“Clemson is redefining the term ‘top-tier research university’ by combining the best of two models: the scientific and technological horsepower of a major research university and the highly engaged academic and social environment of a small college,” said Brett Dalton, chief financial officer of Clemson University. “We searched for an eprocurement solution with a proven track record generating savings and greater efficiencies through a strategic and user-friendly approach to procurement. SciQuest emerged as the best choice to provide that service for us.”

Researchers’ procurement needs are unique in that they make unforeseen, ad hoc purchases of disparate materials and chemicals as experiments evolve. Scientific protocols demand uniformity, consistency and a fast response-all factors that challenge one-size-fits-all eprocurement systems and traditional, paper-based processes.

Functionality and features within the SciQuest solution as well as its extensive online catalog of scientific suppliers address these unique aspects of the research environment. With an all-inclusive eprocurement system in place, researchers can spend more time finding cures and uncovering new discoveries, and less time searching for and ordering the specialty supplies they need to complete their work.

With SciQuest eprocurement, all users, including researchers, will simply login to the application, browse the extensive electronic marketplace of suppliers, and compare and select the items and services they want to buy-all in an intuitive, Web-based shopping environment that brings campus-wide purchasing together in one system. The solution suite will also automate and streamline purchase order placement, tracking and management, allowing Clemson to securely distribute orders electronically to its suppliers through a single integration point.

Through eprocurement, Clemson can harness the full value of pre-negotiated contracts and volume discounts as well as negotiate additional strategic contracts where needed. SciQuest makes it possible to more effectively steer purchasing towards contracted specialty suppliers, such as small and minority- owned businesses and suppliers that satisfy environmental and sustainability goals. The University’s financial departments will also attain real-time visibility into institution-wide spending, ensuring that purchasing decisions are strategic in nature and help to advance the University’s mission.

An added benefit of implementing the SciQuest system is that it will now be easier for suppliers from across the state of South Carolina to vie for business with Clemson University. Suppliers will be able register at a single access point in the SciQuest system-ensuring that all can easily compete in the competitive bidding process.

“We are pleased that Clemson University selected our eprocurement solution suite as one of the pillars to reach its goal of becoming a top-tier research institution,” said Stephen Wiehe, president and CEO of SciQuest. “The signing of Clemson University is further validation of our market leadership in the research-centric and higher education markets. We strive to provide customers with the solution they need to deploy eprocurement within the context of their changing business and resource requirements. We look forward to helping Clemson reach its goals by freeing the campus community to focus on their mission, not the administrative tasks required to attain the goods and services they need.”

MATERIALS SPILL,

The next time disaster strikes, you may not have much time

to act. Prepare now for a sudden emergency.

Learn how to protect yourself and cope with disaster by

planning ahead. This checklist will help you get started.

Discuss these ideas with your family, then prepare an emergency

plan. Post the plan where everyone will see it–on the

refrigerator or bulletin board.

For additional information about how to prepare for

hazards in your community, contact your local emergency

management or civil defense office and American Red Cross

chapter.

Emergency Checklist

Call Your Emergency Management Office or American Red Cross

Chapter

* Find out which disasters could occur in your area.

* Ask how to prepare for each disaster.

* Ask how you would be warned of an emergency.

* Learn your community’s evacuation routes.

* Ask about special assistance for elderly or disabled

persons.

Also…

* Ask your workplace about emergency plans.

* Learn about emergency plans for your children’s school or

day care center.

Create an Emergency Plan

* Meet with household members. Discuss with children the

dangers of fire, severe weather, earthquakes and other

emergencies.

* Discuss how to respond to each disaster that could occur.

* Discuss what to do about power outages and personal

injuries.

* Draw a floor plan of your home. Mark two escape routes

from each room.

* Learn how to turn off the water, gas and electricity at

main switches.

* Post emergency telephone numbers near telephones.

* Teach children how and when to call 911, police and fire.

* Instruct household members to mm on the radio for

emergency information.

* Pick one out-of-state and one local friend or relative for

family members to call if separated by disaster (it is

often easier to call out-of-state than within the affected

area).

* Teach children how to make long distance telephone calls.

* Pick two meeting places.

1) A place near your home in case of a fire.

2) A place outside your neighborhood in case you cannot

return home after a disaster.

* Take a basic first aid and CPR class.

* Keep family records in a water and fire-proof container.

Prepare a Disaster Supplies Kit

Assemble supplies you might need in an evacuation. Store

them in an easy-to-carry container such as a backpack or duffle

bag.

Include:

* A supply of water (one gallon per person per day). Store

water in sealed, unbreakable containers. Identify the

storage date and replace every six months.

* A supply of non-perishable packaged or canned food and a

non-electric can opener.

* A change of clothing, rain gear and sturdy shoes.

* Blankets or sleeping bags.

* A first aid kit and prescription medications.

* An extra pair of glasses.

* A battery-powered radio, flashlight and plenty of extra

batteries.

* Credit cards and cash.

* An extra set of car keys.

* A list of family physicians.

* A list of important family information; the style and

serial number of medical devices such as pacemakers.

* Special items for infants, elderly or disabled family

members.

Emergency Plan

Out-of-State Contact

Name__________________________________________________

City__________________________________________________

Telephone (Day)________________(Evening)______________

Local Contact

Name__________________________________________________

Telephone (Day)________________(Evening)______________

Nearest Relative

Name__________________________________________________

City__________________________________________________

Telephone (Day)________________(Evening)______________

Family Work Numbers

Father_________________________Mother_________________

Other_________________________________________________

Emergency Telephone Numbers

In a life threatening emergency, dial 911 or the local

emergency medical services system number.

Police Department_____________________________________

Fire Department_______________________________________

Hospital______________________________________________

Family Physicians

Name___________________________Telephone_______________

Name___________________________Telephone_______________

Name___________________________Telephone_______________

Reunion Locations

1. Right outside your home____________________________

______________________________________________________

2. Away from the neighborhood, in case you cannot

return home___________________________________________

______________________________________________________

Address_______________________________________________

Telephone_____________________________________________

Route to try first____________________________________

______________________________________________________

Escape Plan

In a fire or other emergency, you may need to evacuate

your house, apartment or mobile home on a moment’s notice. You

should be ready to get out fast.

Develop an escape plan by drawing a floor plan of your

residence. Using a black or blue pen, show the location of

doors, windows, stairways, and large furniture. Indicate the

location of emergency supplies (Disaster Supplies Kit), fire

extinguishers, smoke detectors, collapsible ladders, first aid

kits and utility shut off points. Next, use a colored pen to

draw a broken line charting at least two escape routes from

each room. Finally, mark a place outside of the home where

household members should meet in case of fire.

Be sure to include important points outside such as

garages, patios, stairways, elevators, driveways and porches.

If your home has more than two floors, use an additional sheet

of paper. Practice emergency evacuation drills with all

household members at least two times each year.

Example:

Home Hazard Hunt

In a disaster, ordinary items in the home can cause injury

and damage. Anything that can move, fall, break or cause a fire

is a potential hazard.

* Repair defective electrical wiring and leaky gas

connections.

* Fasten shelves securely.

* Place large, heavy objects on lower shelves.

* Hang pictures and minors away from beds.

* Brace overhead light fixtures.

* Secure water heater. Snap to wall studs.

* Repair cracks in ceilings or foundations.

* Store weed killers, pesticides and flammable products away

from heat sources.

* Place oily polishing rags or waste in covered metal cans.

* Clean and repair chimneys, flue pipes, vent connectors and

gas vents.

If You Need to Evacuate

* Listen to a battery powered radio for the location of

emergency shelters. Follow instructions of local

officials.

* Wear protective clothing and sturdy shoes.

* Take your Disaster Supplies Kit.

* Lock your house.

* Use travel routes specified by local officials.

If you are sure you have time …

* Shut off water, gas and electricity, if instructed to do

so.

* Let others know when you left and where you are going.

* Make arrangements for pets. Animals may not be allowed in

public shelters.

Prepare an Emergency Car Kit

Include:

* Battery powered radio and extra batteries

* Flashlight and extra batteries

* Blanket

* Booster cables

* Fire extinguisher (5 lb, A-B-C type)

* First aid kit and manual

* Bottled water and non-perishable high energy foods such as

granola bars, raisins and peanut butter.

* Maps

* Shovel

* Tire repair kit and pump

* Flares

Fire Safety

* Plan two escape routes out of each room.

* Teach family members to stay low to the ground when

escaping from a fire.

* Teach family members never to open doors that are hot. In

a fire, feel the bottom of the door with the palm of your

hand. If it is hot, do not open the door. Find another way

out.

* Install smoke detectors. Clean and test smoke detectors

once a month. Change batteries at least once a year.

* Keep a whistle in each bedroom to awaken household members

in case of fire.

* Check electrical outlets. Do not overload outlets.

* Purchase a fire extinguisher (5 lb., A-B-C type).

* Have a collapsible ladder on each upper floor of your

house.

* Consider installing home sprinklers.

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A limit on how much the interest rate or the monthly

payment can change, either at each adjustment or during the

life of the mortgage. Payment caps don’t limit the amount of

interest the lender is earning, so they may cause negative

amortization.

Conversion Clause

A provision in some ARMs that allows you to change the ARM

to a fixed-rate loan at some point during the term. Usually

conversion is allowed at the end of the first adjustment

period. At the time of the conversion, the new fixed rate is

generally set at one of the rates then prevailing for fixed

rate mortgages. The conversion feature may be available at

extra cost.

Discount

In an ARM with an initial rate discount, the lender gives

up a number of percentage points in interest to give you a

lower rate and lower payments for part of the mortgage term

(usually for one year or less). After the discount period, the

ARM rate will probably go up depending on the index rate.

Index

The index is the measure of interest rate changes that the

lender uses to decide how much the interest rate on an ARM will

change over time. No one can be sure when an index rate will go

up or down. To help you get an idea of how to compare different

indexes, the following chart shows a few common indexes over a

ten-year period (1977-87). As you can see, some index rates

tend to be higher than others, and some more volatile. (But if

a lender bases interest rate adjustments on the average value

of an index over time, your interest rate would not be as

volatile.) You should ask your lender how the index for any ARM

you are considering has changed in recent years, and where it

is reported.

Margin

The number of percentage points the lender adds to the

index rate to calculate the ARM interest rate at each

adjustment.

Negative Amortization

Amortization means that monthly payments are large enough

to pay the interest and reduce the principal on your mortgage.

Negative amortization occurs when the monthly payments do not

cover all of the interest cost. The interest cost that isn’t

covered is added to the unpaid principal balance. This means

that even after making many payments, you could owe more than

you did at the beginning of the loan. Negative amortization can

occur when an ARM has a payment cap that results in monthly

payments not high enough to cover the interest due.

Points

A point is equal to one percent of the principal amount of

your mortgage. For example, if you get a mortgage for $65,000,

one point means you pay $650 to the lender. Lenders frequently

charge points in both fixed-rate and adjustable-rate mortgages

in order to increase the yield on the mortgage and to cover

loan closing costs. These points usually are collected at

closing and may be paid by the borrower or the home seller, or

may be split between them.

MORTGAGE CHECKLIST

Ask your lender to help fill

out this checklist. Mortgage A Mortgage B

Mortgage amount

Basic Features for Comparison

Fixed-rate annual percentage rate

(the cost of your credit as a yearly

rate which includes both interest and

other charges) __________ __________

ARM annual percentage rate __________ __________

Adjustment period __________ __________

Index used and current rate __________ __________

Margin __________ __________

Initial payment without discount __________ __________

Initial payment with discount

(if any) __________ __________

How long will discount last? __________ __________

Interest rate caps: periodic __________ __________

overall __________ __________

Payment caps __________ __________

Negative amortization __________ __________

Convertibility or prepayment

privilege __________ __________

Initial fees and charges __________ __________

Monthly Payment Amounts

What will my monthly payment be after

twelve months if the index rate:

stays the same __________ __________

goes up 2% __________ __________

goes down 2% __________ __________

What will my monthly payments be after

three years if the index rate:

stays the same __________ __________

goes up 2% per year __________ __________

goes down 2% per year __________ __________

Take into account any caps on your

mortgage and remember it may run 30 years.

probably go up depending on the index rate.

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monthly payment by deferring some of the increase in interest.

Eventually, you will have to repay the higher remaining loan

balance at the ARM rate then in effect. When this happens,

there may be a substantial increase in your monthly payment.

Some mortgages contain a cap on negative amortization. The

cap typically limits the total amount you can owe to 125% of

the original loan amount. When that point is reached, monthly

payments may be set to fully repay the loan over the remaining

term, and your payment cap may not apply. You may limit

negative amortization by voluntarily increasing your monthly

payment.

Be sure to discuss negative amortization with the lender

to understand how it will apply to your loan.

Prepayment and Conversion

If you get an ARM and your financial circumstances change,

you may decide that you don’t want to risk any further changes

in the interest rate and payment amount. When you are

considering an ARM, ask for information about prepayment and

conversion.

Prepayment. Some agreements may require you to pay special

fees or penalties if you pay off the ARM early. Many ARMs allow

you to pay the loan in full or in part without penalty whenever

the rate is adjusted. Prepayment details are sometimes

negotiable. If so, you may want to negotiate for no penalty, or

for as low a penalty as possible.

Conversion. Your agreement with the lender can have a

clause that lets you convert the ARM to a fixed-rate mortgage

at designated times. When you convert, the new rate is

generally set at the current market rate for fixed-rate

mortgages.

The interest rate or up-front fees may be somewhat higher

for a convertible ARM. Also, a convertible ARM may require a

special fee at the time of conversion.

WHERE TO GET INFORMATION

Before you actually apply for a loan and pay a fee, ask

for all the information the lender has on the loan you are

considering. It is important that you understand index rates,

margins, caps, and other ARM features like negative

amortization. You can get helpful information from

advertisements and disclosures, which are subject to certain

federal standards.

Advertising

Your first information about mortgages probably will come

from newspaper advertisements placed by builders, real estate

brokers, and lenders. While this information can be helpful,

keep in mind that the ads are designed to make the mortgage

look as attractive as possible. These ads may play up low

initial interest rates and monthly payments, without

emphasizing that those rates and payments later could increase

substantially. Get all the facts.

A federal law, the Truth in Lending Act, requires mortgage

advertisers, once they begin advertising specific terms, to

give further information on the loan. For example, if they want

to show the interest rate or payment amount on the loan, they

must also tell you the annual percentage rate (APR) and whether

that rate may go up. The annual percentage rate, the cost of

your credit as a yearly rate, reflects more than just a low

initial rate. It takes into account interest, points paid on

the loan, any loan origination fee, and any mortgage insurance

premiums you may have to pay.

Disclosures From Lenders

Federal law requires the lender to give you information

about adjustable-rate mortgages, in most cases before you apply

for a loan. The lender also is required to give you information

when you get a mortgage. You should get a written summary of

important terms and costs of the loan. Some of these are the

finance charge, the annual percentage rate, and the payment

terms.

Selecting a mortgage may be the most important financial

decision you will make, and you are entitled to all the

information you need to make the right decision. Don’t hesitate

to ask questions about ARM features when you talk to lenders,

real estate brokers, sellers, and your attorney, and keep

asking until you get clear and complete answers. The checklist

at the back of this pamphlet is intended to help you compare

terms on different loans.

GLOSSARY

Annual Percentage Rate (APR)

A measure of the cost of credit, expressed as a yearly

rate. It includes interest as well as other charges. Because

all lenders follow the same rules to ensure the accuracy of the

annual percentage rate, it provides consumers with a good basis

for comparing the cost of loans, including mortgage plans.

Adjustable-Rate Mortgage (ARM)

A mortgage where the interest rate is not fixed, but

changes during the life of the loan in line with movements in

an index rate. You may also see ARMs referred to as AMLs

(adjustable mortgage loans) or VRMs (variable-rate mortgages).

Assumability

When a home is sold, the seller may be able to transfer

the mortgage to the new buyer. This means the mortgage is

assumable. Lenders generally require a credit review of the new

borrower and may charge a fee for the assumption. Some

mortgages contain a due-on-sale clause, which means that the

mortgage may not be transferable to a new buyer. Instead, the

lender may make you pay the entire balance that is due when you

sell the home. Assumability can help you attract buyers if you

sell your home.

Buydown

With a buydown, the seller pays an amount to the lender so

that the lender can give you a lower rate and lower payments,

usually for an early period in an ARM. The seller may increase

the sales price to cover the cost of the buydown. Buydowns can

occur in all types of mortgages, not just ARMs.

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Discounts

Some lenders offer initial ARM rates that are lower than

the sum of the index and the margin. Such rates, called

discounted rates, are often combined with large initial loan

fees (“points”) and with much higher interest rates after the

discount expires.

Very large discounts are often arranged by the seller. The

seller pays an amount to the lender so the lender can give you

a lower rate and lower payments early in the mortgage term.

This arrangement is referred to as a “seller buydown.” The

seller may increase the sales price of the home to cover the

cost of the buydown.

A lender may use a low initial rate to decide whether to

approve your loan, based on your ability to afford it. You

should be careful to consider whether you will be able to

afford payments in later years when the discount expires and

the rate is adjusted.

Here is how a discount might work. Let’s assume the

one-year ARM rate (index rate plus margin) is at 10%. But your

lender is offering an 8% rate for the first year. With the 8%

rate, your first year monthly payment would be $476.95.

But don’t forget that with a discounted ARM, your low

initial payment will probably not remain low for long, and that

any savings during the discount period may be made up during

the life of the mortgage or be included in the price of the

house. In fact, if you buy a home using this kind of loan, you

run the risk of…

Payment Shock

Payment shock may occur if your mortgage payment rises

very sharply at the first adjustment. Let’s see what happens in

the second year with your discounted 8% ARM.

As the example shows, even if the index rate stays the

same, your monthly payment would go up from $476.95 to $568.82

in the second year.

Suppose that the index rate increases 2% in one year and

the ARM rate rises to a level of 12%.

That’s an increase of almost $200 in your monthly payment.

You can see what might happen if you choose an ARM impulsively

because of a low initial rate. You can protect yourself from

increases this big by looking for a mortgage with features,

described next, which may reduce this risk.

HOW CAN I REDUCE MY RISK?

Besides an overall rate ceiling, most ARMs also have

“caps” that protect borrowers from extreme increases in monthly

payments. Others allow borrowers to convert an ARM to a

fixed-rate mortgage. While these may offer real benefits, they

may also cost more, or add special features, such as negative

amortization.

Interest-Rate Caps

An interest-rate cap places a limit on the amount your

interest rate can increase. Interest caps come in two versions:

* Periodic caps, which limit the interest rate increase from

one adjustment period to the next; and

* Overall caps, which limit the interest-rate increase over

the life of the loan.

By law, virtually all ARMs must have an overall cap. Many

have a periodic interest rate cap.

Let’s suppose you have an ARM with a periodic interest

rate cap of 2%. At the first adjustment, the index rate goes up

3%. The example shows what happens.

A drop in interest rates does not always lead to a drop in

monthly payments. In fact, with some ARMs that have interest

rate caps, your payment amount may increase even though the

index rate has stayed the same or declined. This may happen

after an interest rate cap has been holding your interest rate

down below the sum of the index plus margin.

Look below at the example where there was a periodic cap

of 2% on the ARM, and the index went up 3% at the first

adjustment. If the index stays the same in the third year, your

rate would go up to 13%.

In general, the rate on your loan can go up at any

scheduled adjustment date when the index plus the margin is

higher than the rate you are paying before that adjustment.

The next example shows how a 5% overall rate cap would affect

your loan.

Let’s say that the index rate increases 1% in each of the

first ten years. With a 5% overall cap, your payment would

never exceed $813.00–compared to the $1,008.64 that it would

have reached in the tenth year based on a 19% indexed rate.

Payment Caps

Some ARMs include payment caps, which limit your monthly

payment increase at the time of each adjustment, usually to a

percentage of the previous payment. In other words, with a 7½%

payment cap, a payment of $100 could increase to no more than

$107.50 in the first adjustment period, and to no more than

$115.56 in the second.

Let’s assume that your rate changes in the first year by 2

percentage points, but your payments can increase by no more

than 7½% in any one year. Here’s what your payments would look

like:

Many ARMs with payment caps do not have periodic interest

rate caps.

Negative Amortization

If your ARM contains a payment cap, be sure to find out

about “negative amortization.” Negative amortization means the

mortgage balance is increasing. This occurs whenever your

monthly mortgage payments are not large enough to pay all of

the interest due on your mortgage.

Because payment caps limit only the amount of payment

increases, and not interest-rate increases, payments sometimes

do not cover all of the interest due on your loan. This means

that the interest shortage in your payment is automatically

added to your debt, and interest may be charged on that amount.

You might therefore owe the lender more later in the loan term

than you did at the start. However, an increase in the value of

your home may make up for the increase in what you owe.

The next illustration uses the figures from the preceding

example to show how negative amortization works during one

year. Your first 12 payments of $570.42, based on a 10%

interest rate, paid the balance down to $64,638.72 at the end

of the first year. The rate goes up to 12% in the second year.

But because of the 7½% payment cap, payments are not high

enough to cover all the interest. The interest shortage is

added to your debt (with interest on it), which produces

negative amortization of $420.90 during the second year.

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position to make a sound economic choice. If you are buying a

home, and looking for a home loan, this booklet will provide

useful basic information about ARMs. It cannot provide all the

answers you will need, but we believe it is a good starting

point.

PEOPLE ARE ASKING

“Some newspaper ads for home loans show surprisingly low rates.

Are these loans for real, or is there a catch?”

Some of the ads you see are for adjustable rate mortgages

(ARMs). These loans may have low rates for a short time–maybe

only for the first year. After that, the rates can be adjusted

on a regular basis. This means that the interest rate and the

amount of the monthly payment can go up or down.

“Will I know in advance how much my payment may go up?”

With an adjustable-rate mortgage, your future monthly

payment is uncertain. Some types of ARMs put a ceiling on your

payment increase or rate increase from one period to the next.

Virtually all must put a ceiling on interest-rate increases

over the life of the loan.

“Is an ARM the right type of loan for me?”

That depends on your financial situation and the terms of

the ARM. ARMs carry risks in periods of rising interest rates,

but can be cheaper over a longer term if interest rates

decline. You will be able to answer the question better once

you understand more about adjustable-rate mortgages. This

booklet should help.

Mortgages have changed, and so have the questions that

need to be asked and answered.

Shopping for a mortgage used to be a relatively simple

process. Most home mortgage loans had interest rates that did

not change over the life of the loan. Choosing among these

fixed-rate mortgage loans meant comparing interest rates,

monthly payments, fees, prepayment penalties, and due-on-sale

clauses.

Today, many loans have interest rates (and monthly

payments) that can change from time to time. To compare one ARM

with another or with a fixed-rate mortgage, you need to know

about indexes, margins, discounts, caps, negative amortization,

and convertibility. You need to consider the maximum amount

your monthly payment could increase. Most important, you need

to compare what might happen to your mortgage costs with your

future ability to pay.

This booklet explains how ARMs work and some of the risks

and advantages to borrowers that ARMs introduce. It discusses

features that can help reduce the risks and gives some pointers

about advertising and other ways you can get information from

lenders. Important ARM terms are defined in a glossary on page

19. And a checklist at the end of the booklet should help you

ask lenders the right questions and figure out whether an ARM

is right for you. Asking lenders to fill out the checklist is a

good way to get the information you need to compare mortgages.

WHAT IS AN ARM?

With a fixed-rate mortgage, the interest rate stays the

same during the life of the loan. But with an ARM, the interest

rate changes periodically, usually in relation to an index, and

payments may go up or down accordingly.

Lenders generally charge lower initial interest rates for

ARMs than for fixed-rate mortgages. This makes the ARM easier

on your pocketbook at first than a fixed-rate mortgage for the

same amount. It also means that you might qualify for a larger

loan because lenders sometimes make this decision on the basis

of your current income and the first year’s payments. Moreover,

your ARM could be less expensive over a long period than a

fixed-rate mortgage–for example, if interest rates remain

steady or move lower.

Against these advantages, you have to weigh the risk that

an increase in interest rates would lead to higher monthly

payments in the future. It’s a trade-off–you get a lower rate

with an ARM in exchange for assuming more risk.

Here are some questions you need to consider:

* Is my income likely to rise enough to cover higher

mortgage payments if interest rates go up?

* Will I be taking on other sizable debts, such as a loan

for a car or school tuition, in the near future?

* How long do I plan to own this home? (If you plan to sell

soon, rising interest rates may not pose the problem they

do if you plan to own the house for a long time.)

* Can my payments increase even if interest rates generally

do not increase?

HOW ARMS WORK:

THE BASIC FEATURES

The Adjustment Period

With most ARMs, the interest rate and monthly payment

change every year, every three years, or every five years.

However, some ARMs have more frequent interest and payment

changes. The period between one rate change and the next is

called the adjustment period. So, a loan with an adjustment

period of one year is called a one-year ARM, and the interest

rate can change once every year.

The Index

Most lenders tie ARM interest rate changes to changes in

an “index rate.” These indexes usually go up and down with the

general movement of interest rates. If the index rate moves up,

so does your mortgage rate in most circumstances, and you will

probably have to make higher monthly payments. On the other

hand, if the index rate goes down your monthly payment may go

down.

Lenders base ARM rates on a variety of indexes. Among the

most common are the rates on one-, three-, or five-year

Treasury securities. Another common index is the national or

regional average cost of funds to savings and loan

associations. A few lenders use their own cost of funds, over

which–unlike other indexes–they have some control. You should

ask what index will be used and how often it changes. Also ask

how it has behaved in the past and where it is published.

The Margin

To determine the interest rate on an ARM, lenders add to

the index rate a few percentage points called the “margin.” The

amount of the margin can differ from one lender to another, but

it is usually constant over the life of the loan.

Let’s say, for example, that you are comparing ARMs

offered by two different lenders. Both ARMs are for 30 years

and an amount of $65,000. (All the examples used in this

booklet are based on this amount for a 30-year term. Note that

the payment amounts shown here do not include items like taxes

or insurance.)

Both lenders use the one-year Treasury index. But the

first lender uses a 2% margin, and the second lender uses a 3%

margin. Here is how that difference in margin would affect your

initial monthly payment.

In comparing ARMs, look at both the index and margin for

each plan. Some indexes have higher average values, but they

are usually used with lower margins. Be sure to discuss the

margin with your lender.

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If you handle your own advertising correspondence, work with layout artists and write your own ads, it’s well worth your while to set up your own in-house ad agency and save a ton of money.

Even if you don’t create your own ads, you can profit from setting up your own agency and placing the ads that bring sales directly to you.

If you have somethings to sell – especially by mail order – advertising is they way to make that product reach people. Although advertising agencies produce excellent ads of all types and sizes with every demographic appeal, they also charge for it. That’s why they’re ready to claim the fifteen percent discount usually granted for placing ads.

You can learn how to create and design your own ads – with no background in copywriting or art. And, you can set up your own ad agency to place these ads where THEY’LL MAKE MONEY FOR YOU.

Do you have a product that you’re ready to sell? Now’s the time to find out the best angles to use and the tricks of the trade to putting money in your pocket.

STARTING YOUR BUSINESS

Do you have a mail order business? Maybe you sell clothing, camping supplies, or information through ads to the mail order trade. Perhaps you’ve run classified ads for years and are ready to branck out into larger display ads.

Not only small home businesses, but larger mail order companies and hundreds of major advertisers everywhere set up their own in-house agencies to produce and place ads. Even magazines create in-house departments under another name to get the agency discount.

What might set advertising agencies apart from homemade operations is the appearance of the letterhead and the ad form. They must look sharp and professional.

Start with a name for the ad agency you want to establish. It can be anything, but must be different from the name of the company that will be using the space. Then register the name with the county clerk. Check first to be sure you’re not using a company name already in business.

Desiging letterhead is easier than you think. You don’t have to create an elaborate or clever logo – the initials of the company will do. You can choose the mark – the special type style – at a printers, or use one of dozens of press-on letter styles available at art supply stores.

Using photo offset, digital camera, an instant printer can run off a thousand sheets at a very low price. If you go to a printer, check and compare the total printing costs. Typesetting can be expensive and there’s a minimum charge. You may want to wait to get all your typesetting and printing done at the same time – letterhead, ad form, ad copy and any sales literature you may be preparing. Investigate ways to get by with the lease expense.

Establishing your own ad agency is so easy that the most important part is the form you send in when you place ads. Although there are no federal restrictions for in-house ad agencies, some publications may quibble. If your form looks as good as the rest, you’ll have no problems.

The following page is a representation of a sample ad order form. Just copy this form and have your company design or logo printed on top. You can choose a color paper to have the forms run off on – they’ll be more noticeable. Then all you do is send in a copy of the ocmpleted form with your check and final artwork for your ad – and claim a big discount for being your own agency.

Address

To the publisher of: __________________________________________________

Organization______________________________________________________

Your name_______________________________________________________

Address__________________________________________________________

City__________________________________State________Zip____________

Phone (____)_________________

Please mark your desired ad size in a box below:

q 1/3 page $30 (5.5” x 2.75”)

q 1/2 page $45 (5.5” x 4.25”)