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KEY POINTS TO REMEMBER

  • The average rate for a home equity line of credit, or HELOC, is 7.89%, jumping 19 basis points week over week.
  • A recent study shows that house prices would have to fall by 27% in order to wipe out all capital gains from homeowners who bought a house in July 2020.
  • Home equity loan and HELOC rates are expected to fluctuate in the short to medium term.

Another week, another increase in the average home equity line of credit (HELOC) rate, which has risen 57 basis points over the past two weeks.

The average home equity loan rate rose slightly after remaining flat last week.

Rates on home equity are rising alongside short-term rate increases by the Federal Reserve. In its continued attempt to calm inflation, the Fed raised its federal funds rate, most recently by 75 basis points in November.

These increases could have the desired effect. The consumer price index showed inflation at 7.7% year-on-year in October, below expectations after months above 8%. However, it is too early to tell if this will last.

While rising interest rates could push the economy into a recession, homeowners still have high levels of workable home equity, keeping foreclosures below pre-pandemic levels.

Despite a recent decline, home values ​​are expected to weather the headwind of a cooling housing market. “For the average national homeowner who bought a home in July 2020, house prices would need to drop 27% to wipe out all of their capital gains through appreciation,” according to a recent report from First American Financial Corporation, a real estate services company. .

Typically, home equity loan and HELOC rates tend to move in tandem with prime mortgage rates, Cook says.

“Many economists expect rates to stabilize, and if we were to enter a recession, rates could start to slowly decline,” says Rob Cook, vice president of marketing, digital and analytics. for Discover Home Loans. “Given all the uncertainty, however, owners should generally expect rates to remain high in the short to medium term.”

The average rate for a $30,000 HELOC is 7.89%, up 19 basis points week over week.

Here are the average home equity loan and HELOC rates as of November 16, 2022:

TYPE OF LOAN RATE FOR THIS WEEK LAST WEEK RATE DIFFERENCE
$30,000 HELOC 7.89% 7.70% +0.19
10-year $30,000 home equity loan 7.57% 7.57% nothing
Home equity loan of $30,000 over 15 years 7.50% 7.49% +0.01

HOW THESE RATES ARE CALCULATED

These rates come from a survey conducted by Bankrate, which, like NextAdvisor, is owned by Red Ventures. Averages are determined from a survey of the top 10 banks in the 10 major US markets.

What are home equity loans and HELOCs?

Home equity loans and HELOCs are secured loans, which means you use the difference between the value of your home and what you owe on your mortgage as collateral. As a result, you can usually get a more competitive rate with home equity financing than with, say, a personal loan or cash refinance.

Here’s how the two products work:

Similar to a personal loan, a home equity loan allows you a single collection that you will pay over a fixed period. The fixed rate associated with home equity loans makes them attractive, especially in a rising rate environment.

HELOC, which offer borrowers a revolving line of credit, are popular for the flexibility they offer homeowners. During the draw period, you often only pay interest on what you actually used. However, HELOCs tend to have variable interest rates, which means your monthly payment is likely to change as rates go up.

PRO TIP

Before borrowing with a home equity loan or HELOC, be sure to shop around to see who can offer you the most competitive interest rate.

What consumers need to know about home equity financing

Recent rate movements reflect the uncertainty surrounding inflation. Although the Fed is poised to slow the pace of its rate hikes, we are likely to see higher rates for longer.

“I encourage consumers to do their homework to understand the impact of current rates on their budget and financial situation,” Cook says.

If you already have a home equity loan, rate increases will not affect your monthly payments. But this is not the case for HELOCs. When borrowing with a HELOC, pay attention to changing rates so you can keep an eye on your shipping costs.

How to get home equity financing

To borrow with a home equity loan or HELOC, you will first need to complete an application with the lender of your choice. Your loan amount and interest rate will be determined based on your application.

Remember that the average rate may not be the rate you qualify for. You may end up with an interest rate above or below the average. That’s why it’s a good idea to shop around to see who can give you the best deal.

How to Use Home Equity

The most common uses for home equity loans and HELOCs are debt consolidation and home improvement projects. However, consumers can tap into the equity in their property for a number of reasons, whether it’s paying for college, a car, or a second home.

“We’re seeing strong demand for home equity loans because they offer homeowners a way to use the available equity in their homes at lower rates than alternatives,” Cook says.

Overall, experts caution against treating your home equity like an ATM. Your home is your greatest asset and resource. Any decision to exploit its own funds must be taken seriously.

Home equity loans and HELOCs can be great financial tools, if you have a clear purpose for borrowing and a comfortable repayment strategy.

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SBF received $1 billion in personal loans from Alameda: FTX bankruptcy filing http://aircraftwalkaround.com/sbf-received-1-billion-in-personal-loans-from-alameda-ftx-bankruptcy-filing/ Thu, 17 Nov 2022 15:43:52 +0000 http://aircraftwalkaround.com/sbf-received-1-billion-in-personal-loans-from-alameda-ftx-bankruptcy-filing/

Former FTX CEO Sam Bankman-Fried received a $1 billion personal loan from one of four silo companies deeply involved in the collapse of cryptocurrency exchange FTX.

An official statement in the pending Chapter 11 bankruptcy filings of new FTX CEO John Ray III revealed further embezzlement by Bankman Fried.

According to the filing, Alameda Research loaned $1 billion directly to Bankman-Fried, while FTX engineering director Nishad Singh also received a $543 million loan from the company.

Ray III, who was responsible for picking up the pieces after Enron’s infamous collapse, was scathing in his initial filing with the United States Bankruptcy Court for the District of Delaware.

He went so far as to describe the situation as the worst he had seen in his corporate career, pointing to “the complete failure of corporate controls” and the absence of reliable financial information:

“From the compromised integrity of systems and faulty regulatory oversight overseas, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented. “

The Chapter 11 filing will seek to implement controls over accounting, auditing, cybersecurity, human resources, data protection and other systems for four groups of businesses associated with the corporate organization from FTX.

Four silos make up FTX Group

Ray III identifies four “silos”, which include a multitude of different companies that make up the FTX group. The “WRS” silo includes subsidiaries of West Realm Shires Inc., which includes FTX US, LedgerX, FTX US Derivatives, FTX US Capital Markets and Embed Clearing.

Alameda Research is a stand-alone silo in the docket with its own subsidiaries, while Clifton Bay Investments LLC and Ltd, Island Bay Ventures Inc. and debtor FTX Ventures Ltd fall under the “Ventures” silo. The “Dotcom” end silo includes FTX Trading Ltd and exchanges doing business under the FTX.com umbrella.

According to Ray III’s filing, all of the silos were controlled by Bankman-Fried, while minor stakes were held by former FTX CTO Zixiao “Gary” Wang and Singh. The WRS and Dotcom silos had third-party equity investors that included a host of investment funds, endowments, sovereign wealth funds and families that were impacted by the FTX collapse.

damning accusations

The dossier contains other damning indictments of the inner workings of Bankman-Fried’s empire. The wider FTX Group failed to “maintain centralized control” of its cash, failed to maintain accurate bank account listings, and paid “insufficient attention to the creditworthiness of banking partners”.

Ray III also notes that the WRS silo was the only arm that undertook a reliable audit with a notable accounting firm. He expresses concern about the audited financials of the Dotcom silo, while finding no audited financials for the Alameda and Ventures silos.

The disbursement of funds was also highly dysfunctional, according to the record:

“For example, FTX Group employees submitted payment requests via an online ‘chat’ platform where a disparate group of supervisors approved disbursements by responding with personalized emojis.”

Ray III also notes that company funds were used to purchase homes and personal items for employees and advisers, with a lack of documentation for transactions, including loans.

The crypto guard in disarray

Custody of cryptocurrency assets was also a mess, according to the Chapter 11 filing, with inadequate records or security controls in place for FTX Group’s digital assets.

Bankman-Fried and Wang controlled access to the cryptocurrency holdings of the main group companies. Ray III describes “unacceptable practices” which include the use of an unsecured group email account to access confidential private keys and highly sensitive data for the global corporate network.

The group also failed to perform a daily reconciliation of cryptocurrency holdings and used software to conceal the misuse of customer funds. It also allowed Alameda to be secretly exempted from certain aspects of FTX.com’s reverse charge protocol.

Perhaps most telling is the fact that debtors who filed for bankruptcy only secured “a fraction of the digital assets” they hoped to recover. Cold wallets containing $740 million worth of cryptocurrency have been obtained, but it is unclear which silo the funds belong to.