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Two sides of the coin of refinancing

admin — Tue, 23 Dec 2008 09:41:05 +0000

The majority of people refinance their mortgage because they are being squeezed by the current loan terms. But there are other reasons for looking seriously at a refinancing strategy. The point of refinancing is to renegotiate what you pay. It’s important to note the need to negotiate with your lender. Lenders tend to get upset if you try to change the terms of your loan without consultation, even if your motives are pure. Let’s take an example of your life as a story of success. When you first took out your mortgage, you had a poor paying job. But that’s all changed. To make the instalments affordable, you went for a long term, say, thirty years. Now you could pay off the loan in half the time. So how do you make this work? First, you have to be able to afford significantly higher monthly repayments. Secondly, what is affordable now must still be affordable in one or two years. Are you sufficiently certain that your circumstances are going to stay successful? Look around. There may be a recession coming. You will pay fees to change the term of the loan. There will be more fees payable if you can’t keep up the new instalments and want to revert to the longer term. Paying off the loan faster is wise only so long as you achieve it. The other increasingly common reason for renegotiation is to avoid a mortgage adjustment. During the last few years of the housing bubble, many buyers were sold on an adjustable rate mortgage. The idea is simple. You have a low starting interest rate but, at the end of the “holiday” period, the rate is reset or adjusted to a higher rate. All these contracts have a fixed period so everyone knows when the higher rate will hit, but not everyone knows what the new rate will be. Most contracts use the prevailing rate on a particular day + an agreed mark-up. That way, you gamble that the rates are not going to rise significantly over the holiday period. But the plan was sold on the expectation that all house prices would keep on rising. If the new mortgage rate was going to be too high, homeowners could sell to realize their capital gain and buy another home on an adjustable rate mortgage. Except the bubble has burst and house prices are dropping so owners are caught with no capital gain and increasing monthly instalments. Whichever side of the coin you find yourself on, money is available in the lending market to help you get what you want. All you need is access to multiple lenders to get the best terms. That’s what you get when you use sites like this.

Free Auto Insurance Quotes are Awful-If you Don’t Get Them!

admin — Sat, 20 Dec 2008 09:41:46 +0000

Auto insurance quotes may seem elusive, especially the free ones. But there are reasons why you should take the time to get plenty of quotes. If you have a perfect driving record, you just may find you have quotes for lower rates. What if you have parking citations or auto accidents on your driving record? Well, you just might find that you have the higher insurance quotes. This is not terrible as there are always ways to lower your rates. By paying all your fines, driving better, avoiding parking tickets, and paying the premium in advance, you will lower your rates and cut your costs. If you really want to save money, look at the vehicle that you drive. With that, auto insurance companies take a good look at everything and will give you higher or lower auto insurance quotes depending on everything possible. Start your search for your auto insurance now.

Baby boomers get to be seniors at last

admin — Sat, 13 Dec 2008 14:02:59 +0000

As the boomer generation has aged, every part of the social system has had to bend to fit them all in. First it was the school system, then higher education. Were there going to be jobs for them all? Now, those who have survived the march of time, are finally approaching retirement making the sale of health insurance a much more competitive market. We caught up with Dave in Oakland and asked how he was preparing for his retirement. He managed a harassed smile. We looked back at his plans last year. “I was all set up to finally do some traveling. He was pitched into medical insurance that would give him cover outside the US. Boy, were they pleased to see me again.” We talked about whether he was using the internet. “I’ve been following the AARP’s campaign, Divided We Fail, and their plans for an HMO for Medicare folk like me look interesting. Dave’s been a revelation. He has plenty of experience in planning his financial affairs and has been playing the field when it comes to getting quotes. As more savvy people start looking for Medigap policies, the market is likely to get more competitive and the existing discounts and incentives are likely to improve. When actual retirement is coming up, look round carefully for the right cover for you.

How do you release some of the capital tied up in your home?

admin — Sat, 29 Nov 2008 07:50:54 +0000

Although there are problems in the real estate market right now with resale prices falling, let’s focus on the general principles making the mortgage market work. The word you need is “equity”. This is the difference between what you owe on the home loan or other debts secured on the property, and the resale price.

This is like a revolving credit account at the bank except that it’s secured on your home for a fixed term of years (usually not more than ten years). The lender assesses the resale value of your home and sets a limit - usually 75% or 80% of that value. The amount of the existing mortgage is subtracted and you can borrow the remaining amount up to the limit. It’s better to use the credit for big ticket items rather than for day-to-day expenses, but there are no limits on how you spend the money.

Other people consider positive equity to be savings. Thus, you can either use the equity as collateral on loans for, say, the college tuition fees for your children, or you can produce a significant cash out sum with which you buy an annuity to produce income during your retirement. Thus, rather than the first view which can lead to you frittering away the value of your home, this gives you a solid basis for planning for your family’s future or your own retirement.