(13)Are you so desperate for a home loan that you are
stretching your finances too far?
Once you get a quote for a home loan don’t be tempted to take
the entire amount if it looks like you overqualified. Most
consumers fill out an application for a home loan and hope they
can get enough money to buy their dream house.
A nice chunk of those consumers also overqualify for their home
loans. If go to your local bank, credit union or mortgage broker
and you are approved for a $500,000 home loan, they payments
might be a bit more than you realistically afford.
Use a mortgage calculator to see your real monthly expenses
If you are not good with your money or would prefer to not
stretch your finances to the limit to get a home, get your hands
on a good mortgage calculator as soon as you get the figures on
your home loan. You might think all will be fine as long as you
can own your own property.
However, you must take into account all of the things that come
along with owning a home. Sometimes you can get so caught up
with the actual dollar amount of your home loan that you forget
the other pieces of your budget.
Do you still have cash for entertainment and personal use?
Check your budget to see if you still have money to enjoy things
like going out, purchasing new furniture, a family vacation once
per year and regular manicures and pedicures. Then add in your
student loans, car payments, credit card bills, lunches at work
and tickets to take your family to baseball games a couple of
times every season.
You also need money for home maintenance and repairs.There
are also the home maintenance issues that are not included when
you qualify for a home loan. If you live in a part of the
country that’s particularly hot or cold, your heating and air
conditioning bill could easily add up to a couple of hundred
dollars per month.
Your home loan package does not include budgeting for
lawnmowers, landscaping and fixing broken windows. Some of these
expenses can be put off until a later day, but some of them will
require your immediate attention once you move into your home.
Know your spending habits to gauge how much debt you can carry.If
you are used to living paycheck to paycheck and generally not
taking care of your budget as a renter, you will probably carry
over some of the same habits to your new home.
The best way to avoid a financial disaster is to make your home
loan a part of your financial life instead of the centerpiece of
your financial life. If you are stressed out about money issues
from the very first move in, it is unlikely that you will enjoy
your new home or anything else in your life for a long time.
About the Author
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Syd Johnson
Editor
Written by: Syd Johnson
Home refinancing is a wonderful financial tool for homeowners to
use for debt management to investments. If the home refinance is
used correctly, wisely, and at the right time, the benefits from
the refinance can improve the financial picture of the
homeowner. There is no cookie cutter approach to refinancing.
Each individual or family has their own unique set of
circumstances. Here are some common questions homeowners often
ask when they are considering refinancing.
What is the most critical question to ask myself when
refinancing a home?
Is refinancing going to put you in a better position
financially? Will refinancing reduce your monthly expenses, meet
a critical family requirement, or improve your investment
portfolio? If the answer is yes, it is probably a good time to
refinance.
What is a cost benefit analysis?
This is a detailed account of the actual cost of refinancing and
helps provide the best financial decision. Cost-benefit analysis
analyzes the cost effectiveness of different alternatives in
order to see whether the benefits outweigh the costs When you
look at the actual costs of refinancing, determine how long it
will take to recoup costs. Is it worth it? A qualified mortgage
professional should review your alternatives and help you
determine if the benefits outweigh the near and long term costs.
The rule of thumb regarding the cost vs. benefit of refinancing
is that you need a 1- 2% "spread" between your existing interest
rate and today's current rates. Refinancing, No Cash-Out option
can reduce your monthly mortgage payment or reduce the remaining
term of your loan and thus probably save tens of thousands of
dollars in interest over the long-run. Cash-Out withdraws cash
(reduces equity) for home improvement, educational tuition, debt
consolidation or for such purchases as a investment property or
second home, auto, or other major purchase.
How often should I refinance?
Some people refinance frequently but a rule of thumb should be
that you have held the property for one year. Refinancing allows
the homeowner to use the home to conduct transactions that allow
opportunities and possibly enhance the homeowner’s asset pool or
reduce the financial short-term burden of the homeowner. How the
homeowner approaches the refinance is critical to long-term
financial net worth. If the homeowner is utilizing the home as a
second checking account to payoff consumer debt, financial
stability for future years is reduced through ineffective money
management by reducing the homeowner’s equity. The ability for
the consumer to build equity is in essence a long term subtle
retirement plan for the homeowner.
What are some questions I can ask the mortgage company or the
bank handling my refinancing?
The scope of financial knowledge a mortgage consultant or loan
officer possesses matters in this transaction. This person
should have a thorough knowledge of money and how it works.
Begin by asking about their professional credentials. The best
mortgage professionals will have formal business education,
professional experience in the financial industry, and the
institutional knowledge to place you in the right product. At
Breakwater Mortgage in Virginia Beach, we select our mortgage
consultants, loan officers, and loan originators based on
strengths in these areas. Often lenders, banks, and other
mortgage companies do not conduct a detailed review of potential
employees that will handle your most important asset. Ask your
mortgage professional why they are recommending a certain loan
product to you. You should also feel free to ask personal
questions such as: Do you own a home? What type of mortgage do
you have? What is your credit score? The answers will reveal
information about their money management. If you do not feel
comfortable with your mortgage professional, research a
qualified individual who will help you based on your needs. It’s
worth it to take the time to find the right mortgage
professional.
Does location of the home matter when considering refinancing?
Yes, it matters a great deal. Some real estate markets have
reached their peak. Do not refinance at the top of the market.
Research and see how quickly homes are selling in your area.
Contact your local professionals regarding home values in your
market. They will be able to give you their opinion, home comps,
assessments of home value trends in your area. I recommend you
leave 10-15% equity in your home when you refinance. A reputable
mortgage broker or lender will recommend that you keep some
equity in your home so you can sell your property if situations
dictate.
Does the type of mortgage I have affect my refinancing decision?
Absolutely. Talk to a qualified mortgage professional first,
before you make your decision. That person will help you compare
your current mortgage rate/product to current market rates,
available mortgage terms, and types of mortgages available based
on your discussions. I look at mortgage products based on an
indebt analysis of the clients needs. With that in mind, some
general rules apply. If rates are falling, I would advise a
homeowner to stay in their current loan until a 2% spread
between their current loan and future refinance loan. If a
client has a loan product that adjusts downward during a period
of decreasing rates, I recommend they stay with that product
until a projected rate increase period that will increase over a
protracted period. When rates start to increase, and are
projected to continue to increase, I would advise a homeowner
with a loan product that adjusts, when rates adjust, to move
towards a fixed mortgage product (7, 10, 15 or 20 year mortgage
depending upon an individual’s situation). If the homeowner is
geographically displaced due to employment, say five years or
less, a long-term fixed mortgage is not the optimal product. If
the homeowner plans to stay in a specific geographical area and
in that same home for a long period of time, I’d recommend a
long-term fixed rate product and possibly a home owner’s line of
credit (HELOC) to supplement the homeowner’s financial
decisions. With long-term mortgages a homeowner can still opt to
pay more on the principal, reducing the term of the loan and
interest costs.
What are economic indicators that bode well for refinancing?
A knowledgeable mortgage professional should understand economic
indicators, and will be able to give you an accurate assessment
on whether to refinance or not. Are interest rates rising or
falling? With refinancing, timing is everything. If rates are
falling and they are lower than your mortgage rate (a general
rule is 1 – 2 % lower then your current fixed rate), it could be
a good time to refinance. If not, it might be a better idea to
sit tight and forgo refinancing for now.
About The Author
Jay R. Popejoy's educational background in financial and
mortgage lending includes B.S. Degrees (Marketing/Business
Education)and a M.B.A. program (current studies). Jay has 19
years of professional experience involving banking and finance,
logistics management, civil affairs, and international
development. Former and present employers include HSBC and
Household/Beneficial Finance. Jay R. Popejoy is currently
Managing Director of Breakwater Mortgage Corp. in Virginia Beach
and Williamsburg, Virginia, and is a senior staff officer for
the US Army (Army Logistics). E-mail jay@breakwatermortgage.com
or visit http://www.breakwatermortgage.com for more informaiton.
Written by: Jay Popejoy
:(16)Auto Refinance Secrets: Refinance Your Car Loan And Save Every Month
Refinancing your auto loan can be a easy and effective way to
lower your monthly payments and save you a good deal of money in
the long term. Huge numbers of people are taking advantage of
refinancing in the face of much lower interest rates. If you
think you are paying way too much money on your loan each month
(and who doesn't?) then based on the amount of time left on your
lease, and the rate of the interest you signed at, refinancing
may be the way to go.
It's always frustrating when you sign on to a loan at a fixed
interest rate and then see the interest rates steadily drop
around you, while you're still stuck with the forking out the
same high percentage payment every month. When you refinance
your auto loan, you do so to save money by paying a reduced rate
of interest, which, if you still have a few years or so to pay
off the loan, can end up saving you a bundle of money.
Basically, the new lender takes care of the difference of paying
off the original interest rate, while you continue paying the
car off to them at a reduced rate. The title to your car is then
transferred to them, and the time it takes you to pay off the
ever-increasing cost of owning an automobile these days is
drastically reduced.
It is important for you to be well aware of the term of your
current auto loan contract so as to maximize the amount of money
you can end up saving. It may be the case that you don't mind
making your payments at the interest rate you are currently
fixed at, and yet still want to be shelling out less per payment
than you are right now. If this is true for you, then your best
plan of action is not to refinance your loan, but to extend the
term of your payment agreement, so that you can minimize monthly
payments. Of course, this means that, over an extended period of
time, you will still end up spending a large amount of your hard
earned money on the interest rate of the contract.
With interest rates currently at noticeable lows, auto
refinancing is becoming more and more the wise decision. As it
stands right now, if you have a significant amount of time
remaining on your loan contract, and you signed on to that
contract when interest rates were unfortunately high, then it is
definitely worth your time to research and compare the rates at
a lending companies, so as to take advantage of getting in an
auto loan contract, while the interest rates continue to be low
http://www.springfieldsocialist.com/category/
automotive-comments>http://www.springfieldsocialist.com/
category/autom
otive-comm ents. Of course, you can research most
of this auto loans onlin information, with not a huge degree of
effort, and you may just find that is an effort that will pay
out nice dividends in the future.
If making preliminary calculations sounds like a hellishly
tedious mathematical trial, then your best to cut straight to
the middleman and talk to a broker who can work to find you the
best loan possible. But any way you go about doing it,
refinancing your auto loan can be a wise decision, and worth
looking into.
About the author:
I have an extensive background of dealing directly with Auto
Refinancing and am now offering my free professional Auto
Refinancing Advice to the public.
Written by: Christopher M. Luck