Free Advice on Buying Benchmark Fiberglass Entry Doors

It is no longer uncommon to find home builders and owners replacing older wood doors with newer fiberglass doors, and with good reason. Wood, which had been the default surface material for doors, is given to rotting, warping and splitting. This may not be hard to miss around the house but you need only take a long hard look at your exterior doors. They have suffered the most through erratic outdoor conditions and extreme wear. Fiberglass, the alternative to wood, endures those conditions and is cost-efficient because it wears better and lasts longer. Benchmark fiberglass entry doors are among popular choices of exterior doors, especially since they are carried exclusively by Lowe's stores and made by a fiberglass door pioneer, Therma-Tru. Is a Benchmark door right for your house in terms of purpose and aesthetic? Will it perform on a level that you expect from door products? Can it endure the way of life in your household?

1. Mind the details. Benchmark fiberglass entry doors come with features focused on energy efficiency, longevity and home security. Their "leak protection pad" is situated in a known target area of air and moisture infiltration, where it acts like a sort of corner pocket preventing air and moisture from creeping through. Their heavy-duty door bottom sweep constitutes double bulbs and dual fins that block air and water even further. Fiberglass itself is closely identified with energy saving because it insulates three to five times better than wood and allows natural sunlight into homes. The sill cap is made from composite material, which means it is resistant to rotting unlike wood, and its adjustable parts are made from corrosion-resistant steel. The optional jamb, primed and ready to be painted on, adds resistance to rotting and insect damage. The optional three-point locking system is also made from corrosion-resistant stainless steel. Needless to say, this feature increases security and peace of mind.

2. You get what you pay for. The most apparent quality of Benchmark doors is the always irresistible combination of attractiveness and affordability. Their contemporary designs are a departure from old wooden doors, an exciting prospect for homeowners who see beyond the familiar rustic house and can appreciate metal or iron décor. Their glass styles are intended to complement chic house features like an interior sliding door or a wall-wide mirror. Certainly, their friendly prices rival that of traditional hardwood doors like mahogany and oak, which usually exhibit elegant handcrafting rather than sleek lines. While price tends to be the most influencing factor when shopping, it would be prudent to consider wear and tear. Since exterior doors are highly exposed, you may want to spend more and get top-of-the-line products, especially if your location is subject to harsh climate conditions. Good-looking mid-priced products would be a smart choice for interior doors.

3. Go to a professional. Benchmark by Therma-Tru is a brand of Therma-Tru Doors, which developed the first fiberglass entry door over 25 years ago. The company's specialization are doors made from fiberglass, especially, pre-hung entry doors, and not necessarily steel, composite material or wood. Whether or not its expertise in other aspects of door production is comparable to that of a long-established manufacturer like Masonite, Feather River or Milgard should be taken into account. Benchmark fiberglass entry doors are pre-hung, which gives you the option to do the installation yourself or have it done by professionals. Do-it-yourself installation is almost always a problematic task. Benchmark doors can be installed by Lowe's, the brand's exclusive distributors. However, if your house lends itself to difficulties in design, architecture, age or location, it would be wisest to seek your own professional installation service.

Ward Eichelberger reviews how to get the best from Benchmark Fiberglass Entry Doors. Please visit his Fiberglass Entry Doors site for latest news.

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What Are the Different Kinds of Mortgages?

There are literally thousands of loan programs available in the market. Every lender tries to be as different as they can to create a special niche, which they hope will increase business. It would be impossible to provide a review of every type of loan, so in this article, we'll just stick to the main ones. Most loan programs are variations of the loans we will cover here. First of all we will go over some terminology you should understand and then we will delve into the different mortgage programs available today.

AMORTIZATION

Amortization is the paying back of the money borrowed plus interest. The actual term, or length of the mortgage along with the amortization is what determines what the payments will be and when the loan will be paid off. It is a means of paying out a predetermined sum (the principal) plus interest over a fixed period of time, so that the principal is completely eliminated by the end of the term. This would be easy if interest weren't involved, since one could simply divide the principal amount into a certain number of payments and be done with it. The trick is to find the right payment amount,which includes some principal and some interest. The formula of amortization uses only 12 days a year to compute the interest. The interest payment on a mortgage is calculated by multiplying 1/12th (one-twelfth) of the interest rate times the loan balance of the previous month.

On a 30-year, $150,000 mortgage with a fixed interest rate of 7.5 percent,a homeowner who keeps the loan for the full term will pay $227,575.83 in interest. The lender does not expect that person to pay all that interest in just a couple of years so the interest is spread over the full 30-year term. That keeps the monthly payment at $1,048.82.

The only way to keep the payments stable is to have the majority of each month's payment go toward interest during the early years of the loan. Of the first month's payment, for instance, only $111.32 goes toward principal. The other $937.50 goes toward interest. That ratio gradually improves overtime, and by the second-to-last payment, $1,035.83 of the borrower's payment will apply to principal while just $12.99 will go toward interest.

There are four types of loans when dealing with amortization and term. They are:

1. Fixed: with conventional fixed rate mortgages, the interest rate will stay the same for the life of the loan. Consequently the mortgage payment (Principal and Interest) also stays the same. Changes in the economy or the borrower's personal life do not affect the rate of this loan.

2. Adjustable: (ARM) also called variable rate mortgages. With this loan the interest rates can fluctuate based on the changes in the rate index the loan is tied to. Common indexes are 30 year US Treasury Bills and Libor (London Interbank Offering Rate). Interest rates on ARMs vary depending on how often the rate can change. The rate itself is determined by adding a specific percentage, called margin, to the rate index. This margin allows the lender to recover their cost and make some profit.

3. Balloon: A loan that is due and payable before it is fully amortized. Say for example that a loan of $50,000 is a 30-year loan at 10% with a five-year balloon. The payments would be calculated at 10% over 30 years, but at the end of the five years the remaining balance will be due and payable. Balloon mortgages may have a feature that would allow the balloon to convert to a fixed rate at maturity. This is a conditional offer and should not be confused with an ARM. In some cases, payments of interest only have to be made, and sometimes the entire balance is due and the loan is over. Unpaid balloon payments can lead to foreclosure and such financing is not advisable to home buyers. Balloons are used mainly in commercial financing.

4. Interest only: This type of loan is not amortized. Just like the name implies the payments are of interest only. The principal is not part of the payment and so does not decline. Interest only loans are calculated using simple interest and are available in both adjustable rate loans and fixed rate loans.

Fixed rate: The fixed rate loan is the benchmark loan against which all other loans are compared to. The most common types of fixed rates loans are the 30 year and the 15 year loans. The 30 year loan is amortized over 30 years or 360 payments while the 15 year is amortized over 180 payments. For the borrower, the 15 year loan has higher payments, since the money needs to be repaid in half the time. But because of that same feature the interest paid to the bank is much lower as well.

Even though these two are the most common terms, others are gaining in popularity, such as the 10, 20, 25, and even 40 year term loans Depending on the lender, the shorter the term, the less risk, and thus the lower the rate.

Other types of fixed rate loans:

BI-WEEKLY MORTGAGE

The bi-weekly mortgage shortens the loan term of a 30 year loans to 18 or 19 years by requiring a payment for half the monthly amount every two weeks. The biweekly payments increase the annual amount paid by about 8 percent and in effect pay 13 monthly payments (26 biweekly payments) per year. The shortened loan term decreases the total interest costs substantially.

The interest costs for the biweekly mortgage are decreased even farther, however, by the application of each payment to the principal upon which the interest is calculated every 14 days. By nibbling away at the principal faster, the homeowner saves additional interest. The ability to qualify for this type of loan is based on a 30-year term, and most lenders who offer this mortgage will allow the home buyer to convert to a more traditional 30-year loan without penalty.

GRADUATED PAYMENT MORTGAGE (GPM)

This loan is a good idea for buyers who expect their income to rise in the future. A GPM will start these borrowers off at a much lower than market interest rate. This allows them to qualify for a larger loan than they would otherwise. The risk is that they assume they will have enough income to pay increased payments in the future. This is similar to an ARM but the rate increases at a set rate, not like the ARM where the rate is based on the market. For example, a GPM for 30 years might start out with an interest rate of 5% for the first 6 months, adjust to 7% for the next year, and adjust upwards .5% every 6 months thereafter.

GROWING EQUITY MORTGAGE (GEMS)

For as long as mortgages have been around conventional fixed loans have been the standard against which creative financing has been measured. In the early 1980s the GEM was developed as a new alternative to creative financing. The GEM loan, while amortized like a conventional loan, uses a unique repayment method to save interest expense by 50% or more. Instead of paying a set amount each month, GEM loans have a graduated payment increase that can be calculated by increasing the monthly payment 2, 3, 4, or 5 percent annually during the loan. Or the monthly payments can be set to increase based on the performance of a specific market index.

So far it is sounds like a graduated payment mortgage but there is a difference. As monthly payments rise, all additional money paid by borrowers is used to reduce the principle balance. This results in a loan paid off in less than 15 years.

REVERSE MORTGAGES

While a reverse mortgage is not exactly a fixed rate mortgage (it is more of an annuity), I have included it here because the payments made to the home buyers are fixed. Reverse mortgages are designed especially for elderly people with equity in their homes but limited cash. They allow individuals to retain home ownership while providing needed cash flow. In a traditional mortgage, the homeowners repay the amount borrowed over a specified period of time. With a reverse mortgage the homeowner receives a specified amount every month.

To illustrate, say Mr. and Mrs. Smith are 70 and 65 years old respectively and retired. Their home is free from all encumbrances and worth $135,000. They would like to get the money out of their house to enjoy it, but instead of receiving it in one lump sum by refinancing it, they want to receive a little bit every month. Their lender arranges for a $100,000 reverse mortgage. They will get $500 a month from their equity and the lender will earn 9% interest.

Unlike other mortgages where the same $100,000 represents only the principle amount, with a reverse mortgage $100,000 is equal to the combined total of all principal and interest. On this particular loan, at the end of 10 years and 3 months, the Smiths will owe $100,000. The breakdown being $61,500 principle and $38,500 in interest. At this time the loan will end. So the Smiths will only receive $61,500, and they now owe the bank $100,000.

ADJUSTABLE RATE MORTGAGES

An ARM is a type of loan amortization where the most prevalent feature is that the interest rate adjusts during the course of the loan. Thanks to the adjustable rate feature, banks and lenders are better protected in case interest rates fluctuate wildly like in the 1970s when banks were lending at 8% fixed and then rates went as high as 18%. This left the banks holding loans that were losing money every month since the banks had to pay money to depositors at higher rates then they were making on their investments.

Important Tip: ARM interest rates are usually lower than fixed rates.There are multiple types of ARM loans in the market today. They all This makes it easier for borrowers to qualify for a larger loan amount with an ARM. differ from each other in minor but important ways. There are four main criteria to look at when dealing with an ARM loan: the Index used, the Margin, the Cap, and the Adjustment Frequency.

INDEX

The interest rates of an ARM loan are based on an Index, which is a published rate. The most common used indexes are:

COFI - The Cost of Funds Index. This index is related with the 11th District Federal Home Loan Bank Board in California. This index is also the most stable of all the common indexes.

The Treasury Series - This is a series of maturity lengths for Treasury Bills. These bills are used as investments by millions and are actively traded every day and so the rate varies daily.

LIBOR - The London Inter Bank Offered Rate is the rate the central bank in England uses to lend money to its banks.

Prime - This rate is the rate that banks in the US use to lend money to their best clients. This number is published daily in US newspapers, but it is important to know that each bank can set it's own Prime rate.

CDs - This index is from the rate paid to purchased of 6 month Certificates of Deposits.

MARGIN

Margin is defined as the amount added to the index rate to determine the current rate charged on the ARM. Once you add the margin to the index rate you arrive at what is called the Fully Indexed Rate (FIR). This rate is the true rate which the borrower will pay. The interest rate quoted to a borrower at closing might be lower then the FIR.

LOAN CAPS

The Cap is a very important number because it is the maximum that a rate can change. So even if the index rises 10% in one period, the FIR will not do so if there the rate cap is reached. There are two types of caps to worry about when discussing an ARM. The Rate Adjustment Cap which is the maximum the rate can change from one period to another. And the Life of the Loan Cap which is the maximum rate that can be charged during the loan. To figure out how the rate will change, you have to know the index, the margin, the rate, and the cap. Add the index and the margin to determine the FIR. Then take the rate and add it to the cap. Whichever is the smaller change is what the new interest rate will be.

ADJUSTMENT FREQUENCY

This is how often the rate changes. Initially when the loan is closed the rate will be fixed for a certain amount of time, then it will start changing. How often it changes is the Adjustment Frequency. So you can have a 7/1 Arm which means the rate will be fixed for 7 years, and then adjust every year after. Or you can have a 3/1 ARM. Fixed for 3 years. The more frequent the adjustment and the sooner it starts, the lower the initial interest rate. So a 3/1 ARM will have a lower rate then a 10/5 will. And that is because the 10/5 has more risk for the lender. The 10/5rate will be much closer to a fixed rate loan.

When a borrower considers an ARM, it is usually because the rate is lower then the fixed rate loan. And thus it is easier to qualify for. But the borrower is then betting against the bank. The ARM loan might turn out to be more expensive then the fixed rate loan in the long run, if rate rise during the term of the loan.

You must have an idea of how long you are going to live in the house you are borrowing to buy. If you are going to stay there long-term, a fixed-rate may make more sense. ARM's are better for military and other people who buy and sell within shorter time periods.

CONVENTIONAL MORTGAGE

A conventional mortgage is a non-government loan financed with a value less than or equal to a specific amount established each year by major secondary lenders. As of 2008, financing for less than $417,000 was regarded as conventional financing. A conventional loan is the most popular loan today, as so it has become the benchmark against all the other mortgages. It has 4 special features:

1. Set monthly payments

2. Set interest rates

3. Fixed loan term

4. Self amortization

A conventional loan is one that is secured by government sponsored entities such as Fannie Mae and Freddie Mac. Since they are secured, the lender is assured that they can easily sell the loan on the secondary market.

And because of that assurance, these loans have the lowest rates.

In order to qualify as a conventional loan, the home and borrowers must fall into the guidelines set by the secondary lenders.

HOME EQUITY LOANS

Real estate has traditionally been considered a non-liquid asset. Property can be converted to cash only by either selling or refinancing. Both are very expensive and time-consuming ways to raise money. Today's borrowers can convert their house to cash immediately by using the equity in their home.

These loans take much less time to approve and fund then regular home loans. And the fees are generally less than a normal loan as well. But home equity loans are usually placed in a second lien position after the original mortgage, at a higher interest rate. If the borrower does not pay, the house could be foreclosed upon.

The Equity Loan is an open ended mortgage similar to a credit card. Borrowers can take the money out, use it, and pay back the money when they choose. Recently, home equity loans have brought about new government regulations in some states since people were getting these loans without really understanding the consequences and thus being taken advantage of by less than honest lenders.

SECOND MORTGAGES

A second mortgage is a loan against a property in second or "junior" position. In case of foreclosure, the creditor in first position gets first dibs on any monies. In many cases, there is not enough equity in a house to pay off both the first and second mortgage. So the second mortgage holder can get nothing. Therefore, being in second position can be a very risky place to be.

That is why second mortgages come with higher rates then first mortgages. Second mortgages come in two main forms - a fixed mortgage and a home equity mortgage. The fixed mortgage follows the same format as a regular fixed loan. The equity mortgage is based on equity in the home.

Second mortgages are used by loan officers to either help the borrower avoid paying PMI, or to avoid a jumbo loan. A jumbo loan would be a non-conforming loan and thus would have a higher rate for the entire loan. If a borrower wanted to avoid this, he could get a first mortgage at the max conventional loans allow, and a second for the balance. The rate on the second would be high, but blended together, the rate would be less than on the jumbo.

GOVERNMENT LOANS

There are two governmental agencies that guarantee loans: The Department of Veterans Affairs (VA), and the Federal Housing Administration (FHA).

VA LOANS

VA loans are one of two types of government loans and are guaranteed by The Department of Veterans Affairs under the Serviceman's Readjustment Act. Lenders rely on this guarantee to reduce their risk. The best thing about VA loans is that for veterans is allows them to get into a house with zero or very little down. The amount of down payment required depends on the entitlement and the amount of the loan. Military service requirements vary. These loans are available to active-duty as well as separated military veterans and their spouses.

These loans are self-amortizing if held for the complete term of the loan, yet it may be paid off without penalty. These loans are only available through approved lenders. The amount of entitlement a veteran has is reported in a Certificate of Eligibility which must be obtained from the VA office in your area.

Veterans who had a VA loan before may still have "remaining entitlement" to use for another VA loan. The current amount of entitlement was much lower previously and has been increased by changes in the law. For example, a veteran who obtained a $25,000 loan in 1974 would have used$12,500 guaranty entitlement, the maximum then available. Even if that loan is not paid off, the veteran could use the difference between the $12,500 entitlement originally used and the current maximum to buy another home with VA financing.

Most lenders require that a combination of the guaranty entitlement and any cash down payment must equal at least 25 percent of the reasonable value or sales price of the property- whichever is less. Thus, in the example, the veteran's $23,500 remaining entitlement would meet a lender's minimum guaranty requirement for a no down payment loan to buy a property valued at and selling for $94,000. The veteran could also combine a down payment with the remaining entitlement for a larger loan amount.

FHA LOANS

The Federal Housing Administration is one of the oldest and largest sources of mortgage assistance available to the general public. The Department of Housing and Urban Development (HUD) run this program.

FHA backed mortgages are the other type of government loans and are an outgrowth of policy in the interest of the public, with the view that the government should stimulate the economy in general and the housing industry in particular. FHA loans like VA loans can only be obtained through approved lenders.

Why are FHA loans so popular? Because they have liberal qualifying standards, low or even no down payments and even closing costs can be financed and added to the loan. There is no prepayment penalty. FHA loans made prior to February 4, 1988 are freely assumable by a new buyer when the house is sold. Loans made after December 15, 1989 may only be assumed by qualified owner-occupants and cannot be assumed by investors.

FHA loans have limits too. Recent housing appreciation has pushed up the limits on this year's loan program by nearly 16 percent in the continental U.S.

If you want to find out what the loan limit is where you live you can call the consumer hotline for the Housing and Urban Development Department . Their toll-free number is available on their site. The FHA is a division of HUD.

As always, consult a mortgage professional. A Certified Mortgage Planner will work with your own financial planner, Realtor, CPA and other advisers to find a mortgage loan product that is right for you.

Please visit James at [http://swifthussherrealestate.com] for mortgage needs. Apply online, check current offered rates and loan programs and more!

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Why a Freedom Loan From Benchmark Lending is the Most Popular

When you think of mortgages that enable thousands of people to acquire homes every year, you are thinking of the Benchmark Lending group which has provided much needed finances to get new homes or refinance the existing homes to many families for over ten years. They offer tailor made mortgages to suit the needs of customers ensuring that you can afford it. They make this happen by considering the cash flow of every customer. They also consider the repayment period, investment opportunities and your equity plans. The Benchmark lending group was founded by Barney Aldridge in 1995 as a primary mortgage lending bank and it continues to grow. Customers can expect no hassles and there are no middlemen. The headquarters are located in Northern California and their culture is to provide a good service with dedication and passion.

When you need to apply for a loan, the company assures you that the process is easy and, you do not have to worry about complications. You will have a loan officer guide you through the whole process briefing you on all vital issues on credit until you have a satisfactory end. At Benchmark lending group, the management consists of people who have mastered the industry and proved that they can deliver what it takes to progress the business. It consists of the President who is the Chief Executive officer. His name is Jason Ehrlicher and he began as a loan officer in the company and years have seen him become capable and able to lead owing to his rich experience and dedication to the company since it began.

The others in the management team include the Director of Human Resources, Vice President of Sales and the Sales Manager. The first kind of loan they offer is the Fixed Rate Loan where the rate does not change and one can get a loan to repay in 10, 15, 20 and 30 years. People who go for such a loan must be planning to keep their house for more than 10 years and, for those who do not plan to use their home equity for the period of the loan. The other kind of mortgage the Benchmark Lending group offer is the adjustable rate mortgage. This loan is for people who plan to keep their house for up to 10 years or less. The duration for this kind of mortgage is usually 3, 5, 7 and 10 years.

A freedom loan from Benchmark Lending is the most popular because it is an adjustable loan that enables you to choose from 4 different payment methods according to your convenience every month. The loan is tailor made for people who do not have a regular or stable cash flow and for people who want to make other investments. Another loan suitable for people with fluctuating incomes is the Better Half loan and, it will help people with unstable monthly income realize their dream of owning a home. There are very many other options to choose from and, you can even apply online on their site. There are other resources that you will find very helpful. Before you take any mortgage, it is good to consider your income and your flexibility and ability to repay given the many options of repayments. Get a good system that will help you realize your dream for a good home.

Peter Gitundu Creates Interesting And Thought Provoking Content on Finance. For More Information On How To Manage Loans, Read More Of His Articles Here MANAGE STUDENT LOANS If You Enjoyed This Article, Make Sure You SUBSCRIBE TO MY RSS FEED!

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Forget Benchmarking

Forget benchmarking. At best, let yourself be benchmarked. If you have benchmarking as a key strategic driver, with the best case scenario you will excel at the art of catching up. You will not invent the new breakthrough product, create a new market or be unique at what you do. OK, you may want to see your company at the top of the league table. If this is what you want, fine.

Benchmarking is a form of comparison with so-called best practices. Typically a company does the research for you, following pre-defined parameters and measures, so you are eventually able to compare yourself with your competitors. It could be a productivity comparison, a quality comparison or any other performance comparison with others. Assuming that the research is done thoroughly and that people are not trying to compare apples with pears, you can obtain any statistic you want and you will find yourself somewhere in the spectrum from bad to good. League tables in schools and hospitals in the UK and other countries are a form of benchmarking. In the pharmaceutical industry there is plenty of data available in measures such as R&D productivity, time to market, or, say, speed of the clinical trial programme.

The problem with benchmarking is that sometimes people make extraordinary efforts comparing themselves with others on a reality that is gone: the past. It is impossible to benchmark yourself against things that have not happened yet. The future is not benchmarkable. Benchmarking is catching up. It is rear-mirror management, not future development.

Benchmarking also has the potential to block creativity since the efforts are focused on what is happening as opposed to what may happen in future. Benchmarking is loved by managers of the inevitable, people whose main priority in business is to manage things that otherwise would happen anyway. Managers should be paid to drive things that would not happen unless they were there. Organisations that put too much emphasis on benchmarking may miss the innovation train. Since benchmarking needs today's data (or, to be more precise, yesterday's) it may produce tunnel vision, in other words, the least visionary of visions.

I wonder whether Bill Gates, founder of Microsoft, was benchmarking when in 1985 he stated that 640K of computer memory ought to be enough for anybody. Obviously, it was not benchmarking that saved him from this 'vision'. Kenneth Olsen, founder of the computer company Digital Equipment Corporation, was also benchmarking when in 1977 he said that there was no reason why anyone would want a computer in their home. Undoubtedly the benchmarking consultants of the day could not find any computers in homes so the hypothetical benchmarking study would have confirmed the reality of Olsen's views. In 1876, Sir William Preece, chief engineer of the British General Post Office, had done his own benchmarking (although he did not know the term) and argued that "the Americans had need for the telephone but we do not; we have plenty of messenger boys". Probably the imaginary benchmarking research of the day would have produced a league table of 'fast to slow messengers'. Decca, the record company, must have also been benchmarking the musical market when they rejected the Beatles on the grounds that 'guitar music is on the way out'. I don't know, but I bet they even had 'hard statistical data'.

Business history is full of examples of where true innovation defies the expectations of today and the realities of the past. I can't imagine a benchmarking consultant doing research for Sony and finding that: (a) people wanted to have little battery powered boxes hanging from their belts with thin wires hooked into their ears to play tapes in the street when going to the office, or (b) they actually found examples of that strange behaviour in the market and reported the facts to Sony. The Walkman was not invented on the back of benchmarking (or market research for that matter).

Incrementalism and innovation

Benchmarking usually leads to an incrementalist mentality. If one is behind on something, surely by putting some measures into practice one can advance one, three, five points. Benchmarking is a race against somebody who has already won. Nicolas Negroponte, of the MIT's Media Lab, is quoted as saying that "incrementalism is innovation's worse enemy". I agree.

Is benchmarking such a waste? No. Like many things in life it depends on how seriously you take it. If benchmarking data is used to generate ideas, to give wake-up calls when things are not great, or simply to understand what's going on in your world, then you should welcome it. But to turn benchmarking into some sort of religion or, as in many organisations, the driver of strategy is a waste of time. If you find a company or potential employer singing the benchmarking song as the main theme, I suggest you downgrade your expectations.

Entire change management programmes are based on some form of benchmarking, even when the term is not used. You can see those drivers; industry standards, averages of competitors' performances, constant reference to 'industry best practices', etc. These approaches are unlikely to produce radical change. By that I mean sustainable change that is not incremental and that leads the organisation to a higher level of possibilities. Some change programmes are based on a simple extrapolation of the past and present, containing a horizon that is a sort of 'better picture' of today.

To be fair to benchmarking addicts, many books, publications and congresses that have benchmarking in the title are using the term in its broadest sense: a panorama of what is available today. In the best cases they are a journalistic account of management practices that organisations have put in place and the benefits they have achieved under such and such programme. Strictly speaking this is not benchmarking, but a non-judgemental review of practices. The word 'best' associated with the title 'best practices' does not guarantee that what you see is the best - I have never read an account of 'worst practices'.

The fact that many entrepreneurial ventures are led by people who know little about that industry tells you that they are unlikely to rely on benchmarking data or industry standards to produce something different. This, of course, is not always the case. But certainly the most successful and lasting entrepreneurial enterprises produce something different or unique rather than simply 'better' - something that was almost certainly unpredictable.

In 1976, Muhammad Yunus, a professor of economics, had the wild idea of creating a bank that lends relatively small amounts to the poor and to the sector of the population in his part of the world with less access to money: women. The Grammen Bank was born. Today it has more than two million borrowers and has lent over US$1 billion. It has not only become a very successful enterprise but has minimum levels of defaults, and has expanded to offer other services, for example, mobile communications. The 'Grammen model' has led to successful enterprises outside banking, yet it still has intrinsic merit as a socially responsible initiative. I am pretty sure that Yunus did not rely on benchmarking data, or banking 'best practices', to set up the enterprise. What he did was diametrically opposite to 'best banking practice'. In reality, he put into practice what is arguably the 'worst possible banking practice'.

The history of mankind, the history of business and the history of ideas are all full of predictions that were wrong and that, had they been followed up, would have blocked innovation. They have in common the focus on the present or the past, a rear-mirror strategy or benchmarking-like motivation. Lord Kelvin, former president of The Royal Society (UK), predicted in 1895 that heavier-than-air flying machines were impossible. Some years later, in 1923, Robert Millikan, a Nobel Prize winner in physics, predicted that "there is no likelihood that man can ever tap the power of the atom". Twenty years later the founder of IBM, Thomas Watson, stated that there was a world market for about five computers. Perhaps the most striking statement in the history of complacency (and arrogance) comes from the often quoted Charles H Duell, Commissioner of the USA Office of Patents, who in 1899 recommended the abolition of the office on the grounds that "everything that can be invented has been invented".

What has always interested me is that you rarely find idiots among that pool of people making statements that seem ridiculous today. IQ clearly doesn't correlate with business predictions!

Benchmarking should in the best cases be a starting point, not an aim in itself: a platform for conversation and to move forward; data to reflect upon and forget quickly. Innovation comes from exploring the unthinkable, from stretching the world of possibilities, from a healthy "forget benchmarking, what if we did this?" Out-of-the-box thinking is needed more than benchmarking data. The problem with out-of-the-box thinking is that it is often in short supply in semi-bureaucratic and super-structured environments. I am afraid we have hit the 'culture thing' here - a topic for another day.

I sometimes use a vignette of a group of managers who are discussing out-of-the-box thinking to illustrate the difficulties. One of them is addressing the others and saying: "We are encountering a few difficulties in my department with this thinking out-of-the-box. We have had a series of meetings discussing the size of the box, the need for a box, the market availability of boxes and our own benchmarking data on boxes. We haven't agreed on much so far, but we are progressing towards the next stage where we will address the issues of what materials the box should be constructed from, a budget for the box and our first choice of box vendors."

Dr Leandro Herrero practiced as a psychiatrist for more than fifteen years before taking up senior management positions in several pharmaceutical companies, both in the UK and the US. He is co-founder and CEO of The Chalfont Project Ltd, an international firm of organizational consultants. Taking advantage of his behavioral sciences background - coupled with his hands-on business experience - he works with organizations of many kinds on structural and behavioral change, leadership and human collaboration. He has published several books, among which The Leader with Seven Faces, Viral Change and New Leaders Wanted: Now Hiring!, all published by meetingminds.

All articles posted on E-zine by Leandro Herrero are copyright © Leandro Herrero.

http://www.meetingminds.com - http://www.thechalfontproject.com

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What Makes Historical LIBOR Rates Significant?

Financial institutions in London had an increasing demand for a benchmark for lending rates at the beginning of the nineteen eighties. This benchmark was specially needed to compute prices for financial items such as interest swaps and options. The British Bankers' Association (BBA) took responsibility in 1984 which then led to the dissemination of the first LIBOR interest rates. Historical LIBOR rates have been useful references or sources for LIBOR.

Today LIBOR is acknowledged worldwide as the most significant benchmark for short-term interest rates. It is also used in the professional financial markets as base rates for a huge number of financial items like the options, swaps and futures. In banks, they use LIBOR interest rates as the basis for deciding on savings, interest rates for loans and mortgages. Since LIBOR is widely accepted as the base rate for other items, historical LIBOR rates are now constantly being tracked by numerous professionals, individuals and businesses all over the world.

LIBOR is known as an average interest rate where carefully selected banks undergo a process of lending funds to each other. These selected banks are recognized as "panel banks". Each year the British Bankers' Association together with the Foreign Exchange and Money Markets Committee performs the process of selecting banks. A panel for each currency is made at which can be composed of eight to sixteen banks that are chosen to be delegates for the London money market. The basis for a bank's candidacy to be in the panel is its reputation, market volume and understanding of the currency.

When LIBOR was just starting, it was only published for three currencies which are the pound, Japanese yen and US dollar. As time passed by the currencies increased to a maximum of 16 where some of them combined with the Euro on 2000.

Since there are fifteen various maturity levels, then there are also fifteen various LIBOR rates. Fifteen Maturity levels wasn't always the case especially in 1998 where the shortest maturity was just one month. A one week rate was then added in the same year and it was only in 2001 when the two-week and overnight LIBOR rates were established.

As you come to understand how LIBOR works then you will know how significant Historical LIBOR rates are. Though these rates are positioned in the United Kingdom, a lot of consumers still require comprehension on the mechanics of LIBOR especially that it is accepted as a basis for many kinds of consumer loans.

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How Does a Bank Decide What Interest Rate to Charge?

Over the last 12 to 18 months the banking world has been turned upside down by the global financial crisis. As a rule, banks obtain the money from a variety of sources and then lend that money to their customers at a higher rate than what they have paid for it. This is how a bank makes money.

A large part of the bank's resources comes from their deposit accounts. Things like everyday transaction accounts, term deposits and other investment accounts. They also borrow money from the Reserve Bank, and they have access to money from other banks, both at home and around the world.

As a rule of thumb, it is the cost of money from the Reserve Bank that determines how much a bank will charge its customers. This is because, in normal times, the Reserve Bank sets the interest rate after examining the state of the Australian and world economies and using its power to set the rate of interest as a method for controlling things like the growth of the economy and internal demand for credit. This rate has been an acceptable average for banks to use as a benchmark.

As the global financial crisis began to unfurl, the usual benchmarks flew out the window. No longer could banks use the reserve bank rate as their acceptable average. Instead they were forced to look at the internal costs they were incurring when borrowing money from other banks around the world. This international swap rate, as it is called, rose considerably, making that source of funding virtually untenable.

As the credit dried up, the amount of money the bank would lend similarly contracted. It was at this point that banks began to use different ways to determine the interest rate at which they could lend to borrowers. This accounts for the fact that each bank now lends at different rates for different home loans right across the board.

As a sense of calm gradually filters through the financial markets around the world, we can expect a return to the good old days. Until then, banks will continue to change the interest rates to match their internal costing, and not simply rely upon the Reserve Bank price of money.

There have been many criticisms in the press especially where banks have raised the interest rates by higher amounts than the reserve bank has set.

This is a brief explanation for why that has happened, and it is as good a reason as any to be careful when choosing which bank can give you the best deal on your home loan.

Richard J Gardner operates the Australian Bank Branches Directory which lists the location of all bank branches. Find the right bank branch and the best banking deals on home loans, credit cards and business lending at http://www.bankbranches.com.au

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