the usd in terms of international trade and as a reserve currency is in the global market for crude oil much of the world s oil and gas is produced overseas in the middle east russia norway south america and elsewhere the global oil market however is priced in dollars per barrel usd paid for oil to non u s exporters are known as petrodollars which becomes a primary source of revenue for these nations because those nations do not use usd as their primary currency they develop reserves of dollars that must be recycled or spent in order to convert them into local currency forex markets are a primary channel for this as well as the purchase of u s treasuries to hold in reserves usd faqsaccording to the federal reserve as of july 2022 there is just over 2 trillion worth of usd currency in circulation 7 this number swells to more than 21 6 trillion if you look at the m2 measure of the money supply which includes non cash items like money market instruments deposits and other credit money as of july 2022 the eur usd exchange rate is 1 02 which means that one euro eur is equal to usd 1 02 alternatively you can say that one dollar is equal to 0 99 8 the eur usd currency pair is often the most actively traded in forex markets usdcoin usdc is a stablecoin that is pegged to the value of 1 usd the price as of july 30 2022 is 0 95 9 a stablecoin is a class of cryptocurrency that derives its value from some external reference usdcoin is not issued or managed by the u s government or federal reserve as is not considered legal tender in exchange | |
what is usda streamlined refinancing | usda streamlined refinancing refers to a simplified mortgage refinancing option offered through the u s department of agriculture usda usda streamlined refinancing is intended for homeowners who purchased their homes using a usda issued home loan and provides an option for borrowers to refinance for more affordable loan terms understanding usda streamlined refinancingthe usda loan is a mortgage option for some rural and suburban homebuyers the usda offers home loans directly and guarantees loans issued by qualified mortgage lenders qualification standards for these home loans are lenient compared to those of other mortgages usda loans are designed to help low to moderate income borrowers purchase homes in mostly rural areas a section 502 loan which is a loan available to low income individuals and households in rural areas is one example of this type of loan 1the usda has two programs to refinance direct and guaranteed loans streamlined assist and standard streamlined 2usda refinancing is similar to other federal streamlined refinancing options such as the federal housing administration s fha streamlined refinancing department of veterans affairs va streamlined refinancing and home affordable refinancing program harp from government sponsored enterprises fannie mae and freddie mac 3a streamlined refinanced loan even allows you to wrap your closing costs and escrow charges into the new loan amount that helps homeowners receive a zero out of pocket refinance for which no cash is needed upfront eligibility requirements for usda streamlined refinancingtwo popular usda refinancing programs include the streamlined assist and the standard streamlined program with both programs the refinanced interest rate must be equal to or below the current mortgage loan rate and the mortgage must have closed 12 months prior to the loan application the usda refinancing program known as streamlined assist have the following eligibility requirements unlike a typical loan application there are no credit report home appraisal or property inspection requirements current income is not a qualifying factor either the borrower must only document that their income falls within current usda limits 45another refinancing program includes the usda standard streamlined program similar to the streamlined assist program no appraisal is required and homeowners underwater on their mortgage are eligible the benefits of this particular option include no requirement to drop the payment by at least 50 and existing borrowers listed on the note can be removed as long as one of the original borrowers remains on the loan the latter can be beneficial in the case of divorce 6usda streamlined refinancing ratesto refinance a guaranteed loan check out the usda s list of approved lenders they offer usda loans but the usda does not recommend specific lenders you ll need to shop around to ensure you get the best terms and a lower interest rate 71the interest rate for direct loans as of march 24 2024 is 4 5 but your effective rate can be as low as 1 after subsidies 8 | |
what loan refinancing options does the usda offer | the usda offers direct loans and guarantees loans from private mortgage lenders to low and moderate income borrowers in rural areas it oversees two programs to refinance these loans streamlined assist and standard streamlined | |
what are the requirements to refinance a usda loan | under either program the home to be refinanced must be a primary residence and have a mortgage from a usda direct or guaranteed home loan among other requirements neither requires a home appraisal or inspection however a standard refinance has more requirements than the streamlined assist including debt to income dti ratio requirements 2 | |
what are the benefits of usda streamlined refinancing | streamlined refinancing offers a hassle free way to refinance a usda mortgage the main benefit is lower loan payments the bottom linethe usda streamlined refinancing option can help borrowers save money by refinancing their usda mortgage loan the streamlined program offers options for low to moderate income families located in mostly rural areas borrowers can also save on fees since a new appraisal or home inspection is not required however the borrower must have made on time payments for the last 12 consecutive payments and the refinancing must result in at least 50 per month in savings | |
what is usda streamlined refinancing | usda streamlined refinancing refers to a simplified mortgage refinancing option offered through the u s department of agriculture usda usda streamlined refinancing is intended for homeowners who purchased their homes using a usda issued home loan and provides an option for borrowers to refinance for more affordable loan terms understanding usda streamlined refinancingthe usda loan is a mortgage option for some rural and suburban homebuyers the usda offers home loans directly and guarantees loans issued by qualified mortgage lenders qualification standards for these home loans are lenient compared to those of other mortgages usda loans are designed to help low to moderate income borrowers purchase homes in mostly rural areas a section 502 loan which is a loan available to low income individuals and households in rural areas is one example of this type of loan 1the usda has two programs to refinance direct and guaranteed loans streamlined assist and standard streamlined 2usda refinancing is similar to other federal streamlined refinancing options such as the federal housing administration s fha streamlined refinancing department of veterans affairs va streamlined refinancing and home affordable refinancing program harp from government sponsored enterprises fannie mae and freddie mac 3a streamlined refinanced loan even allows you to wrap your closing costs and escrow charges into the new loan amount that helps homeowners receive a zero out of pocket refinance for which no cash is needed upfront eligibility requirements for usda streamlined refinancingtwo popular usda refinancing programs include the streamlined assist and the standard streamlined program with both programs the refinanced interest rate must be equal to or below the current mortgage loan rate and the mortgage must have closed 12 months prior to the loan application the usda refinancing program known as streamlined assist have the following eligibility requirements unlike a typical loan application there are no credit report home appraisal or property inspection requirements current income is not a qualifying factor either the borrower must only document that their income falls within current usda limits 45another refinancing program includes the usda standard streamlined program similar to the streamlined assist program no appraisal is required and homeowners underwater on their mortgage are eligible the benefits of this particular option include no requirement to drop the payment by at least 50 and existing borrowers listed on the note can be removed as long as one of the original borrowers remains on the loan the latter can be beneficial in the case of divorce 6usda streamlined refinancing ratesto refinance a guaranteed loan check out the usda s list of approved lenders they offer usda loans but the usda does not recommend specific lenders you ll need to shop around to ensure you get the best terms and a lower interest rate 71the interest rate for direct loans as of march 24 2024 is 4 5 but your effective rate can be as low as 1 after subsidies 8 | |
what loan refinancing options does the usda offer | the usda offers direct loans and guarantees loans from private mortgage lenders to low and moderate income borrowers in rural areas it oversees two programs to refinance these loans streamlined assist and standard streamlined | |
what are the requirements to refinance a usda loan | under either program the home to be refinanced must be a primary residence and have a mortgage from a usda direct or guaranteed home loan among other requirements neither requires a home appraisal or inspection however a standard refinance has more requirements than the streamlined assist including debt to income dti ratio requirements 2 | |
what are the benefits of usda streamlined refinancing | streamlined refinancing offers a hassle free way to refinance a usda mortgage the main benefit is lower loan payments the bottom linethe usda streamlined refinancing option can help borrowers save money by refinancing their usda mortgage loan the streamlined program offers options for low to moderate income families located in mostly rural areas borrowers can also save on fees since a new appraisal or home inspection is not required however the borrower must have made on time payments for the last 12 consecutive payments and the refinancing must result in at least 50 per month in savings | |
what is a use tax | the term use tax refers to a conditional sales tax the use tax is charged on any goods purchased without paying a sales tax when one would normally be applied in their home state one of the most common instances of the use tax is when someone buys goods from another state where no sales tax is levied and the consumer intends to use store or distribute the goods where a sales tax would normally apply the rate is generally the same as the local sales tax rate it s up to consumers to calculate and pay use taxes which makes it difficult to enforce understanding use taxesthe use tax is a type of sales tax charged on certain goods unlike a sales tax the use tax is only applied in certain circumstances rather than on all goods and services the use tax is charged by a consumer s home municipality or state in any number of cases some of the most common ones include the use tax rate is the same as the resident s local sales tax rate which includes both state and local sales taxes it is up to consumers to calculate and pay use taxes on any applicable purchases they make a resident who does not pay use tax may be subject to interest and penalties 2for example california residents must pay sales tax on things like furniture gifts toys clothing vehicles mobile homes and aircraft 3 if a californian purchases clothing from a california retailer the retailer will collect sales tax from the buyer at the point of sale and remit it to the tax authorities no additional tax will be due they would pay tax if they bring any of these goods back to california if they were purchased in arizona where no sales tax is charged 4use tax vs sales taxa use tax is ultimately the same as a sales tax a sales tax is imposed by the government on the sale of goods and services it is added to the purchase price at the point of sale which means the seller collects it and remits it directly to the government sales tax rates vary by jurisdiction some states charge a higher sales tax than others while some don t charge any at all certain states don t impose a sales tax on certain items such as food clothing and books others have a blanket tax on everything the use tax is usually the same rate as the local state sales tax the difference lies in how it s accounted for and who calculates it the use tax is self assessed and remitted by the end consumer so if you make a purchase and are liable for your state s use tax it s up to you to figure out how much you owe and pay it the use tax is generally more difficult to enforce than the sales tax and in practice is only applied to large purchases of tangible goods the number of states that impose a use tax it is the same as the number of states with a sales tax 5use tax and nexusa nexus is generally defined as a physical presence such as a sales office or warehouse but this presence is not limited to these examples in fact you can have a nexus just by having an employee or an affiliate in a state or even a partner website that directs traffic to your webpage in exchange for a share of profits 6 so how does this relate to a use tax retailers are usually not required to collect sales tax on purchases made by consumers in states where the retailer does not have a physical presence as such the onus falls on the consumer to calculate and remit the tax to his or her state government whether a business owes sales taxes to a particular government depends on the way that government defines nexus tensions arising from the e commerce industry s failure to pay sales taxes prompted the u s supreme court to rule in 2018 that physical presence is not necessary to create a substantial nexus which can be sufficiently established by economic and virtual contacts all states that charge sales tax have adopted remote sales tax laws covering e commerce sellers 78purpose of use taxthe purpose of the use tax is supposed to protect in state retailers against unfair competition from out of state sellers that aren t required to collect tax it also ensures that all of a state s residents help fund state and local programs and services regardless of where they shop similar laws apply in most states not just california as noted above it is often difficult to enforce that s because it s up to consumers to report and pay the use tax this means governments end up losing a chunk of revenue to goods purchased in areas where no sales tax is collected which is why states require online vendors to collect taxes whenever their customers make purchases example of use taxlet s say that a californian bought clothing from an online retailer in oregon under oregon law the retailer does not collect sales tax on the goods but the retail buyer must still pay a use tax on that clothing purchase to the california tax authority called the board of equalization on the other hand if the californian purchased groceries in oregon and did not pay any sales tax on the purchase generally no use tax would be due because the state of california does not tax the majority of groceries 93 | |
what does the use tax mean | the use tax is a type of sales tax it is imposed on goods purchased where no sales tax is charged outside a consumer s jurisdiction and brought back home the rate is generally the same | |
what s the difference between the use tax and the sales tax | a sales and use tax are ultimately the same thing they are both applied to goods and services the difference lies in how they re calculated and who pays them while a sales tax is applied at the time a purchase is made and is collected and remitted to the government by the seller a use tax is calculated and paid by the consumer or end user the rate however is generally the same as the local state sales tax | |
how much is the use tax in california | the use tax rate in california is 7 25 which is the same as the sales tax applied across the state as of 2024 some cities and counties have additional sales taxes 10the bottom linetaxation comes in many forms but many people aren t aware of the use tax which almost all states impose on consumers the use tax is a form of sales tax that you must pay for goods and services you intend to use in a state where you d normally pay sales tax and purchase anywhere else where they aren t required to collect sales tax the government does this to ensure that local sellers aren t at a disadvantage but it can be hard to enforce because many consumers don t report or pay their use taxes failure to pay use taxes can result in fines or penalties you can consult your state s tax department to find out more about how to pay any use taxes you may owe | |
what is useful life | the useful life of an asset is an accounting estimate of the number of years it is likely to remain in service for the purpose of cost effective revenue generation the internal revenue service irs employs useful life estimates to determine the amount of time during which an asset can be depreciated there are a variety of factors that can affect useful life estimates including usage patterns the age of the asset at the time of purchase and technological advances understanding useful lifeuseful life refers to the mathematically estimated duration of utility placed on a variety of business assets including buildings machinery equipment vehicles electronics and furniture useful life estimations terminate at the point when assets are expected to become obsolete require extraordinary repairs or cease to deliver economic results the estimation of the useful life of each asset which is measured in years can serve as a reference for depreciation schedules used to write off expenses related to the purchase of capital goods useful life and straight line depreciationthe depreciation of assets using the straight line model divides the cost of an asset by the number of years in its estimated life calculation to determine a yearly depreciation value the value is depreciated in equal amounts over the course of the estimated useful life for example the depreciation of an asset purchased for 1 million with an estimated useful life of 10 years is 100 000 per year useful life and accelerated depreciationbusinesses may also elect to take higher depreciation levels at the beginning of the useful life period with declining depreciation values over the duration of the time span using an accelerated model the yearly write offs in the reducing balance depreciation model decline by a set percentage rate to zero using the sum of the years method depreciation declines by a set dollar amount each year throughout the useful life period until it is fully depreciated useful life adjustmentsthe duration of utility in a useful life estimate can be changed under a variety of conditions including the early obsolescence of an asset due to technological advances in similar applications to change a useful life estimate in this circumstance the company must provide a clear explanation to the irs backed by documentation comparing the old and new technologies for example if a company s original useful life estimate is 10 years but new technology is likely to render it obsolete after eight years the company may be able to accelerate depreciation based on a shorter schedule in this situation a company that has been depreciating assets based on a 10 year schedule will update depreciation values based on a newly abbreviated eight year useful life estimate | |
what is a user fee | a user fee is a sum of money paid as a necessary condition to gain access to a particular service or facility examples of user fees could include highway tolls or parking garages people pay user fees for the use of many government affiliated services and facilities as well at the federal level for example there is a fee to go up to the top of the statue of liberty and to drive into the country s many national parks also certain services offered by the library of congress in washington d c require the public to pay a fee | |
how user fees work | in levying or authorizing user fees from a government standpoint the u s congress determines whether the revenue should go into the treasury or should be available to the agency providing the goods or services government services and facilities that are supported by user fees instead of by taxes may closely resemble private businesses because it is not apparent whether a true demand exists for those services and facilities in that sense the line between user fees and taxes can blur in certain circumstances sometimes a tax will be incorrectly labeled as a user fee for political reasons i e user fees that are often deemed more palatable and able to be passed on to voters than taxes for example if a politician wants to keep a promise to not raise taxes but still take certain steps to try to increase government revenue streams the politician may push for an increase in certain kinds of taxes that can be labeled as fees in contrast to user fees taxes must be paid and do not necessarily go toward a specific service or facility that an individual actually uses or benefits from for example the money governments spend to treat smoking related illnesses in this case via the sale of cigarettes could be considered both a tax and a fee income taxes can be an alternative to funding facilities and services with user fees everyone pays income taxes including those who may not necessarily use or benefit from a specific facility or service user fees and economic developmentwithin international development circles user fees refer to a system fee for fundamental health care education and other essential services implemented by a developing country to make up for the costs of these services for one the international monetary fund often recommends that nations start charging fees for these services in order to reduce budget deficits for poorer nations however such user fees can have a counteractive effect adding a burdensome expense on an already impoverished population | |
what are usual customary and reasonable ucr fees | usual customary and reasonable ucr fees are out of pocket fees that a health insurance policyholder must pay for services ucr fees are based on the services provided to policyholders as well as the area of the country where the services are being provided understanding usual customary and reasonable feesa fee is considered usual customary and reasonable if ucr fees are monitored by the insurance company which determines whether they make sense when compared to what doctors in the area are charging if a doctor charges more than what the insurance company determines to be usual customary and reasonable the policyholder may be responsible for the difference between the amount charged for the service and the amount covered by the insurance company the amount of usual customary and reasonable fees that are charged for services depends on a variety of factors and the conditions under which a ucr fee is charged are outlined in the policy many medical insurance policies for example break providers into network and out of network groupings using an in network provider may result in no ucr fees being charged but using an out of network doctor may result in the policyholder is responsible for some or even all of the service costs many policyholders only think about the cost of medical services after the service is provided and can be caught off guard when their insurance doesn t cover all expenses in order to mitigate the possibility of a big bill policyholders should check whether a doctor is in the insurer s network talk to the doctor about the cost of any service before the service is provided and ask the insurer how much of the fee will be covered usual customary and reasonable fees and medicaremedicare ucr charges are not regulated by state or federal agencies but medicare does publish its ucr fee schedule this is commonly referred to as medicare allowable charges providers who participate with medicare agree to accept the medicare allowable charge as full payment patients are still responsible for their co insurance and deductible medicare providers may choose not to bill the patient for amounts above the medicare allowable fee schedule it is important to verify that a provider accepts medicare assignment or is a medicare provider to avoid unexpected and potentially large out of pocket expenses | |
what is a usufruct | a usufruct is a legal right accorded to a person or party that confers the temporary right to use and derive income or benefit from someone else s property it is a limited real right that can be found in many mixed and civil law jurisdictions a usufructuary is the person holding the property by usufruct a usufruct combines the two property rights of usus and fructus usus refers to the right to use something directly without damaging or altering it and fructus refers to the right to enjoy the fruits of the property being used that is to profit from the real property by leasing it selling crops produced by it charging admission to it or similar usufruct is usually conferred for a limited time period it can be granted to the usufructuary or person holding usufruct as a way to look after property until the death of a property owner and the estate can be settled if the property owner is in ill health while the usufructuary has the right to use the property they cannot damage or destroy it or dispose of the property a usufructuary does not have full ownership of the property because they do not enjoy the third property right abusus which refers to the right to consume destroy or transfer ownership of the property to someone else | |
how a usufruct works | in usufruct a person or group has the right to use the property of another they do not own it but have a contractually sanctioned interest in it there are two types of usufruct perfect and imperfect in perfect usufruct the usufructuary can use the property and can profit from it but cannot change it in a substantial way for example if the owner of a business becomes incapacitated and gives usufruct to a relative to run the business for him or her the usufructuary can run the business but can t sell it or tear down the building and rebuild it in an imperfect usufruct system the usufructuary does have some power to alter the property such as when a landowner grants usufruct to a piece of land for agricultural use the usufructuary may have the right to produce crops from the land and to make improvements to the land that would aid in that endeavor however the usufructuary does not own these improvements when the usufruct ends they belong to the original owner or to his or her estate usufruct is only recognized in a few jurisdictions in north america such as louisiana as an example if a party has a usufruct in a real estate property they have the full right to use it or rent it out and collect the rental income without sharing it with the actual owner as long as the usufruct is in effect usufruct examplefor example bert has been granted usufruct over helen s property helen s property is a bed and breakfast with a large yard that needs tending helen is in ill health and can no longer tend to the property and run the business bert as the usufructuary has the right to use the property and run the business on helen s behalf for the time the usufruct is in effect the usufruct may be in effect until helen s death when the estate will be settled and the property will be passed on per act of law or the directions in the estate | |
what is usury | usury is the act of lending money at an interest rate that is considered unreasonably high or that is higher than the rate permitted by law usury first became common in england under king henry viii and originally pertained to charging any amount of interest on loaned funds over time it evolved to mean charging excess interest but in some religions and parts of the world charging any interest is considered illegal 1understanding usurycharging interest on loans is not a new concept but in 16th century england limitations were put on the amount of interest that one could legally charge on a loan however throughout history certain religions have abstained from usury altogether as charging interest went against their core principles given that early lending was done between individuals and small groups in contrast with the modern banking system used today setting firm social standards for lending terms was deemed essential high interest rates on credit cards are one of the driving reasons behind the high consumer debt levels in the u s specifically judaism christianity and islam the three abrahamic faiths take a very strong stance against usury several passages in the old testament condemn the practice of usury especially when lending to less wealthy individuals without access to more secure means of financing in the jewish community this created the rule of lending money at interest only to outsiders the old testament s condemnation of usury also led to the christian tradition against money lending some christians believe that those who lend should not expect anything in return the protestant reformation in the 16th century brought about a distinction between usury charging high interest rates and the more acceptable lending of money at low interest rates islam on the other hand has historically not made this distinction but charging interest is not allowed in the religion usury laws and predatory lendingtoday usury laws help protect investors from predatory lenders predatory lending is broadly defined by the fdic as imposing unfair and abusive loan terms on borrowers predatory lending often targets groups with less access to and understanding of more traditional forms of financing predatory lenders can charge unreasonably high interest rates and require significant collateral in the likely event a borrower defaults 2predatory lending is also affiliated with payday loans also termed payday advances or small dollar loans among other names payday loans are small sum short term unsecured loans which can appear to carry substantial risk to the lender to prevent usury some jurisdictions limit the annual percentage rate apr that a payday lender can charge while others outlaw the practice entirely usury laws are determined by the state and vary from state to state the rate that is allowed by state usury laws depends on the size of the loan the type of individual entity making the loan and the type of loan usury laws don t apply to all loans but only to certain ones as deemed by the state the types of loans subject to usury laws include ones where there is no written agreement from a non bank institute loans with a written agreement from a non bank institute private student loans payday loans and any other types of contracts with non bank institutes credit cards have very high interest rates but credit cards do not fall under usury laws as determined by a u s supreme court ruling marquette national bank of minneapolis vs first of omaha service corp in 1978 3as usury laws are determined individually by states the penalties for violating usury laws vary the penalty may include the lender having to return all interest to the borrower most often with additional fees added on the fees usually amount to more than the interest the creditor would have received violators may also be subject to jail time example of usuryjohn is unemployed and has no health insurance he injures himself while fixing his roof resulting in medical bills costing him 10 000 john is able to cover 2 000 from his savings but does not have the remainder in cash to cover his medical bills he asks family members and friends to borrow money but none have available cash hard pressed john borrows money from a friend of a friend he doesn t know very well the creditor loans him the 8 000 and charges him an interest rate of 18 a month the state in which john lives has a usury law in place that limits the interest rate to 9 in this case the creditor is charging john usury and is in violation of state law | |
is usury a crime | usury is most often a crime but can also be a violation the federal government along with each state has its own usury laws stating the maximum interest rate that can be charged on certain types of loans if a creditor charges a rate higher than this they would be breaking the law and held accountable for violation of the usury law | |
what is the current usury rate | each state specifies its own usury rate and how it is calculated for example the current usury rate in north dakota is the maximum rate of interest which may be charged for loans of money by non regulated lenders and is equal to 5 5 higher than the current cost of money as reflected by the average rate of interest payable on u s treasury bills maturing within six months but in any event the maximum allowable interest rate ceiling may not be less than 7 4 | |
when did usury become illegal | usury has a long history it has primarily become illegal to prevent individuals from predatory loan practices situations in which people need to borrow money but are charged a high interest rate often resulting in difficulty paying back the loan with interest and or financial ruin usury is also not permitted in many religions which has had an impact on its legality in society | |
do usury laws apply to private loans | yes usury laws do apply to private loans most loans made outside of a banking institution are subject to usury laws to prevent unfair lending practices | |
what are usury laws | usury is lending money at an interest rate that is unreasonably high or higher than the rate permitted by law usury laws protect consumers by governing the interest charged on a loan in the united states individual states are responsible for setting usury laws though this type of financial activity could fall under the constitution s commerce clause congress has not traditionally focused on usury at the federal level examples of usury laws by statecredit card companies charge interest rates that are allowed by the state where the company was incorporated rather than follow the usury laws that apply in the states where borrowers live nationally chartered banks similarly can apply the highest interest allowed by the state where the institution was incorporated delaware and south dakota may be chosen as the states of incorporation for many financial institutions because of the freedom allowed regarding interest rates similarly nevada has no usury limits pennsylvania considers interest above 25 as criminal usury new jersey s general usury limit is 30 for individuals and 50 for corporations 1in 2023 the consumer financial protection board and the new york attorney general sued credit acceptance corporation for misrepresenting the cost of credit and tricking customers into high cost loans on used cars 2legislationthe effectiveness of usury laws is often debated after decisions by the u s supreme court and legislation gave financial institutions the capacity to circumvent limits the high court s decision in the case of marquette national bank v first of omaha corp allowed credit companies to charge customers out of state at the same interest rates the companies could charge in the states where they were incorporated 3delaware s introduction of the financial center development act which eliminated limits in the state on fees and interest that can be charged on consumer lending further amplified the desire among financial institutions to move there 4in 2023 u s senators sheldon whitehouse jack reed elizabeth warren bernie sanders and jeff merkley introduced the empowering states rights to protect consumers act to restore states ability to limit consumer loan interest rates and help address the billions of dollars that consumers hold in loans and credit card debt 5 | |
what is predatory lending | predatory lending is defined by the fdic as imposing unfair and abusive loan terms on borrowers predatory lenders charge unreasonably high interest rates and require significant collateral 6 | |
when were usury laws first enacted in the united states | the first usury laws were adopted by 18th century american colonies setting the interest cap at 8 7 | |
how does the cfpb help prevent usury | the cfpb identifies abusive conduct against consumers in 2010 congress passed the consumer financial protection act which allows the cfpb federal banking regulators and states to identify wrongdoing and target firms that are committing abusive acts or practices 8the bottom lineusury laws aim to protect consumers from predatory lending and high interest rates individual states in the u s set usury laws for their region 18th century american colonies established the first usury laws in the united states | |
what is a usury rate | the term usury rate refers to a rate of interest that is considered to be excessive as compared to prevailing market interest rates they are often associated with unsecured consumer loans particularly those relating to subprime borrowers understanding usury rateshistorically the term usury was used to describe all forms of lending involving the payment of interest by the borrower in recent times however the term is generally used to describe only those loans which carry particularly high rates of interest these high rates have therefore come to be known as usury rates in the united states the federal deposit insurance corporation fdic associates usury rates with predatory lending which it describes as the practice of imposing unfair or abusive loan terms on borrowers predatory lenders will generally target demographic groups with less access to or understanding of more affordable forms of financing the practice of lending for interest has existed for thousands of years over the centuries christianity judaism and islam have all condemned predatory lending and have pursued various strategies to regulate the practice usury laws by stateusury laws and high interest rates are directly related to state laws on the matter each state can set its own requirements for example washington a lender may charge interest greater than 12 per year if the interest rate has been agreed to in writing north dakota the usury rate is equal to 5 5 higher than the current cost of money based on the interest rate on u s treasury bills maturing within six months the maximum allowable interest rate ceiling may not be less than 7 missouri the usury rate is the greater of the market rate or 10 with the interest rate on second mortgages deregulated each state can have its own process for setting the rate examples of the baselines states can use to set usury rates include there is no federal regulation dictating usury interest rates usury rate applicationsmost usury interest rates apply to consumer loans and usury laws dictate what financial institutions can and cannot charge clients because usury laws are primarily dictated by states usury rates often do not apply to credit card debt retail installment contracts or consumer leases one of the more obvious disconnects regarding usury rates are credit cards consider the options offered by bank of america as of july 2022 after the introductory apr offer ends clients will be charged interest at a variable apr rate will fluctuate between 15 49 and 25 49 usury interest rates do not apply to credit card companies as courts have held that national banking associations can charge cardholders according to the law of the state in which it is chartered not necessarily where the customer resides in addition not every state has usury laws that restrict business contracts performed within the state assessing usury ratesthe line between a usurious interest rate and a merely high interest rate can be difficult to assess with quantified boundaries set by state for instance payday lenders who provide high interest loans to subprime borrowers are often accused of being predatory lenders their defenders however argue that their high interest rates are justified by the fact that the loans they provide carry unusually high risk without permitting high interest rates as compensation for this risk those who rely on payday loans may find themselves without any financing options at all several organizations such as treasurydirect and the wall street journal provide real time or periodic updates on interest rates in markets such as personal lines of credit locs auto loans student loans home mortgages and many others by reviewing these sources consumers can better understand whether the rates offered by a particular lender are reasonable using these means consumers seeking credit often have resources available to determine whether rates are excessively high similar to any free market where consumers can choose to buy any good at any price loans can be priced differently it may sometimes be up to the customer seeking a loan to determine what price they are willing to pay usury rates seem to have existed during ancient egypt there is evidence that the code of hammurabi contains legal verbiage that regulates interest rates example of usury ratejames is a first time homebuyer looking for mortgage financing although james currently has a well paying job he had faced issues with personal debt in the past and as such has a very low credit rating due to his poor credit history the mainstream banks are unwilling to extend him a mortgage therefore james is forced to look for alternative means of financing his home purchase one of the options available to him is a private lender named diane who offers to lend him 80 of the purchase price of the home over a 25 year amortization period with an interest rate of 40 per year diane argues that although the 40 interest rate is considerably higher than that offered by the banks it is not unreasonable due to the fact that james s credit score indicates he is a high risk borrower after doing more research into the prevalent interest rates in various markets james rejects diane s proposal he argues that although he is considered a subprime borrower the 40 interest rate is unreasonably high and an example of predatory lending | |
what is a usury interest rate | a usury interest rate is an interest rate deemed to be illegally high to discourage predatory lending and promote economic activity states may enact laws that set a ceiling on the interest rate that can be charged for certain types of debt interest rates above this ceiling are considered usury and are illegal | |
what s the maximum interest rate allowed by law | the maximum interest rate will vary from state to state based on each geographical location s legislation some states do not have interest rate limits for some types of loans in addition some states currently have very lax restrictions for example new mexico has presented a house bill to reduce the apr on loans up to 5 000 from 175 apr to 36 apr on loans up to 10 000 | |
why are usury interest rates illegal | usury rates are considered predatory loans where the lender is in a position to take advantage of the borrower usury law attempts to protect the consumer by allowing a lender to still obtain a profit on a loan and compensation for incurring risk however usury rates are in place to often encourage business transactions and minimize price gouging on loans | |
what is utilitarianism | utilitarianism is a theory of morality that advocates actions that foster happiness or pleasure and oppose actions that cause unhappiness or harm when directed toward making social economic or political decisions a utilitarian philosophy would aim for the betterment of society as a whole utilitarianism would say that an action is right if it results in the happiness of the greatest number of people in a society or a group understanding utilitarianismutilitarianism is a tradition of ethical philosophy that is associated with jeremy bentham 1747 1832 and john stuart mill 1806 1873 two british philosophers economists and political thinkers utilitarianism holds that an action is right if it tends to promote happiness and wrong if it tends to produce sadness or the reverse of happiness not just the happiness of the actor but that of everyone affected by it at work you display utilitarianism when you take actions to ensure that the office is a positive environment for your co workers to be in and then make it so for yourself the greatest good for the greatest number is a maxim of utilitarianism from the founders of utilitarianismjeremy bentham describes his greatest happiness principle in introduction to the principles of morals and legislation a 1789 publication in which he writes nature has placed mankind under the governance of two sovereign masters pain and pleasure it is for them alone to point out what we ought to do as well as to determine what we shall do 1john stuart mill had many years to absorb and reflect on jeremy bentham s thoughts on utilitarianism by the time he published his own work utilitarianism in 1863 the key passage from this book utilitarianism s relevance in a political economyin liberal democracies throughout the centuries the progenitors of utilitarianism spawned variants and extensions of its core principles some of the questions they wrestled with include what constitutes the greatest amount of good how is happiness defined how is justice accommodated in today s western democracies policymakers are generally proponents of free markets and some base level of government interference in the private lives of citizens so as to assure safety and security although the appropriate amount of regulation and laws will always be a subject of debate political and economic policies are geared primarily toward fostering as much well being for as many people as possible or at least they should be where there are disadvantaged groups who suffer income inequality or other negative consequences because of a utilitarian based policy or action most politicians would try to find a remedy utilitarianism s relevance in the workplacemost companies have a formal or informal code of ethics which is shaped by their corporate culture values and regional laws today having a formalized code of business ethics is more important than ever for a business to grow it not only needs to increase its bottom line but it also must create a reputation for being socially responsible companies also must endeavor to keep their promises and put ethics at least on par with profits consumers are looking for companies that they can trust and employees work better when there is a solid model of ethics in place on an individual level if you make morally correct decisions at work then everyone s happiness will increase however if you choose to do something morally wrong even if legal then your happiness and that of your colleagues will decrease utilitarianism s relevance in businessutilitarianism holds that the most ethical choice is the one that will produce the greatest good for the greatest number as such it is the only moral framework that can justify military force or war moreover utilitarianism is the most common approach to business ethics because of the way that it accounts for costs and benefits the theory asserts that there are two types of utilitarian ethics practiced in the business world rule utilitarianism and act utilitarianism an example of rule utilitarianism in business is tiered pricing for a product or service for different types of customers in the airline industry for example many planes offer first business and economy class seats customers who fly in first or business class pay a much higher rate than those in economy seats but they also get more amenities simultaneously people who cannot afford upper class seats benefit from the economy rates this practice produces the highest good for the greatest number of people and the airline benefits too the more expensive upper class seats help to ease the financial burden that the airline created by making room for economy class seats an example of act utilitarianism could be when pharmaceutical companies release drugs that have been governmentally approved but with known minor side effects because the drug is able to help more people than are bothered by the side effects act utilitarianism often demonstrates the concept that the end justifies the means or it s worth it quantitative utilitarism vs qualitative utilitarismquantitative utilitarianism is a branch of utilitarianism that was developed out of the work of jeremy bentham quantitative utilitarians focus on utility maximization that is maximizing the overall happiness of everyone and use a hedonic approach to determine the rightness or wrongness of actions bentham defined as the foundation of his philosophy the principle that it is the greatest happiness of the greatest number that is the measure of right and wrong qualitative utilitarianism is a branch of utilitarianism that arose from the work of john stuart mill qualitative utilitarians categorize pleasures and pains in a more qualitative manner depending on the level of their consequences and disregarding any quantifiable proof of their importance qualitative utilitarianism argues that mental pleasures and pains are different in kind and superior in quality to purely physical ones quantitative utilitarianism argues that mental pleasures and pains differ from physical ones only in terms of quantity 3the limitations of utilitarianismin the workplace though utilitarian ethics are difficult to achieve these ethics also can be challenging to maintain in our business culture where a capitalistic economy often teaches people to focus on themselves at the expense of others similarly monopolistic competition teaches one business to flourish at the expense of others so although utilitarianism is surely a reason based approach to determining right and wrong it has obvious limitations | |
what are the principles of utilitarianism | utilitarianism puts forward that it is a virtue to improve one s life better by increasing the good things in the world and minimizing the bad things this means striving for pleasure and happiness while avoiding discomfort or unhappiness | |
what is a utilitarian | a utilitarian is a person who holds the beliefs of utilitarianism today these people might be described as cold and calculating practical and perhaps selfish since they may seek their own pleasure at the expense of the social good at times | |
what is utilitarian value in consumer behavior | if a consumer buys something only for its practical use value in a calculative and rational evaluation then it is of utilitarian value this precludes any sort of emotional or sentimental valuing psychological biases or other considerations | |
what is the role of utilitarianism in today s business environment | because its ideology argues for the greatest good for the greatest number a business acting in a utilitarian fashion should increase the welfare of others however in practice utilitarianism can lead to greed and dog eat dog competition that can undermine the social good the bottom lineutilitarianism offers a relatively simple method for deciding the morally right course of action for any particular situation over the years the principle of utilitarianism has been refined and expanded in many variations utilitarians today describe benefits and harms in terms of the satisfaction of personal preferences or in purely economic terms of monetary benefits over monetary costs rather than in terms of happiness and pleasure 4 | |
what is the utilities sector | sector investing offers targeted opportunities into the stocks of companies in specific segments of the economy the utilities sector includes companies such as electric gas or water utilities or those that operate as producers or distributors of power as of july 2022 the sector had a market capitalization of over 1 58 trillion 1 although utilities are private for profit companies they are part of the public service infrastructure and are heavily regulated those who include utilities in their portfolios hold them as long term investments and commonly use them to generate income through dividends understanding the utilities sectorutilities include large companies that offer multiple services such as electricity and natural gas or specialize in just one type of service such as water some utilities rely on clean and renewable energy sources like wind turbines and solar panels to produce electricity utilities typically offer investors stable and consistent dividends coupled with less price volatility relative to the overall equity markets as a result utilities tend to perform well during recessions and economic downturns conversely utility stocks tend to fall out of favor with the market during times of economic growth utilities require a significant amount of expensive infrastructure and consequently carry large amounts of debt on their balance sheets these debt loads make utilities hypersensitive to changes in the market interest rate and because utilities are capital intensive they require a continuous inflow of funds to finance infrastructure upgrades and new asset purchases as of july 2022 higher inflation raised new challenges for utilities during the inflation of the 1970s and 80s utilities faced large debt soaring fuel costs blackouts increased regulation and bankruptcies utilities that succeed through economic challenges will likely continue to rank among the best investments for safety generous income and steady wealth building 2although the sector appeals to a wide range of investors utilities companies commonly attract income producing investments | |
how investors trade utilities | because utility stocks pay reliable dividends investors often favor them over lower dividend paying equities after the financial crisis the federal reserve cut interest rates to stimulate the economy 3 as a result investors flocked to utilities as safer investments as utility companies are a viable defensive choice for investors during macroeconomic downturns if interest rates rise investors can find higher yielding alternatives than utilities when a utility pays a dividend yield of 3 but increases in interest rates increase treasury bond yields to 4 the utility company would have to increase its dividend payout to match the rising yields aside from investing in the individual stocks of utility companies investors may also purchase regional utilities or invest in exchange traded funds etfs or sector funds containing a basket of utility stocks of companies located throughout the u s the fidelity select utilities portfolio fsutx includes the holdings of 29 utility companies as of march 2022 and an annual dividend yield of 1 52 4 the utilities select sector spdr fund xlu is one of the largest utility sector funds with 15 5 billion in net assets and is one of the most actively traded utility etfs with more than 18 million shares traded daily the fund typically pays a dividend yield of around 3 5the xlu s dividend yield beats the yield for the s p 500 equity etf spdr s p 500 trust etf spy which as of july 2022 pays around 1 56 pros and cons of the utilities sectorutilities are stable investments that commonly provide a regular dividend to shareholders making them a popular long term buy and hold option dividend yields on utility stocks trend higher than those paid by other equities during times of economic downturns with low interest rates utilities become attractive they exhibit lower volatility and provide a desirable source of predictable investment returns from the dividends they pay on their shares profit margins for utilities can vary from company to company depending on their location and the regulations they face utilities however face intense regulatory oversight and require expensive infrastructure that needs routine updating and maintenance to meet these infrastructure needs utility companies often float debt products that in turn increase their debt loads this debt also makes these services particularly sensitive to interest rate risk should rates rise the company must offer higher yields to attract bond investors stable long term investments and regular dividendssafe investments during times of economic downturnsvarious investment options including bonds etfs and individual company stocksintense regulatory oversightexpensive infrastructure that requires continual upgrades and maintenancebecome less attractive when interest rates are high and bond yields are highpublic utility companiesthe utilities sector consists of companies that provide electricity natural gas water sewage and other services to homes and businesses public utilities are privately owned companies that are regulated by public utility commissions that operate at a variety of jurisdictional levels usually at the state level these commissions are overseen by the national association of regulatory utility commissioners naruc members are responsible for assuring reliable utility service at fair and reasonable rates 6 in 2022 utility companies in the united states with a strong investor interest included | |
how the utilities sector is changing | in 2020 president joe biden called for the country to achieve a 100 clean energy economy and net zero greenhouse gas emissions no later than 2050 committing nearly 2 trillion in investment to achieve this goal 7 the energy and utility industry has an opportunity to advance its grid modernization and clean energy efforts by tapping into funds allocated in the infrastructure investment and jobs act which includes 65 billion earmarked for upgrading the national power infrastructure 8a 2022 industry outlook report by deloitte identified five trends for the utilities industry which include enhanced competition expansions in infrastructure greater electrification of transportation an emphasis on disaster readiness and traditional energy players entering the renewable energy field 9according to fidelity utility sector portfolio manager douglas simmons the fundamentals of utilities in 2022 look very robust overall driven by the ongoing shift toward renewable energy sources and away from fossil fuels 10utilities remain wary of regulations that may force the closure of power plants though the sector largely supported the tax credits proposed in a bill called build back better which aimed to provide more than 300 billion in direct subsidies for wind solar transmission storage carbon capture and nuclear projects build back better failed to pass the senate and was replaced by the inflation reduction act ira which was signed into law in august 2022 the ira appropriates 369 billion for climate and clean energy initiatives including tax incentives that should reduce the costs of the renewable energy transition for utilities companies 1112 | |
how quickly are renewable energy resources growing | renewable energy resources are expected to grow from 12 of the us energy mix as of 2021 to 39 by 2030 according to morgan stanley 13 | |
what is a public utility | public utilities are regulated by the government or state under the national association of regulatory utility commissioners and commonly supply electricity gas or water to a region or area | |
what is the largest utility company | globally the largest utility is nextera energy a provider of electricity related services and a market capitalization of 158b as of july 2022 its principal subsidiary fpl is a rate regulated utility engaged primarily in the generation transmission distribution and sale of electric energy 1415the bottom linethe utilities sector is an industrial category of stocks consisting of companies that provide basic everyday amenities including natural gas electricity water and power typically investors buy utilities stocks as long term holdings these equities typically feature stable prices and good dividend income the movement toward clean energy along with competition enhancing legislation and a presidential administration committed to renewable energy resources has some financial analysts forecasting strong growth for the utilities sector in the 2020s correction march 20 2024 this article has been corrected to state that investing in utilities becomes less attractive when interest rates and bond yields are high | |
what is the utilities sector | sector investing offers targeted opportunities into the stocks of companies in specific segments of the economy the utilities sector includes companies such as electric gas or water utilities or those that operate as producers or distributors of power as of july 2022 the sector had a market capitalization of over 1 58 trillion although utilities are private for profit companies they are part of the public service infrastructure and are heavily regulated those who include utilities in their portfolios hold them as long term investments and commonly use them to generate income through dividends understanding the utilities sectorutilities include large companies that offer multiple services such as electricity and natural gas or specialize in just one type of service such as water some utilities rely on clean and renewable energy sources like wind turbines and solar panels to produce electricity utilities typically offer investors stable and consistent dividends coupled with less price volatility relative to the overall equity markets as a result utilities tend to perform well during recessions and economic downturns conversely utility stocks tend to fall out of favor with the market during times of economic growth utilities require a significant amount of expensive infrastructure and consequently carry large amounts of debt on their balance sheets these debt loads make utilities hypersensitive to changes in the market interest rate and because utilities are capital intensive they require a continuous inflow of funds to finance infrastructure upgrades and new asset purchases as of july 2022 higher inflation raised new challenges for utilities during the inflation of the 1970s and 80s utilities faced large debt soaring fuel costs blackouts increased regulation and bankruptcies utilities that succeed through economic challenges will likely continue to rank among the best investments for safety generous income and steady wealth building although the sector appeals to a wide range of investors utilities companies commonly attract income producing investments | |
how investors trade utilities | because utility stocks pay reliable dividends investors often favor them over lower dividend paying equities after the financial crisis the federal reserve cut interest rates to stimulate the economy as a result investors flocked to utilities as safer investments as utility companies are a viable defensive choice for investors during macroeconomic downturns if interest rates rise investors can find higher yielding alternatives than utilities when a utility pays a dividend yield of 3 but increases in interest rates increase treasury bond yields to 4 the utility company would have to increase its dividend payout to match the rising yields aside from investing in the individual stocks of utility companies investors may also purchase regional utilities or invest in exchange traded funds etfs or sector funds containing a basket of utility stocks of companies located throughout the u s the fidelity select utilities portfolio fsutx includes the holdings of 29 utility companies as of march 2022 and an annual dividend yield of 1 52 the utilities select sector spdr fund xlu is one of the largest utility sector funds with 15 5 billion in net assets and is one of the most actively traded utility etfs with more than 18 million shares traded daily the fund typically pays a dividend yield of around 3 the xlu s dividend yield beats the yield for the s p 500 equity etf spdr s p 500 trust etf spy which as of july 2022 pays around 1 56 pros and cons of the utilities sectorutilities are stable investments that commonly provide a regular dividend to shareholders making them a popular long term buy and hold option dividend yields on utility stocks trend higher than those paid by other equities during times of economic downturns with low interest rates utilities become attractive they exhibit lower volatility and provide a desirable source of predictable investment returns from the dividends they pay on their shares profit margins for utilities can vary from company to company depending on their location and the regulations they face utilities however face intense regulatory oversight and require expensive infrastructure that needs routine updating and maintenance to meet these infrastructure needs utility companies often float debt products that in turn increase their debt loads this debt also makes these services particularly sensitive to interest rate risk should rates rise the company must offer higher yields to attract bond investors stable long term investments and regular dividendssafe investments during times of economic downturnsvarious investment options including bonds etfs and individual company stocksintense regulatory oversightexpensive infrastructure that requires continual upgrades and maintenancebecome less attractive when interest rates are high and bond yields are highpublic utility companiesthe utilities sector consists of companies that provide electricity natural gas water sewage and other services to homes and businesses public utilities are privately owned companies that are regulated by public utility commissions that operate at a variety of jurisdictional levels usually at the state level these commissions are overseen by the national association of regulatory utility commissioners naruc members are responsible for assuring reliable utility service at fair and reasonable rates in 2022 utility companies in the united states with a strong investor interest included | |
how the utilities sector is changing | in 2020 president joe biden called for the country to achieve a 100 clean energy economy and net zero greenhouse gas emissions no later than 2050 committing nearly 2 trillion in investment to achieve this goal the energy and utility industry has an opportunity to advance its grid modernization and clean energy efforts by tapping into funds allocated in the infrastructure investment and jobs act which includes 65 billion earmarked for upgrading the national power infrastructure a 2022 industry outlook report by deloitte identified five trends for the utilities industry which include enhanced competition expansions in infrastructure greater electrification of transportation an emphasis on disaster readiness and traditional energy players entering the renewable energy field according to fidelity utility sector portfolio manager douglas simmons the fundamentals of utilities in 2022 look very robust overall driven by the ongoing shift toward renewable energy sources and away from fossil fuels utilities remain wary of regulations that may force the closure of power plants though the sector largely supported the tax credits proposed in a bill called build back better which aimed to provide more than 300 billion in direct subsidies for wind solar transmission storage carbon capture and nuclear projects build back better failed to pass the senate and was replaced by the inflation reduction act ira which was signed into law in august 2022 the ira appropriates 369 billion for climate and clean energy initiatives including tax incentives that should reduce the costs of the renewable energy transition for utilities companies | |
how quickly are renewable energy resources growing | renewable energy resources are expected to grow from 12 of the us energy mix as of 2021 to 39 by 2030 according to morgan stanley | |
what is a public utility | public utilities are regulated by the government or state under the national association of regulatory utility commissioners and commonly supply electricity gas or water to a region or area | |
what is the largest utility company | globally the largest utility is nextera energy a provider of electricity related services and a market capitalization of 158b as of july 2022 its principal subsidiary fpl is a rate regulated utility engaged primarily in the generation transmission distribution and sale of electric energy the bottom linethe utilities sector is an industrial category of stocks consisting of companies that provide basic everyday amenities including natural gas electricity water and power typically investors buy utilities stocks as long term holdings these equities typically feature stable prices and good dividend income the movement toward clean energy along with competition enhancing legislation and a presidential administration committed to renewable energy resources has some financial analysts forecasting strong growth for the utilities sector in the 2020s correction march 20 2024 this article has been corrected to state that investing in utilities becomes less attractive when interest rates and bond yields are high | |
what is utility | in economics utility is a term used to determine the worth or value of a good or service more specifically utility is the total satisfaction or benefit derived from consuming a good or service economic theories based on rational choice usually assume that consumers will strive to maximize their utility the economic utility of a good or service is important to understand because it directly influences the demand and therefore price of that good or service in practice a consumer s utility is usually impossible to measure or quantify however some economists believe that they can indirectly estimate what is the utility of an economic good or service by employing various models investopedia mira norianunderstanding utilitythe utility definition in economics is derived from the concept of usefulness an economic good yields utility to the extent to which it s useful for satisfying a consumer s want or need 1 various schools of thought differ as to how to model economic utility and measure the usefulness of a good or service utility in economics was first coined by the noted 18th century swiss mathematician daniel bernoulli 2 since then economic theory has progressed leading to various types of economic utility ordinal utilityearly economists of the spanish scholastic tradition of the 1300s and 1400s described the economic value of goods as deriving directly from this property of usefulness and based their theories on prices and monetary exchanges 3this conception of utility was not quantified but a qualitative property of an economic good later economists particularly those of the austrian school developed this idea into an ordinal theory of utility or the idea that individuals could order or rank the usefulness of various discrete units of economic goods 4austrian economist carl menger in a discovery known as the marginal revolution used this type of framework to help him resolve the diamond water paradox that had vexed many previous economists because the first available units of any economic good will be put to the most highly valued uses and subsequent units go to lower valued uses this ordinal theory of utility is useful for explaining the law of diminishing marginal utility and fundamental economic laws of supply and demand 5cardinal utilityto bernoulli and other economists utility is modeled as a quantifiable or cardinal property of the economic goods that a person consumes 2 to help with this quantitative measurement of satisfaction economists assume a unit known as a util to represent the amount of psychological satisfaction a specific good or service generates for a subset of people in various situations 5 the concept of a measurable util makes it possible to treat economic theory and relationships using mathematical symbols and calculations however it separates the theory of economic utility from actual observation and experience since utils cannot actually be observed measured or compared between different economic goods or between individuals 6if for example an individual judges that a piece of pizza will yield 10 utils and that a bowl of pasta will yield 12 utils that individual will know that eating the pasta will be more satisfying for the producers of pizza and pasta knowing that the average bowl of pasta will yield two additional utils will help them price pasta slightly higher than pizza additionally utils can decrease as the number of products or services consumed increases the first slice of pizza may yield 10 utils but as more pizza is consumed the utils may decrease as people become full this process will help consumers understand how to maximize their utility by allocating their money between multiple types of goods and services as well as help companies understand how to structure tiered pricing economic utility can be estimated by observing a consumer s choice between similar products however measuring utility becomes challenging as more variables or differences are present between the choices 6total utilityif utility in economics is cardinal and measurable the total utility tu is defined as the sum of the satisfaction that a person can receive from the consumption of all units of a specific product or service 7 using the example above if a person can only consume three slices of pizza and the first slice of pizza consumed yields ten utils the second slice of pizza consumed yields eight utils and the third slice yields two utils the total utility of pizza would be twenty utils marginal utilitymarginal utility mu is defined as the additional cardinal utility gained from the consumption of one additional unit of a good or service or the additional ordinal use that a person has for an additional unit 7using the same example if the economic utility of the first slice of pizza is ten utils and the utility of the second slice is eight utils the mu of eating the second slice is eight utils if the utility of a third slice is two utils the mu of eating that third slice is two utils in ordinal utility terms a person might eat the first slice of pizza share the second slice with their roommate save the third slice for breakfast and use the fourth slice as a doorstop | |
how do you measure economic utility | while there is no direct way to measure the utility of a certain good for an individual consumer it is possible to estimate utility through indirect observation for example if a consumer is willing to spend 1 for a bottle of water but not 1 50 economists can safely state that a bottle of water has economic utility somewhere between 1 and 1 50 however this becomes difficult in practice because of the number of variables that are present in a typical consumer s choices | |
what are the 4 types of economic utility | in behavioral economics the four types of economic utility are form utility time utility place utility and possession utility these terms refer to the psychological importance attached to different forms of utility for example form utility is the result of the design of a product or service and time utility refers to the ability of a company to provide services when the customers need them | |
how do you invest in utilities | utilities are companies that operate in the electric water oil or gas sectors these companies play a major role in industrial economies and have a total global market capitalization of nearly 6 4 trillion as of 2024 8 in addition to investing in individual companies there are also many targeted funds that are invested in a basket of utilities sector companies the bottom lineutility can be used to measure the usefulness of goods and services to consumers while there are limitations when more variables and differences appear in the market various types of economic utility continue to be examined not only can it help companies with structuring their tiered pricing but it can also help consumers learn how to boost the utility of their purchases | |
what is a utility patent | a utility patent covers the creation of a new or improved and useful product process or machine a utility patent also known as a patent for invention prohibits other individuals or companies from making using or selling the invention without authorization when most people refer to a patent they most likely are referring to a utility patent understanding utility patentsutility patents give inventors exclusive commercial rights to produce and utilize the latest technology covered by the patent this value makes utility patents difficult to obtain as well they can be difficult to write the process may be time consuming and expensive to undertake and their complexity may make them difficult to understand utility patents cover the creation of a new or improved and useful product process or machine and give its inventor exclusive commercial rights to it for 20 years 1the nature of a utility patent is covered in title 35 part ii chapter 10 subsection 101 of the united states code which defines it as any invention for which a patent may be obtained whoever invents or discovers any new and useful process machine manufacture or composition of matter or any new and useful improvement thereof may obtain a patent therefor subject to the conditions and requirements of this title 2utility patents are issued by the u s patent and trademark office uspto and last for up to 20 years 1 however the patent holder may have to pay maintenance fees over that time period 3 once a utility patent has been issued inventors have the right to stop others from manufacturing using or selling their invention for many the first step in obtaining a utility patent aside from a unique idea is enlisting a patent attorney or agent they can guide an inventor through the complex utility patent filing process the next step may be hiring a technical illustrator to draft patent drawings when all the pieces are compiled a filing may be made depending on the complexity of the invention filing costs can range from a few thousand dollars to tens of thousands of dollars 4utility patents vs other patentsa product protected by a utility patent also may obtain a design patent which safeguards its unique visual elements and requires only drawings of a design accompanied by limited text design patents last for 14 to 15 years from the date of filing and can be obtained on their own 5 to get both a utility patent and a design patent remember that the invention must be useful and serve some practical purpose not just decoration a third type of patent available is called a plant patent and it is acquired by someone who has discovered or created a new variety of plant it lasts 20 years from the date of filing and requires no maintenance fees 67 plant patents are considerably fewer than utility or design patents examples of utility patentsutility patents the most common type issued by the uspto apply to a broad range of inventions including according to the uspto more than 90 of all patents granted are utility patents 8searching for utility patentsthe uspto offers multiple ways to search for patents whether it is part of your research before applying for your own or even if you are just curious the patent public search option allows users to search by keywords inventors names or other filter options there also are options available for searching application status if you already have filed for a patent 9 | |
how do utility patents differ from other patents | utility patents are for products processes or machines that are new or improved and they represent more than 90 of patents granted by the uspto 8 among other types of patents are design patents which are drawings of a design with only minimal text it s even possible to patent a plant that you have discovered or created can you search for existing patents the uspto s patent public search option allows users to see what patents might already exist searches can be filtered by keywords and other descriptions 10 | |
do utility patents expire | utility patents are good for up to 20 years during that time period the patent holder may have to pay maintenance fees to maintain the patent 3the bottom linenew or improved products processes or machines are eligible for utility patents which give the patent holder exclusive rights over the product this includes manufacturing and selling the product and that can be valuable when there is a market for the patented item utility patents are the most common type of patent granted by the uspto by a wide margin and they are good for up to 20 years | |
what is utility revenue bond | a utility revenue bond also known as an essential service bond is a type of municipal bond issued to finance a public utility that repays bondholders directly from project revenues rather than a general tax fund understanding utility revenue bonda utility revenue bond is used to fund capital projects in areas considered essential to public services including hospitals fire service water and waste treatment facilities and improvements to the electrical grid these services generate revenue through customer fees which provide cash flows that can service the debt revenue bonds come with either a gross revenue or a net revenue pledge a gross revenue pledge gives bondholder payments priority over operational or maintenance costs incurred by the project a net revenue pledge allows for the disbursement of administrative expenses and upkeep costs before satisfying obligations to bondholders utilities deliver essential services such as water and electricity due to the necessity of these services it is common for utility revenue bonds to feature a net revenue pledge as upkeep must be implemented to maintain them in good working order it is also common for utilities to be required to maintain a specific revenue to expenditure ratio the inclusion of debt repayment is as an expense and the ratio is often used to support customer rate increases for public utilities paying back utility revenue bondsmunicipal bonds repay bondholders through either municipal taxation as in a general obligation bond or through revenue bonds revenue bonds derive income from the capital project the issuer of general obligation bonds guarantees the repayment of debt via any means necessary to collect funds the issuer can raise taxes issue another round of bonds or even sell physical assets the issuer is not constrained to a single revenue stream to satisfy obligations investors should be aware of this distinction and can use it as they build a diversified fixed income portfolio other factors come into play when credit ratings agencies or investors evaluate utility revenue bonds and the projects they finance the coverage ratio is used to determine expected revenues to principal and interest obligations population size and trends can provide an idea of future revenue growth or decline for a utility project customer concentration describes the mix of consumers whose usage fees support debt repayment if a small number of consumers use a significant portion of a public utility s service that may lead to risk for the viability of that project s revenues | |
what is a utilization fee | a utilization fee is a periodic fee that some lenders charge borrowers whose outstanding balances exceed a certain percentage of their available credit utilization fees are most common on revolving lines of credit and term loans for businesses | |
how utilization fees work | some loans are structured in a way that makes a certain amount of money available to the borrower but the borrower doesn t have to take it all at once in a lump sum a line of credit is one example a borrower might be granted a line of credit for say 20 000 but take only 5 000 at the outset that leaves them another 15 000 to draw from as needed in the future the borrower will only owe interest on the amount of debt they have outstanding at any given point loans with a utilization fee impose an additional charge typically if the borrower takes out more than a certain amount of money the reason is that lenders are counting on their borrowers as a group not to max out on their loans because of the capital demands that would put on the lender if all of their borrowers used nearly the full amount of the credit that s available to them lenders could be strained to come up with the money by charging utilization fees a lender can create another stream of revenue to sustain its operations while also giving borrowers an incentive to reduce or eliminate their outstanding balances in order to avoid paying these costs utilization fees are sometimes referred to as usage fees depending on the loan contract usage fees may be imposed not only if a borrower exceeds a certain percentage of their available credit but if they use too little of it 1typical utilization fee termsif a loan or other form of credit involves utilization fees that and any other fees should be spelled out in the lending agreement the specific terms can vary from one lender to another and according to the type of credit in question payment may be required annually or quarterly with the fee based on a quarterly or even daily assessment of the borrower s outstanding balance relative to their available credit line some clauses set the threshold for the outstanding balance at 33 3 of the total commitment while others may set it at 50 before any utilization fees will be triggered in some cases utilization fees can be charged against the outstanding balance regardless of the percentage it represents other potential charges that may be part of lending agreements include origination fees commitment fees and facility fees example of a utilization feesay a business borrower has a 2 million line of credit with a utilization fee clause that sets a 50 threshold and that for three days their outstanding balance exceeded 1 million under many loan contracts they would owe a utilization fee based on that period if their outstanding balance remained below the threshold for the entire time they would generally not owe a utilization fee at all | |
what is an origination fee | an origination fee is a one time fee charged by the lender at the outset of a loan typically based on a percentage of the entire loan amount origination fees are commonly seen in installment loans such as home mortgages but may be found with other types of credit as well origination fees are sometimes referred to as initiation fees or processing fees | |
what is a commitment fee | a commitment fee is a charge that a lender may impose on a borrower in return for committing to make a line of credit available to them whenever they choose to access it commitment fees are typically based on the amount of credit the borrower has available but isn t using at the time while lenders receive interest on outstanding balances commitment fees compensate them for the rest of the money they have committed to lend but aren t otherwise profiting off of commitment fees can come in the form of flat fees or be based on a percentage of the unused balance according to the internal revenue service business borrowers cannot deduct commitment fees as interest but may be able to deduct them as business expenses 2 | |
what is a facility fee | in lending jargon a facility is a predetermined sum of money that a borrower can draw upon as needed a revolving line of credit is a common example facility fees compensate the lender for making that money available and unlike commitment fees are typically changed on the total amount of the facility not just the unused portion | |
what is a credit utilization ratio | a credit utilization ratio refers to the amount of revolving credit a borrower is using at any given time compared with the total amount of credit they have available to them credit utilization ratios come into play in the calculation of credit scores in a typical fico credit scoring formula for example amounts owed which includes credit utilization accounts for 30 of a person s score 3scoring formulas as well as prospective lenders favor individuals with lower credit utilization ratios the idea being that someone with a high ratio may already be overextended or heading there generally speaking it s best for individuals to keep their credit utilization ratios below 30 4the bottom lineutilization fees are one of an assortment of fees that lenders can write into their loan agreements that s one reason borrowers should read these contracts carefully and not focus solely on the interest rate that they are being charged even if a loan contract has a provision for utilization fees a borrower may be able to avoid them if they keep a close eye on their outstanding balance and are careful not to exceed the threshold at which a utilization fee would be triggered | |
what is the utxo model | an unspent transaction output utxo is the amount of digital currency that remains after a cryptocurrency transaction you can think of it as the change you receive after buying an item but it is not a lower denomination of the currency it is a transaction output in the database generated by the network to allow for non exact change transactions understanding the utxo modelutxo is a protocol for distributing the bits of data that cryptocurrency is made from and can be difficult to understand initially a cryptocurrency network or developer sees utxo much differently than a day to day cryptocurrency user does for example imagine that 1 btc is a bucket full of coins each coin represents a utxo if you purchase something from bob for 5 btc the network will give bob the entire bucket of coins and send back the 5 btc you re owed in change you now have a utxo worth 5 btc that cannot be divided into smaller amounts nearly all transactions create utxos because the network must gather a user s unspent outputs and send them to the recipient thus it s rare for a user to have the exact amount of utxo needed this is similar to looking under the car seat for loose change to pay for the burger at the drive through and finding a quarter when you only needed a dime the restaurant must give you back 15 utxos are not cryptocurrency denominations like satoshi for bitcoin btc or gwei for ether eth however utxos can be measured in these denominations | |
when you initiate a transaction through your wallet utxos with your information are located and unlocked the new owner s information is associated with the utxo you transferred to them they are locked once again and the user can use them in transactions via the same process | as transactions continue the database becomes populated with records of ownership changes the outputs assigned to you are fractions of the cryptocurrency you sent to someone that were sent back | |
when you decide to spend your bitcoin you only see the amount you ve spent deducted and the amount left over in your wallet for you it s similar to using a 1 bill on a 50 item you re given change you put it in your pocket and go about your day | goals of the utxo modelthe utxo model is used in many cryptocurrencies because it allows users to track ownership of all portions of that cryptocurrency because cryptocurrencies were created with anonymity in mind utxos are associated with the public addresses visible to the entire network users cannot be identified from their ownership unless they advertise their address but the model allows for transparency through the addresses a transaction encodes the transfer of value from the fund source your input to the destination the output or the recipient advantages and disadvantages of the utxo modelthere are several advantages to the utxo model some of the disadvantages of the model are | |
what is a utxo with an example | unspent transaction outputs are part of the distributed database technology behind bitcoin and other cryptocurrencies bitcoin uses utxos but it is not a utxo | |
what are the benefits of utxo | it allows for full traceability and more privacy if multiple addresses are used | |
which blockchains use utxo | bitcoin litecoin and bitcoin cash are examples of blockchains that use the utxo model the bottom linethe unsigned transaction output model is used in some blockchains to keep track of token ownership a cryptocurrency is designed with a certain number of smaller increments so smaller units can be used in transactions utxos not account balances are what are tracked on these blockchains the comments opinions and analyses expressed on investopedia are for informational purposes only read our warranty and liability disclaimer for more info | |
what is v shaped recovery | v shaped recovery is a type of economic recession and recovery that resembles a v shape in charting specifically a v shaped recovery represents the shape of a chart of economic measures that economists create when examining recessions and recoveries a v shaped recovery involves a sharp rise back to a previous peak after a sharp decline in these metrics understanding v shaped recoveryv shaped recovery is one of the countless shapes a recession and recovery chart could take including l shaped w shaped u shaped and j shaped each type of recovery represents the general shape of the chart of economic metrics that gauge the health of the economy economists develop these charts by examining the relevant measures of economic health such as employment rates gross domestic product gdp and industrial production indexes in a v shaped recovery an economy that has suffered a sharp economic decline experiences a fast and strong rebound such recoveries are generally spurred by a significant shift in economic activity caused by rapid readjustment of consumer demand and business investment spending because of the economy s rapid adjustment and quick recovery in the major metrics of macroeconomic performance a v shaped recovery can be thought of as a best case scenario for an economy in recession 1those interested in learning more about v shaped recoveries and other financial topics may want to consider enrolling in one of the best investing courses currently available historical examples of v shaped recoverytwo periods of recession and recovery in the u s stand out as examples of v shaped recoveries in 1920 the u s entered a steep recession that was feared to have the potential to become a major depression the u s economy was still adjusting from large shifts in government spending industrial activity and inflationary monetary policy that had been directed to the war effort during the world war i it was also reeling from the impact of the spanish flu pandemic of 1918 1920 2by 1919 world war i had ended and more than 1 5 million soldiers returned home from the war flooding the economy with new workers simultaneously the federal government slashed spending by 65 including closing munitions factories that were no longer needed for the war effort the federal reserve s monetary policy didn t help because it hiked the discount rate its main policy tool at the time by 244 basis points or 2 44 interest rates in the economy rose to 7 by mid 1920 as a result the postwar economy of 1920 experienced a decline in production of more than 32 and unemployment surged to 12 as some businesses failed and many others saw a 75 drop in profits the impact on the financial markets was devastating as the dow jones industrial average djia plummeted by 47 that year 3by modern standards the monetary and fiscal policy responses were wholly inadequate to address the deep downturn unemployment insurance as we know it did not yet exist though state and local committees to provide some relief were set up late in the recession the federal government s cut in spending throughout the 1920 recession which would today be called contractionary fiscal policy virtually guaranteed making the recession worse on the monetary policy front the federal reserve increased rates in 1919 and early 1920 which is contractionary because it leads to fewer loans reducing the money supply in the economy the fed then lowered interest rates late as the economy recovered in 1921 and by 1923 interest rates were 3 the 1919 1923 monetary policy would be the reverse of what policymakers would likely do today 4these apparent policy missteps resulted in a sharp v shaped recovery as failing businesses were quickly liquidated and their assets reallocated to new uses businesses and industries prices and wages fell and adjusted to reflect the new structure of production and consumption in the post war post pandemic and increasingly urbanizing society workers found new jobs in the new businesses and industries and the economy quickly recovered and entered a renewed period of expansion known as the roaring twenties as a result the unemployment rate fell to 2 4 and gross national product gnp rose 4 2 per year through 1929 56the recession of 1953 in the u s is another clear example of a v shaped recovery this recession was relatively brief and mild with only a 2 2 decline in gdp and an unemployment rate of 6 1 7 growth began to slow in the third quarter of 1953 but by the fourth quarter of 1954 was back at a pace well above the trend 8 therefore the chart for this recession and recovery would represent a v shape as in 1920 21 an important factor contributing to the quick recovery was the by modern standards wildly inappropriate policy response or rather the lack thereof the fed s monetary policy response was underwhelming with a half percentage point drop in the discount rate and a three quarters point drop in the fed funds rate late in the recession 4 this represents the weakest monetary policy response in the post world war ii era in terms of fiscal policy the federal government took no steps to increase spending and overall tightened fiscal policy during the recession and recovery as measured by the high employment budget surplus an indicator of the direction of fiscal policy popular among economists 9once again a restrained approach to monetary and fiscal policy in the face of recession facilitated the v shaped recovery that followed marring the recovery was the fact that unemployment continued to rise even after the end of the declared recession peaking in september 1954 possibly due to the fed s policy shift to interest rate cuts in 1954 which may have slowed the recovery 10image by sabrina jiang investopedia 2022 | |
what do chart patterns look like during an economic recovery | economic recoveries can last for many years the shapes of the chart patterns that typically form range from sharp bounces to softer gradual curves there are many factors that influence economic recoveries so no two patterns are alike traders will often look to common formations such as a double bottom v shape or u shape when planning how to position themselves during these important inflection points | |
what is a double dip recession | a double dip recession occurs when there is a short term recovery followed by another recession sometimes active traders will use a v w or u shaped chart pattern to mark the reversal in a primary trend it is worth noting that a double dip recession is a non zero probability that can lead to severe losses for those who rely on reversal patterns for trying to time a market or economic reversal | |
what is a double bottom pattern | a double bottom is a reversal pattern that is used by followers of technical analysis to mark a major shift in the price of a security more broadly active traders also use chart patterns such as a double bottom or v shape to mark major shifts in broad market indexes and changes in economic sentiment | |
what is a reversal pattern | a reversal pattern is a chart pattern used by followers of technical analysis to mark the shift in the direction of the predominant trend common examples include double top double bottom triple top triple bottom broadly speaking reversal patterns often follow a v w or u shape depending on the conviction of market participants the bottom linea v shaped recovery is a type of economic recession and recovery that resembles a v shape in economists and traders charting this type of recovery involves a sharp rise back to a previous peak after a sharp decline in these measurements and is considered a best case scenario because of the speed of adjustment and recovery in macroeconomic performance such recoveries are usually powered by a significant shift in economic activity caused by rapid readjustment of consumer demand and spending on business investments | |
what is a va loan | a va loan is a mortgage loan available through a program established by the u s department of veterans affairs va previously the veterans administration with va loans veterans service members and their surviving spouses can purchase homes with little to no down payment and no private mortgage insurance and generally get a competitive interest rate | |
how a va loan works | va loans help active service members veterans and their surviving spouses become homeowners they provide up to 100 financing on the value of a home eligible borrowers can use a va loan to purchase or build a home improve and repair a home or refinance a mortgage 1the va sets the qualifying standards dictates the terms of the mortgages offered and backs the loan but doesn t actually offer the financing instead va home loans are provided by private lenders such as banks and mortgage companies 1 | |
when borrowers apply for a loan they need to provide the lender with a certificate of eligibility from the va to get the certificate you ll have to produce service related documentation which can vary based on whether you are active duty or a veteran the certificate can be obtained from the va website although some of the lender s own underwriting requirements still must be met in most cases va loans are easier to qualify for than conventional loans 2 | va loans federal housing administration fha loans and other loans insured by departments of the united states government have securitization through the government national mortgage association gnma also known as ginnie mae these securities carry the guarantee of the u s government against default borrowers can apply for a va loan more than once but the funding fee increases when using a va loan after your first time if the down payment is less than 5 fees range from 1 4 to 3 6 of the loan amount 3va loan termsthe terms of va loans are quite generous compared to other mortgages and even to other federal loan programs among the benefits 1credit score minimum requirements differ slightly from lender to lender the va s only credit requirement is for the borrower to be considered a satisfactory credit risk by a lender the benefits of a va loan are the same no matter which lender you choose 4types of va loansthe va offers several types of mortgage loans va home purchase loans help veterans to buy a home at a competitive interest rate these purchase loans often do not require a down payment or private mortgage insurance cash out refinance loans allow mortgage holders to borrow against home equity to pay off debt fund school or make home improvements this refinancing option offers a new mortgage for a larger amount than the existing note and converts home equity into cash 5the va also offers adapted housing grants these grants help veterans with a permanent and total service connected disability to purchase or build an adapted home or modify an existing home for their disability 6interest rate reduction refinance loans irrrls also known as va streamline refinance loans help borrowers obtain a lower interest rate by refinancing an existing va loan this is a va loan to va loan process that allows homeowners with an existing va loan to refinance a fixed rate loan at a lower interest rate or convert an adjustable rate mortgage arm into a fixed rate mortgage 7the native american direct loan program helps eligible native american veterans finance the purchase construction or improvement of homes on federal trust land reductions in interest rates also come with these loans 8 | |
what is a vacancy rate | the vacancy rate is the percentage of all available units in a rental property such as a hotel or apartment complex that are vacant or unoccupied at a particular time a vacancy rate is the opposite of the occupancy rate which is the percentage of units in a rental property that are occupied high vacancy rates indicate that a property is not renting well while low vacancy rates can point to strong rental sales in addition to being used for real estate analysis vacancy rates can also be applied to the employment sector understanding vacancy ratesvacancy rates are a very important determinant for property owners because they tell them how their buildings are performing when compared to the area s vacancy rate these rates are also economic indicators as they paint a portrait of the broad market conditions in real estate the vacancy rate most often represents units that are vacant and ready to be rented units that have been turned off upon the exit of a tenant and units that are not currently rentable because they are in need of repairs or renovations low vacancy rates are considered positive because it generally means people want to live in a particular area or building while higher rates mean the opposite low vacancy rates mean there are more occupied units while high vacancy rates indicate people do not want to live in a certain building or area the rate is calculated by taking the number of vacant units multiplying that number by 100 and dividing that result by the total number of units the vacancy rate and occupancy rate should add up to 100 so if an apartment building has 300 units and 30 units are unoccupied it means the vacancy rate is 10 in order to be used effectively vacancy rates for one property should be used to compare to a similar one it is not a fair comparison when putting a commercial office building next to a three story apartment complex similarly there may be different factors at play between vacancy rates for a small town and a major city so these two areas may not be suitable to compare together real estate vacancy rate analysisa property owner can use vacancy rates as an analytic metric changes in the percentage of vacant units versus occupied units the length of time occupied units are remaining active or other rental conditions can provide guidance on how competitive a property owner has made the property if a property owner charges significantly more or less than the rest of the rental market this may be reflected in the overall vacancy rates it can also provide information about the effects of price changes or advertising on unit occupancy while vacancy rates are commonly used to assess an individual property s performance such as a hotel monitoring its nightly vacancy rate aggregate vacancy rates are also used as economic indicators of a real estate market s overall health many firms that service the commercial real estate sector gauge the strength of the overall industry using metrics such as vacancy rates rental rates and construction activity in may 2019 real estate firm jones lang lasalle reported that the u s real estate market continued to maintain its steady trends from 2018 with vacancy rates near historic lows according to the report office market vacancies hit about 5 in the year s first quarter in the previous year the firm projected a development boom that would outpace occupancy gains despite strong overall demand in the nation s office market of the largest metropolitan regions in the country san francisco s office market boasted the lowest vacancy rate in 2018 according to the data at only 8 1 new york s westchester county meanwhile registered the highest vacancy rate at 24 9 residential vacancy datathe u s census bureau compiles its residential vacancy data in a quarterly report that provides three key figures the rental vacancy rate homeowner vacancy rate and homeownership rate in april 2019 the bureau reported national vacancy rates at 7 for rentals while homeowner vacancy rates sat at 1 4 for the year s first quarter both figures have remained fairly sustained in recent years after falling from all time highs reached during the u s housing crisis when rental vacancies peaked at 11 1 in 2009 and homeowner vacancies peaked at 2 9 in 2008 the u s census bureau also collects data for the quarterly report regarding rental prices and property information much like data for commercial property markets this information can be used in conjunction with other information to help determine the health of an economy s residential real estate market by examining changes in the number of units available and the average prices of available or occupied units investors and vacancy ratesas noted above vacancy rates play a big part in business and can help investors determine whether they re making a good move by putting their money into certain real estate deals for example someone considering a large apartment complex as an investment may want to look at the building s vacancy rate before signing a contract by comparing that building s vacancy rate with other comparable properties in the area the investor can determine its performance and decide whether it s worth purchasing vacancy rates in employmentin employment the vacancy rate applies to the number of open positions a company currently has in comparison to the total number of positions available throughout the company in other words an employment related vacancy rate can indicate the proportion of positions a company has allocated for the performance of certain duties that do not currently have an employee functioning in that space | |
what is a vacation home | a vacation home is a secondary dwelling other than the owner s principal residence and is used primarily for recreational purposes including vacations or holidays also known as a recreational or secondary property or residence a vacation home is often situated in a different location from the owner s primary residence because vacation homes are only used at certain times of year many owners rent out these dwellings when they are not using them understanding vacation homesproperty is divided into several different categories usually for income tax purposes the property that a homeowner lives in is referred to as their principal or primary residence this property can be a home apartment condominium or trailer in order to qualify as a principal residence the homeowner whether that s a single individual a couple or a family must live there for the majority of the year 1a vacation home on the other hand is much different this type of property is often considered to be a second home in most cases it s in a different location than the owner s primary principal residence as noted above the owner may use this property for recreational purposes including vacations usually for a few days or weeks each year just like primary residences vacation homes can take any form the most popular being cottages or condos the distinction between primary residence and vacation property may be a blurred line to individuals especially if they spend a considerable amount of time in both locations however the distinction is important for several financial matters renting vacation propertyaside from providing the homeowner with a place to get away vacation properties can also be rented out to produce additional income when they re not being used in this case a couple with a principal residence in maine may own a vacation home in florida the couple may visit the florida residence during maine s coldest months while renting it out to other people for the rest of the year although they re a great asset to have vacation homes may be a financial challenge for instance a mortgage on a vacation home may have a higher interest rate than a loan on a homeowner s primary residence that s because the owner may have a higher risk of default as individuals are more apt to save their primary residence than a temporary one in the event of a reversal of fortune owners of vacation property may also be taking on a second mortgage if the mortgage of the primary property has yet to be paid off yet this form of investment is also risky when considering the potential for rental income renting out a vacation property does not provide stable or consistent cashflow even if the property is in a desirable location most vacation property renters will service shorter term customers compared to tenants or long term residents therefore landlords of vacation property must prepare for potential cashflow shortfalls and be available to step in and pay for expenses not covered by rental income consider that the irs may define vacation property differently than you therefore you might consider yourself as owning or not owning vacation property though the irs may disagree tax implications of renting vacation propertyin order for a vacation home to be classified as a residence by the irs it must offer basic living accommodations including sleeping space as well as cooking and bathroom facilities the home must also be used for personal purposes for more than 14 days and 10 of the total number of days the home is rented at a fair rental value 2 it is also increasingly popular to rent out vacation homes on a short term basis through services like airbnb or vrbo the vacation home tax rules for a residence will apply if those requirements are met deductible expenses would include the rental portion of qualified home mortgage interest real estate taxes and casualty losses other expenses that can be deducted stem directly from the rental property and include advertising payment of commissions legal fees and office supplies expenses related to the maintenance and operation of the rental property are also deductible 3if a vacation home is rented out for 15 days or more per year the rental income must be reported to the internal revenue service irs using schedule e 2 owners can also deduct any expenses associated with that residence if the home is considered a personal residence the deducted expenses cannot exceed the rental income if the vacation home is not a personal residence the deducted expenses can exceed this threshold but the reported loss may be limited by passive activity regulations 4income must be reported if a vacation home is rented for 15 days or more each year 2financial implications of owning vacation homeowning a vacation home may be financially similar as owning a primary residence in that light there are many financial aspects of owning a vacation home meaning the owner must consider more than just the purchase price of the piece of real estate they buy below are the most common operating costs a vacation home owner can expect to incur in addition to the ongoing expenses above vacation home owners must consider how real estate properties may fluctuate in value the market price of a property may increase or decrease based on prevailing macroeconomic conditions such as monetary policy interest rates or industry supply selling vacation property | |
when the owner of a vacation home sells the property they should consider implications on capital gains in most cases these capital gains must be reported to the irs that s because vacation homes are treated as personal capital assets owners are taxed on the profits of the sale which are reported on schedule d for the year the property was sold this form accompanies the owner s annual tax return 5 | the important distinction here is that this rule only pertains to vacation property as taxpayers have a substantial tax benefit when selling a primary residence when selling a primary residence the taxpayer is exempt from the first 250 000 for single filers or 500 000 for couples filing jointly 6challenges of owning vacation homemany aspects of owning a vacation home are appealing after all imagine escaping terrible weather or busy lifestyles on a whim to a second location you own however there are ongoing challenges on owning a vacation home that create financial and non financial hurdles one of the primary logistical challenges of owning a vacation home is maintenance and upkeep vacation homes require regular maintenance and upkeep even when you re not there this can be especially challenging if your vacation home is located far away from your primary residence making it difficult to handle any unexpected issues that may arise on a similar note depending on the location of your vacation home you may need to worry about issues such as hurricanes flooding or wildfires these natural disasters can be expensive to deal with and can cause significant damage to your property your vacation property may also require emergency prevention actions i e boarding up windows on a short notice something that may not be possible based on where your primary residence is located there are several emotional aspects to overcome when considering a vacation home depending on your lifestyle and schedule you may not be able to use your vacation home as much as you would like this can be frustrating especially if you have decided to invest a substantial amount of money in the property the opposite end of the spectrum occurs when its time to part ways with a vacation home similar to other forms of investments with sentimental value it may be challenging to part ways with something you already own even if it makes the most financial sense for you and your legacy also like other forms of investing there are many elements of trading psychology last as discussed in sections above there are several unique financial challenges of owning a vacation home rental income may not be stable and relying on a third party to rent your property will incur material management fees you ll also incur potentially higher costs to operate your property if you don t plan on always being on site for this reason those considering a vacation home as an investment would do well to consider the true long term financial implications of their purchase for looking for changes in vacation home trends over time the united states census bureau collects data on vacation homes 7vacation home vs investment propertysome vacation homes may be considered investment properties but not all investment properties are vacation homes as mentioned above the owner of a vacation home may use it to produce extra rental income making it an investment property when they re not using it in other cases someone who buys an investment property may do so for the sole purpose of generating income either through rent or the future resale of the property unlike vacation properties investment properties don t need to be homes they can be residential as well as commercial properties or even mixed use structures properties with both residential and retail spaces these investors may never actually step foot inside of the property however they may still be able to generate a similar income stream compared to someone who owns and personally uses a similar type of asset vacation property vs timesharevacation property and a timeshare are technically the same thing however not all forms of vacation property may have the same ownership structure as a timeshare broadly speaking most vacation homes are property that you own outright and can use whenever you want you have full control over the property and can use it as a second home or rent it out to generate income you re also responsible for all the expenses discussed above that come along with owning and maintaining the property a timeshare on the other hand is a type of vacation ownership that allows you to use a property for a specific period of time each year timeshares are usually sold in increments of one week for this reason the cost of owning this form of a vacation home is much cheaper than 100 outright ownership of a vacation home however the investor in a timeshare may only reside in the vacation home for the period of time corresponding to their ownership because of the limited time period an investor can reside in a timeshare all timeshares are often considered vacation property however because different forms of vacation properties may be accompanied by shorter or longer periods of stay not all vacation periods have the same restrictions as a timeshare | |
is it smart to own a vacation home | this answer will be different for every individual as some may use a vacation property more often or have greater disposable income that can be used towards a second property very broadly speaking a vacation home may be a risky investment as it does not guarantee a steady income stream but does come with operational ongoing costs a vacation home is a more viable option for a more financially secure individual with sufficient savings to cover these ongoing expenses | |
how far is too far for a vacation home | again this is up to each individual s preference some may prefer a short drive for a quick change of scenery others may prefer a flight to an entirely different geographical area general guidelines to consider are how long of an average stay your vacation trips will be for shorter trips consider buying property easier to to get to i e no more than 5 hours away for longer trips it may be more feasible and worthwhile to invest in property further away | |
how much of your net worth should you spend on a vacation home | financial advisers may suggest no more than 10 to 15 of one s net worth should be tied to a vacation property another aspect to consider is ongoing stable income make sure any vacation property investment expenses can be covered by monthly cash inflows whether via income government benefits or retirement savings can i live in a vacation home year round in the eyes of the irs a vacation home is one where you ve lived in the property for part of the year though you can logistically chose to live whereever for personal reasons there are different tax implications for different real estate properties based on various rules including how long you reside in the property and whether you have exclusive control over the property the bottom linea vacation home may be a relaxing getaway to enjoy a change of scenery it may also be a financial investment to generate rental income it may also end up being a financial burden with ongoing operating expenses and unstable revenue as you consider a vacation home consider how the irs defines a vacation home what the ongoing cost of ownership will be and how often you truly expect to visit your additional property | |
what is a validation code | a validation code also known as a cvv cv2 or cvv2 code is a series of three or four numbers located on the front or back of a credit card it is intended to provide an additional layer of security for credit card transactions that take place online or over the phone most credit card issuers place their validation codes on the back of the card on the far right side of the signature panel on american express axp cards however the validation code is printed on the front of the card 1 | |
how validation codes work | as online shopping continues to grow in popularity the threat of identity theft and other forms of credit card fraud has become increasingly severe one measure taken to try to mitigate this risk is the use of validation codes when making credit card purchases in a typical transaction a customer will be asked to provide their name billing address card number expiration date and validation code although many of these details such as the name and address could be obtained from other sources the card number expiration date and validation code can theoretically only be obtained from possessing the card itself as an added measure the validation code is generally printed on the back of the card making it more difficult for would be thieves to glean all the necessary information from a single photograph of the credit card to process the credit card transaction and verify the identity of the user the entered cvv is compared against the card number to further enhance these security measures consumer protection laws prevent merchants from storing customers validation codes after a purchase has been made although unscrupulous sellers may still record this information illegally an additional measure of protection is provided by the personal identification numbers pins that cardholders must enter when making payments using point of sale pos terminals real world example of a validation codealthough security measures such as the validation code raise the difficulty of committing identity theft or making purchases using a stolen credit card they are unlikely to deter a sufficiently motivated thief in practice credit card fraud has continued to climb in recent years surpassing 393 207 reported cases in 2020 3 the united states is by far the most acutely affected country representing nearly 34 of global cases 2merchants are not allowed to store card security codes after a customer makes a purchase which provides extra protection against credit card theft still validation codes can be stolen and cardholders should protect their card s validation code just as they would protect the card number and expiration date the validation code is a key piece of data that can enable thieves to make fraudulent transactions with someone else s card however if a thief does use a stolen card the cardholder s liability is limited to 50 under the fair credit billing act fcba depending on when the theft is reported customers who realize their card is missing or detect suspicious or unauthorized purchases or other activity should contact their credit card issuer immediately to report the problem and alert them to a possible case of fraud the card issuer can then cancel or deactivate the card 4 |
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