Saturday, December 30, 2006

Adverse Credit Home Loan Tips

If you have only been able to rent property in the last few years due to poor credit, you may feel the time is right to buy a property using an adverse credit home loan. However, buying a home can be a daunting prospect, especially if you have had credit problems in the past. This should not deter you though, because even with poor credit you can still find the house that you want. All you need to do is find and secure the right adverse credit home loan.

Before looking for a property you should find out more about securing an adverse credit home loan. It pays to know about how much you can borrow before house hunting, because otherwise you will face disappointment when you find the house of your dreams but you are unable to afford it. However, if you follow a few simple steps then finding an adverse credit home loan can be much less troublesome than you might think.

Finding a lender

The very first step on the path to finding an adverse credit home loan is to find yourself a lender who is willing to offer you a loan. This may seem like a near impossible task to you, but in fact there are a fair number of lenders who might be able to help you. Property is an attractive item for lenders because if they need to take possession then it will be relatively easy to sell. Take the time to look around to find a lender you are happy with.

One of the best ways of finding a lender is by using the Internet. This saves you the time of travelling to lenders who cannot help you, and also allows you to search specifically for those lenders who specialise in offering adverse credit home loans. As well as searching online you should visit mortgage lenders and banks in your area. The more research you do, then the more likely you are to find the first adverse credit home loan for your needs.

Getting pre-approval

Once you have found the lender you think is right for you, then you need to get pre-approval if possible, Pre-approval means that the lender carries out a number of the credit checks necessary to approve you for a loan, so that they can offer you a guaranteed amount that they will lend you. This allows you to begin looking for a property with a budget in mind, as well as showing sellers that you have the correct finance in place to purchase the property. If a specific lender will not give you pre-approval, then try and find one that does.

Buying a house

Now that you have your pre-approved adverse credit home loan, it is time to find yourself a property. You can look for properties being sold by individuals, or consult a realtor who can help you find a property.

Whichever method you choose, it is important to remember that there is more to buying a house than the initial cost. Although your adverse credit home loan will cover the costs of the property itself, you might need to find the money for items such as closing costs and down payments. It is worthwhile consulting a professional who will be able to help you with the property transaction and keep you aware of any extra costs involved.

If you have only been able to rent property in the last few years due to poor credit, you may feel the time is right to buy a property using an adverse credit home loan. However, buying a home can be a daunting prospect, especially if you have had credit problems in the past. This should not deter you though, because even with poor credit you can still find the house that you want. All you need to do is find and secure the right adverse credit home loan.

Before looking for a property you should find out more about securing an adverse credit home loan. It pays to know about how much you can borrow before house hunting, because otherwise you will face disappointment when you find the house of your dreams but you are unable to afford it. However, if you follow a few simple steps then finding an adverse credit home loan can be much less troublesome than you might think.

Finding a lender

The very first step on the path to finding an adverse credit home loan is to find yourself a lender who is willing to offer you a loan. This may seem like a near impossible task to you, but in fact there are a fair number of lenders who might be able to help you. Property is an attractive item for lenders because if they need to take possession then it will be relatively easy to sell. Take the time to look around to find a lender you are happy with.

One of the best ways of finding a lender is by using the Internet. This saves you the time of travelling to lenders who cannot help you, and also allows you to search specifically for those lenders who specialise in offering adverse credit home loans. As well as searching online you should visit mortgage lenders and banks in your area. The more research you do, then the more likely you are to find the first adverse credit home loan for your needs.

Getting pre-approval

Once you have found the lender you think is right for you, then you need to get pre-approval if possible, Pre-approval means that the lender carries out a number of the credit checks necessary to approve you for a loan, so that they can offer you a guaranteed amount that they will lend you. This allows you to begin looking for a property with a budget in mind, as well as showing sellers that you have the correct finance in place to purchase the property. If a specific lender will not give you pre-approval, then try and find one that does.

Buying a house

Now that you have your pre-approved adverse credit home loan, it is time to find yourself a property. You can look for properties being sold by individuals, or consult a realtor who can help you find a property.

Whichever method you choose, it is important to remember that there is more to buying a house than the initial cost. Although your adverse credit home loan will cover the costs of the property itself, you might need to find the money for items such as closing costs and down payments. It is worthwhile consulting a professional who will be able to help you with the property transaction and keep you aware of any extra costs involved.

14 Household Budgeting Tips

1. Stay busy after work

One "easy" way to avoid overspending and thus stay within your budget is to have something else to do after work. Get a second job that is fun, go to school, volunteer or get into great physical shape. The more you do, the less you will spend!

2. Watch those miscellaneous categories

Make sure you have enough well-defined categories to capture your true spending. Putting too much into a miscellaneous category makes it harder to track what you have spent and harder to control, especially the splurges!

3. Need

If you did not know you need it, you probably do not. Do not buy things just because they are on sale. If you had no use or want for it before you saw it on sale, then you will have no use for it later.

5. Don't Forget to Budget for Special Occasions

When forecasting your expenses, remember to include gift-giving occasions. Mother's Day, Valentine's Day, birthdays, Christmas, and anniversaries are good examples. If you plan to spend money on these occasions, remember to include this in your budget.

6. Don't use a debt to get out of another debt

Do not take out a consolidation loan to pay off your other debts. The point is to get out of it, not to squeeze them together and end up paying interest on the loan while paying off your debts. Try consulting a "free" debt counselor service first.

7. Remember To Budget Time As Well

We have all heard "time is money." Well-spent time can be an investment. Take a few minutes to plan ways to save on bills - 15 or 20 min. researching lower rates on electricity or long distance can pay off. You will know when time spent is not worth it.

8. The envelope system

Total yearly/monthly bills, divide each into 12 months. Divide monthly amount into bi-weekly payments. Use envelope for each bill; put in cash every 2 weeks. Use only the cash in envelope till it is gone. Do not touch your account/debt card! Envelopes ONLY!

9. Good teeth cheaper

You can go to a dental school to have your teeth cleaned, filled, orthodontic work done, etc. The cost is approximately half what you would usually pay. Note: Make sure you have some extra time as this takes a little longer.

10. Avoid expensive friends

Avoid friends who want to go for drinks all the time or suggest an evening at home. The money you spend on drinks and snacks, can buy something better, or go into your savings account. Also avoid friends who want to have supper at your house because you are a "good cook" what that really means is that they are saving money while you are grocery shopping.

11. Keep Track of Your Expenses on a Daily Basis

I call the bank's automated line and do my banking every single night before I go to bed. I can see what checks and/or debits from my debit card are posted and what my running balance is. I compare with what I have in my checkbook or with receipts. This only takes about 10 minutes. Often people get into trouble when they try to keep a running total of what they have left in their head and get into trouble.

12. How To Live Within Your Budget

Organize, budget, and beat stress.

13. Know what you spend

Establishing a budget, and periodically entering all of your purchases into money managing software, should take the guesswork out of your finances. At the beginning, minor changes will most likely need to be made to your budget. Once you have a finalized budget, one person should be responsible for maintaining the budget and tracking finances. I sit down with my wife on a monthly basis and go over our financial results. If we are close to exceeding a budget line item during the month, I will tell my wife and we adjust our spending accordingly.

14. Cut down on interest

With bills happening throughout the month, people can find themselves poor one part of the month, and rich during the other. My bank offers free online bill pay, so I take all of my bills, and divide it by 4. I then pay weekly, so I always have the same spending cash each pay check. It also cuts down on the interest that accrues.

Secured Loans For Homeowners Your Home Is Your Heaven

“Give shelter to your dreams with the help of your home.” Homeowners are definitely very fortunate in terms of availing financial aid to fulfill their dreams and desires. Home is an asset for the homeowners. They can utilize the equity in their homes to get financial advantages through secured loans for homeowners.Lenders feel more than happy to offer secured loans to homeowners because the loan amount is secured against the home. Lenders know that they can seize or sell the home in case the homeowner fails to repay the loan on time. So, the lender is sure he will be able to recover the loan money from the borrower. This confidence of the lenders and lower risk perceived enable the borrowers receive the following privileges:

1. low interest rate

2. flexible monthly installments

3. easy availability

4. approval for a large sum of money

The loan amount that you can receive depends upon the equity value of your home. Greater the equity, greater the sum of money you can receive. One can get up to 125% of the property value as secured loan. So, the lender will first get your home value assessed and then decide the loan amount to be approved. However, a homeowner should not get too tempted by his dreams and desires to endanger the home. Take care to apply for the amount that is extremely necessary. Be sure that you are able to bear the monthly installments comfortably. Always keep in mind that your home is under constant threat of being repossessed by the lender in case you fail to repay on time.

A homeowner is free to use the secured loans for homeowners for any purpose, such as making home improvements, meeting expenses of higher education, arranging for a wedding, purchasing a stylish car, managing your debts or anything under the sun.

Creating a Financial Plan

Having a financial plan is essential. It can help you eliminate your debt, save for the things you truly want and prepare for a comfortable retirement. If you are tired of living from paycheck to paycheck, perhaps it is time to start following a balanced financial plan.

There are three main aspects to financial planning: Budgeting and saving; investing; and retirement and estate planning. You must work on all three in order to have a balanced financial picture.

There is no way around it. No matter how much you dislike the idea, budgeting is one of the main requirements of successfully managing your finances. It isn't the negative task that many people assume it to be. It isn't a financial diet and it isn't something that deprives you of the things you want.

Budgeting simply helps you to see how and where you spend your money. It also can provide you with a guideline on how to spend your money in order to get the things you really want. It can help you to plan your debt elimination and start saving for the future.

When you take the steps to budget, you are laying out the plan for your financial future. You are deciding what you need to save for and how you will do it. With a budget in place you can start a savings plan that will help you to meet your long-term financial goals.

With a budget, you are able to recognize the areas in which you can save money. You have the chance to improve your financial situation month by month.

Too many people assume that investing is something that is out of their reach. However, investing is a vital in preparing for your future. All you have to do is educate yourself and get started. You don't have to have a lot of money to invest. The key is to start investing and let your money grow over time.

Investing is one of the best ways to prepare for your retirement. If you want to retire comfortably, it is never too early to begin planning. You probably want to enjoy your life during retirement. Without wise planning, you could spend most of your golden years working. Social Security may not be there when you reach retirement age. If it is, it probably won't be enough to maintain your current lifestyle.

With proper planning, retirement can be something to look forward to. Along with planning for retirement and getting your estate in order, you need to have proper insurance to cover any emergencies that could pop up. Good health insurance and generous life insurance should be top priorities. You should also have property insurance that covers all hazards in your area. If you can afford it, disability insurance is always a good idea.

You can change the way you are living. You can create a financial peace for your family. All it takes is the proper financial planning. Just start with one step today. You will find that it won't be long until you have everything together.

8 Easy Tips for Cheaper Home Insurance

No one likes paying for home insurance, but it's a necessary evil for most of us. This doesn't mean you have to pay through the nose for it though - try these 8 easy tips for cheaper home insurance and see how much you could reduce your premiums by.

- Shop Around

By comparing prices from several insurance companies, you'll probably be able to reduce your premiums by a substantial amount. This may seem obvious, but research has shown that a surprisingly large proportion of people either just renew their current policy, or get only one or two quotes. Many insurance web sites will automatically compare dozens of policies for you, making this one of the easiest ways to reduce your insurance bill.

- Buy online

If you buy your policy online you can often get a discount of up to 20% on normal prices, because there are less administration costs involved and the savings can be passed on to you.

- Combine your buildings and contents policies

Many insurers will give you a discount if you take out both types of home insurance with them, and this usually works out cheaper than getting the two kinds of policies from different companies.

- Pay upfront

Although most insurers let you pay your premium in monthly instalments, many will charge interest for this. If you can afford to pay a full year's premium in advance, then this will work out cheaper in the long run.

- Don't claim for small amounts

Making many small claims can increase your insurance costs, as your insurer may see you as a greater risk and increase your premiums. You will also lose any no claims discount your policy has. Of course, you're entitled to claim for anything your policy covers, but ask yourself if making a small claim is really worth the hassle and possible future costs.

- Voluntary excess

This is related to the last point. Insurance policies feature something known as 'excess', which basically means that the policy won't pay out on claims below a certain value. On some policies, if you choose to raise your excess to a higher level, then your premiums will be lower.

- Increase your home security

Beefing up your home security with better door locks, window locks, outdoor lighting, and alarm systems can all result in lower premiums. Ask your insurer what you could do to get extra discounts.

- Reduce your cover

Many policies feature benefits that you might not need, such as cover for personal possessions while travelling, or 'free' legal advice. Look through your policy and see what parts of it you really need - by cutting your cover down to size you may be able to reduce your premium.

Factoring Your Expenses into Your Take Home Pay

There is usually a big gap between the number given on your paycheck and the money you bring home in a given pay period. The number on your paycheck is not realistic. Indeed, if you want to know the exact money you have at your disposal, you must first factor in a number of expenses.

In case you have any plans of changing your current employment, you should be in the know of the money that you can make in the given period. This information is vital for anyone who either wishes to opt for a new career, venture into a new project, discontinue working for some personal reason like bringing up children or taking care of parents.

The reservations regarding finances have held back many an individuals from venturing into their own business. It might not be a feasible idea to limit the options for the sake of money. Consider the expenses that are factored as a result of your current employment. These can be under the heads of commuting (car and gas), food and clothing as well as other necessary items.

One major factoring you need to do is the commuting expense. With the gas prices soaring each day, commuting is a costly proposition. Moreover, the vehicle requires some amount of maintenance also. You can start by factoring in the amount of this wear and tear as well as the fuel costs for a week. These days it is also possible to take help of the Internet that has several templates for factoring this number in the take home pay.

If you're working in a business or office that enforces a strict dress code, you should factor in this expense into your take home pay since you would not otherwise make these purchases. Also, don't forget to include the cleaning bills for the suits, shirts, shoes, and other business attire. Since most dress clothing cannot be cleaned at home, you spend heavily on dry cleaning bills.

Another factor in your take home pay is any food expenses you incur while on the job. These innocuous expenses can add up quickly and often go unnoticed by working individuals. That morning cup of coffee or breakfast goodie coupled with the lunch at a sit down or take out restaurant can quickly become expensive. Additionally, these meals can often pack on pounds, which can lead to health issues.

If you have children, you are certain to find a substantial portion of your pay check is going towards child care costs. These costs must also be used when factoring your take home pay, since you would not incur the bills if you were not working.

One important factor that needs to be considered in the take home pay is the business expenses. What comes next is a revelation for you, as you will discover the enormous amount that is spent on the items related to business. Contrary to the perception of the amount being spent on friends and family members the truth is that business expenses eat into a lot of cash. Whatever you are on a lookout for, changing career, launching a new business, staying back at home for raising kids, the final amount should facilitate you in making a decision.

Handling Personal Finance

We have often heard about people who are known to be experts at managing finances at office but financial matters at home are relegated to a backseat. Maintaining accounts seems to be an intimidating thought for most of us who are not accountants. However, it is not a feasible idea to go about dealing with a problem this way. What is required is to take the bull right by its horns.

One of the important determinants of the personal finance is credit. In the domain of finance the credit score holds the key to the success. In the absence of respectable credit score, you would not be able to borrow money or obtain a home loan or a vehicle loan. The importance of this number can be judged by the fact that if this number goes wrong then it has the ability of leaving your goals unfulfilled.

Your credit number reflects the credit that is currently in your name. You get a poor credit score if you abuse credit cards and rack up high bills. That does not mean that the amount you're charged is harmful to your credit. On the contrary, it is the amount you keep on your credit cards that can prove detrimental to your credit score. It's not difficult to use your credit cards wisely and carefully. All you have to do is check your monthly statement and pay off your outstanding bill in full each month.

In today’s society, identity theft is often a problem. If someone steals your identity, they can wreck your finances, ruin your credit, and tarnish your good name and reputation. In order to prevent identity theft, carefully monitor all your financial statements and safe guard your personal information.

The attitude of most people towards money is spending today and saving later, thus relegating saving for a later part of their life. But this habit catches them unawares in the later part of their life where they get jolted with the rude shocks of a fast approaching retirement date and a non-existent retirement fund. So do not wait for tomorrow, start saving today by putting some portions of your income in the retirement fund account.

A budget is an excellent tool for any individual looking to curtail spending and control his or her finances. In order to begin your budget, create a column for your income and another for your expenditures. Take out items such as a rent or mortgage payment, car payment, insurance, utilities, and food. The end amount is your monthly excess that can be used in a variety of different ways.

If you are unsure how to go about setting your personal finance records straight, contact an accountant. He or she will be able to correct any potential problems while ensuring your future will be successful.

Although treading the financial domain at first might seem like an intimidating proposition, but it is nothing to be scared of. Venture forth and work towards rebuilding or smoothening your credit scores.

Refinancing and Interest Rate Trends

When you think about refinancing your mortgage, you probably imagine taking out a new loan with a lower interest rate. It seems obvious -- a lower rate means a reduced monthly payment. In recent months, however, many homeowners are refinancing from adjustable-rate mortgages (ARMs) to fixed-rate loans, which can carry rates up to two percent higher.

Why pay more?

Maybe you think interest rates will go up in the medium term, and you want the stability offered by a fixed-rate mortgage. The last few years have seen the lowest interest rates in a generation, which has led to a huge boom in the real estate market. Many feel these rates are unlikely to stay this low for the long term. "Rates have been bouncing around," says LendingTree's Vice President of Product Management, Dan Moore, "but over the course of the last year and a half, adjustable rates have been rising while fixed rates have stayed very low." If rates do rise sharply, homeowners with adjustable mortgages may be strained by the higher payments.

The effect of market trends

No one can predict market trends with any certainty, but any decision to refinance should take into account your feelings about where rates might be headed. In general, if rates are indeed headed higher, a fixed rate may be a wise choice, while adjustable-rate mortgages are more attractive if rates are dropping or staying level. You're not limited to these two options, however. "Lenders are coming out with new products all the time," says Moore, "because consumers are asking what else is out there besides the traditional mortgages."

Hybrid mortgages

Moore and other experts are seeing more homeowners choosing hybrid mortgages, which combine the features of both fixed and adjustable rates. A 5/1 hybrid mortgage, for example, carries a locked-in rate for the first five years, after which it adjusts annually. What makes these mortgages so attractive is that they offer stability for those first five years, yet carry a lower initial interest rate than a 15- or 30-year fixed-rate loan. If you're thinking about moving in five years or so, refinancing with a hybrid may be an excellent choice. (Hybrid mortgages are also available with three-, seven- and ten-year fixed periods.)

Option ARMs

Another mortgage that Moore suggests is the option ARM, which allows homeowners to choose different payment amounts each month. "The loan is great for people who need the flexibility," he says. "You can really control your cash flow -- if you take the lowest option you can almost cut your payment in half. But remember, there is no free lunch. That amount you save is added to your principal balance, so you may get a surprise later if you don't understand the loan."

As with any borrowing decision, the choice to refinance should start with an understanding of the many mortgage products available. Read about many of your mortgage options in the Consumer Education Center.

Friday, December 29, 2006

Is the House Worth the Price

Before you plunk down your hard-earned cash for what seems to be the perfect home, step back and take time to consider the following:

A Comparative Market Analysis Ask your REALTOR® to provide you with a Comparative Market Analysis (CMA). A CMA compares similar homes in the same neighborhood that have sold in the past six months to a year or are still on the market. The house you want should compare favorably in price, with the price properties sold for being more indicative of real estate value than the listing price. The more similar the features (square footage, number of rooms, number of bathrooms, age, lot size, etc.) and the more recent the data, the more accurately the CMA reflects the current market.

It's also useful to look at how quickly homes are selling in the neighborhood. If similar houses are selling rapidly (within a month or so) at close to their listing price, it's a sign the home you are interested in is probably priced fairly and will be more likely to appreciate in value over time than a home that has sat on the market for a year or more.

b>Location, location, location It's an old real estate saying that the three most important factors to consider when buying a home are all location. It's certainly true when determining price. The least fancy home in a good neighborhood is worth more, in the long run, than the fanciest house in a bad neighborhood.

To evaluate the house you want, research the local housing market. Browse the Internet, local newspaper ads and real estate publications. Visit nearby open houses, talk to the neighbors and keep your eyes open. The best neighborhoods have:

* Good schools
* Proximity to public transportation
* Convenient amenities like grocery stores, parks, a post office and a doctor's office
* No environmental hazards -- clean air, water and soil, and minimal noise pollution (visit at night and listen for traffic, trains, planes, barking dogs and loud neighbors)
* Low crime

Also, find out how much it will cost to live there. The house itself may be a great value, but the cost of taxes, water, electricity, natural gas, oil, television and telephone could be inordinately high.

The condition of the home Look past cosmetic repairs such as a fresh coat of paint and new carpeting. These could disguise defects such as peeling walls or cracked flooring. And try to ignore decor. Those beautiful paintings, vases overflowing with flowers and freshly baked cookies won't be there when you move in. Focus instead on basics that add value:

* A solid structure -- well-constructed walls, floors, ceilings, doors and windows
* A roof and basement that don't leak
* Heating, electrical, plumbing and other systems that work
* Kitchens, bathrooms and bedrooms with the space and amenities to meet your needs
* No signs of termites or other vermin
* No signs of mold, rot or water damage

Your current and future needs Ask yourself how many bedrooms and bathrooms you need for the next few years. And whether you need, and are willing to pay for, space for a home office, a garage, air conditioning, a swimming pool, etc. It's not worth paying for amenities you may want but don't really need.

A well-designed, renovated kitchen or basement, or extra rooms are usually worth paying more for. But only pay more for extras such as fancy tiles if you want them to improve the quality of your life. Unique extras that may have cost the owners $20,000 are unlikely to add $20,000 in value to the home when you decide to sell.

A home inspection and appraisal
It's always wise to make your offer conditional upon a home inspection. A reputable home inspection company will provide you with a report that identifies existing and potential problem areas, suggestions on how to solve these problems and a cost estimate for any work you'll eventually require.

It's also a good idea to have the home's market value professionally appraised. Your lender may require a home appraisal in any case before providing you with financing. Home inspections and appraisals usually each cost around $200 to $500.

Option ARMs flex ARMs

With most mortgages, your payment is the same every month. But what if your paycheck isn't so regular? Would you like to be able to vary your mortgage payment depending on your cash flow? An option ARM -- also called a flex-ARM or pick-a-payment loan -- allows you to do just that.

How does it work?

An option ARM is an adjustable-rate mortgage with a twist. You don't pay a set amount each month. Instead, the lender sends a monthly statement with up to four payment options. You simply tick off the amount you want to pay and send the slip back with your check.

The options vary, but here's the most common menu:

* minimum payment: This is calculated using an "initial rate" that can start as low as 1.25 percent. Because this payment is so low, it's useful for months when you don't have much cash on hand, perhaps because you are waiting for a commission or bonus check. Any unpaid interest gets deferred, or added to the principal of the loan.

* interest only: You pay all the interest due, but none of the principal. This doesn't reduce your mortgage balance, but it allows you to avoid deferring interest. (This option isn't offered if the amount would be less than the minimum payment.)

* 30-year amortized
: This matches the monthly payment of a mortgage amortized over 30 years at your current interest rate. It includes both principal and interest.

* 15-year amortized: The same as above, but amortized over 15 years. This is the highest monthly payment. Choosing it allows you to reduce your principal faster than any other option.

To illustrate how these payments may differ, let's assume you've taken out a $150,000 mortgage with an interest rate of six percent, and your lender offers an initial rate of three percent for the minimum payment.

Your options would look like this:
Minimum payment $632.41
Interest only $750.00
30-year amortized $899.33
15-year amortized $1,265.79

The fine print The biggest caveat with option ARMs is that those enticing initial rates are short-lived.

The low minimum payments that make these mortgages so attractive can increase dramatically. In addition, every five years the loan is recast -- that is, a new amortization schedule is drawn up to ensure that the remaining balance will be paid off by the end of the loan's term. When that happens, the minimum payment can be pushed even higher.

What's more, if you defer too much interest, you can reach what's called negative amortization. If your balance rises 10 percent to 25 percent (depending on state law) above the original principal, your loan is automatically recast and you have to start paying the fully amortized rate.

Another potential downside of option ARMs is that they're more complicated than most other mortgages. Home buyers may be seduced without fully understanding how much the minimum payments will increase over the long-term. When the monthly amounts go up, these people can experience payment shock.

Who should consider one?

Option ARMs offer a lot of flexibility for people with fluctuating incomes, provided they are financially disciplined. If you're a commissioned salesperson, a self-employed professional or an employee of a company that has a commission or bonus compensation scheme, you may want to make minimum payments during lean times, and then make up the difference when the checks you're waiting for come in. If you're a seasonal worker, you might pay one of the higher options when you're actively employed and choose the minimum during the off-season.

Cash out mortgage refinancing

Your house is a potentially large source of ready money if you are willing to sacrifice some of your equity in return for liquidity. Cash-out mortgage refinancing is one way to access this cash.

What is cash-out mortgage refinancing?

Cash-out refinancing involves refinancing your mortgage for more than you currently owe and pocketing the difference. If you have been paying down your mortgage for some time, then the principal is likely to be substantially lower than what it was when you first took out your mortgage. That build-up of equity will allow you to take out a loan that covers what you currently owe -- and then some.

For example, say you owe $90,000 on a $180,000 house and want $30,000 to add a family room. You could refinance your mortgage for $120,000, and the bank will then hand over a check for the difference of $30,000.

You can take the difference and use it for home renovations, second-property purchases, tuition, debt repayment or anything else that needs a significant amount of cash. What's more, you may be able to get a more favorable interest rate for your refinanced mortgage.

However, if the interest rate offered for your refinanced mortgage is higher than your current rate, this probably isn't a sensible choice. A home equity loan or line of credit (HELOC) might be a better idea.

Typically, homeowners are allowed to refinance up to 100 percent of their property's value. However, if you borrow more than 80 percent of your home's value, you may have to pay private mortgage insurance, or pay a higher interest rate. Again, this might make a home equity loan or a HELOC a better choice.

Cash-out refinancing vs. home equity loans

Homeowners sometimes confuse these two pools of home-financed cash. They are quite different. Cash-out refinancing is a replacement of your first mortgage; home equity loans are separate loans on top of your existing mortgage. In other words, with refinancing you get a new mortgage, not a second loan against the equity in your home.

Refinancing usually makes sense only when there has been a drop in interest rates and you want to lock in a new mortgage at a lower rate for a longer term than your existing mortgage. It can also benefit those who want to refinance their mortgages for a longer term to lower their monthly payments. In other instances where you need a short-term cash infusion, a home equity loan is often a better choice.

Is a hybrid mortgage right for you

Most homeowners understand the difference between fixed-rate and adjustable-rate mortgages (ARMs). A hybrid mortgage, as its name suggests, combines the features of both. It starts off like a fixed-rate mortgage, with a stable interest rate for up to ten years. But then it converts to an ARM, with the rate being adjusted every year for the remaining life of the loan.

How does it work?

On mortgage charts you'll see hybrids referred to as 3/1 or 5/1, and so on. The first number is the length of the fixed term -- usually three, five, seven or ten years. The second is the adjustment interval that applies when the fixed term is over. So with a 7/1 hybrid, you pay a fixed rate of interest for seven years; after that, the interest rate will change annually.

So is a hybrid mortgage the best of both worlds, or the worst? That depends on how long you plan to stay in your home and your tolerance for risk.

The pros

The most appealing thing about a hybrid mortgage is that -- initially, anyway -- you pay less interest than with a fixed-rate loan. As a rule of thumb, the rate of a 5/1 hybrid is about one percent below that of a 30-year fixed-rate mortgage.

Let's say you need to borrow $150,000. Here's how your payments might differ:

Type of mortgage Interest rate (estimated) Monthly payment (for fixed term)

30-year fixed rate) 7.0% $998
10/1 6.8% $978
7/1 6.4% $938
5/1 6.0% $899
3/1 5.6% $861
1-year ARM 5.2% $824

The 3/1 option in this example offers a monthly payment almost $140 less. Sure, you can go even lower with a one-year ARM, but you wouldn't have the same peace of mind. Since you may face unexpected expenses after moving, a consistent monthly payment for three or more years can be comforting -- especially when the interest rate is only marginally higher than an ARM.

The cons

Of course, these lower monthly payments don't come for free. After your fixed term is up, your interest rate is adjusted and it could increase dramatically.

Most hybrid mortgages protect you from huge swings in interest rates by setting a maximum increase -- typically two percent per year, and six percent for the lifetime of the loan. But this cap doesn't necessarily apply to the first year after your fixed term is up.

Say you get a 5/1 mortgage at six percent. If rates climb to eight or nine percent during the next five years, your monthly payments could suddenly get a lot bigger when your fixed term is up.

Who should consider one?

Most experts agree that hybrid mortgages are not a good choice for people who plan to be in their home for 10 years or more. It's usually not worth sacrificing the security of a fixed-rate mortgage for the savings you'd achieve with a 10/1 or even a 7/1 hybrid.

At the other end of the scale, if you plan on keeping your house for less than three years, a one-year ARM is likely the best option.

However, most people sell their homes or refinance after five to seven years, and it's these homeowners who should consider a hybrid mortgage. While the 3/1 rates may be tempting, you'll have greater flexibility if you sign on for a slightly longer fixed term. A 7/1 hybrid will give you an interest-rate break and allow you to move or refinance at a fixed rate before the adjustable rate kicks in, but you may be subject to penalties.

Interest Only Mortgage

Do you need to keep the mortgage payments on your home as low as possible? A mortgage that requires you to pay only interest for the first few years might be your best bet.

How interest-only mortgages work

When you take out a traditional mortgage, you pay the lender a monthly amount that's a blend of principal plus interest. The principal goes to repayment of the money you borrowed. The interest is what the financial institution charges for the use of the money.

When you take out an interest-only mortgage, you pay only interest every month for a fixed period of time -- usually the first five to 10 years. Then, depending on the term of your mortgage loan, you have 20 to 25 years to repay all of the principal, plus interest. You can pay money toward the principal during the interest-only period, but make sure your interest is recalculated on the new balance.

An interest-only loan could be ideal for you if you are short of cash but want to buy a home in anticipation of an improvement in your financial situation. Refinancing with an interest-only mortgage is an idea you might want to consider if you are experiencing a temporary financial squeeze -- if, for instance, you or your spouse has chosen to go back to school, or one of you has decided to take a few years off with your children. Paying only interest for a few years could help you to stay in your current home, even though you can't make your conventional mortgage payments for the time being.

You might also choose an interest-only mortgage as a way of investing in real estate, if you believe house prices in your area will rise in the next five to 10 years. You could live in the house for that period, paying only interest, and plan to sell it, pay off the mortgage and keep the difference when the interest-only period expires.

Slash your cash needs

You can free up a lot of money each month with an interest-only mortgage.

Let's say you have a mortgage of $200,000 and that the interest rate is 4.75 percent. With an interest-only mortgage and no principal payments due for five years, your mortgage payments for the first five years will be $791 a month. With a regular five-year adjustable-rate mortgage and the same interest rate, you would pay about $250 more per month, or $15,000 more in five years.

Since interest payments on your mortgage are generally tax deductible, you may be able to deduct 100 percent of your monthly payment with an interest-only mortgage. Consult your tax advisor to confirm whether you are eligible to do so.

Your payments rise later

When you take out an interest-only mortgage, whether it's for the purchase of a new home or to refinance your current home, you must bear in mind that when the five- or 10-year interest-only period expires, your payments will increase. In fact, they will be much higher than if you had taken out a conventional mortgage. This is because you must now pay off the principal in a much shorter period of time.

40 Year Mortgages

As home prices have risen in recent years, new strategies have emerged to help buyers afford a home. But one of these "new" strategies is really an old one that's returned to favor: the 40-year mortgage. A number of lenders offer them, but are they a good deal? Let's look at the pros and cons.

What is a 40-year mortgage?

A 40-year mortgage is a conventional mortgage, but instead of repaying the principal over the standard 15, 20 or 30 years (the amortization period), you pay it off over 40 years. In many cases, the lender simply extends the life of its 30-year fixed-rate mortgage to 40 years. Some lenders also offer a 40-year version of their adjustable-rate mortgage (ARM).

The advantage

The biggest advantage of a 40-year mortgage is that you get a lower payment. For example, the monthly payment for a 30-year, $100,000 mortgage at 6 percent would be about $599. By choosing a 40-year mortgage, you would get a slightly higher interest rate -- say, 6.25 percent -- but your payment would fall to $568.

That's not a huge difference, but it could be enough to let you buy a home you couldn't afford with a 30-year mortgage. Just a few dollars a month can be the difference between qualifying for a mortgage and not qualifying. A 40-year mortgage could also help you buy a higher-priced house for the payment you can afford, especially if mortgage rates are high. Or it could leave you more money for other expenses.

The cost

A 40-year mortgage also has some drawbacks. It carries a higher interest rate -- typically, .25 to .375 percentage points above an equivalent 30-year mortgage. And since you're making payments for 10 more years, you end up paying substantially more interest. Over 40 years, you would pay a total of $172,515 in interest on that $100,000 mortgage at 6.25 percent, compared with $115,838 for a 30-year mortgage at 6 percent. That's a difference of $56,677.

Another drawback is the speed at which you build equity in your home. With a 40-year mortgage, you will build equity much slower than with a 30-year mortgage, which means when you sell, you'll get back less of the money you've paid into the house. These mortgages might also tempt you to buy a bigger house than you can afford, so it's wise to make sure you're not biting off more than you can chew.

Does it work for you?

Despite its faults, a 40-year mortgage may still be a good option. If you're at an early stage in your career, it can allow you to buy a house you might not have been able to afford otherwise. As your income grows, you can refinance to a mortgage that lets you build more equity.

Remember, few people hold a mortgage to maturity. If, like most people, you move or refinance in five to seven years, the original 40-year term has little effect. And meanwhile, you've had the benefit of a lower monthly payment.

A 40-year mortgage can also be advantageous for high-income earners whose mortgage interest payments may be their only major income tax deduction. Or, it might reduce the carrying costs on a rental property.

There are other types of mortgages that can reduce your payments just as much as a 40-year mortgage. One alternative is an interest-only mortgage, which can give you a lower payment but builds no equity at all. Or you can choose a hybrid or regular ARM, both of which offer a lower initial interest rate but could expose you to rising rates later on.

How to choose?

Compare your payment, the interest you'll pay and the equity you'll build in the time you expect to be in the house. This will give you an idea of which mortgage is best for you.

Protect Your Mortgage

Not so long ago, most American home buyers saved up a down payment of 20 percent of the purchase price and paid off the rest with a fixed-rate mortgage. Many still do, but the trend in recent years has been toward lower-percentage down payments and more flexible mortgage terms. According to the National Association of Realtors, today 42 percent of first-time home buyers put no money down at all.

While this may make it possible for some people to purchase a home they would otherwise not be able to afford, no-down-payment mortgages and other new mortgage options need to be considered with caution.

The common feature of these new mortgages is the low payments they offer in the short term. However, in the long run they can end up being considerably more expensive than traditional loans. That's because in almost every case, those low monthly payments rise sharply after an initial period.

Option adjustable rate mortgages (ARMs) offer up to four choices each month, from a low minimum payment to a fully amortized amount (like a traditional fixed-rate mortgage), and their popularity has even surprised the experts. "Traditional banker that I am, I didn't think there would be much interest in this product," Anthony Hsieh, president of, told CNN recently. "But consumers have loved it."

Hsieh is careful to point out that option ARMs are not for everyone. "If you have seasonal income or are self-employed with monthly income that is inconsistent, this loan may be great for you," he says. "You can pay the minimum a few times per year and catch up in months when your income is higher." If you're not disciplined enough to do that, however, your debt can spiral out of control.

Interest-only and negative amortization mortgages
are also growing in appeal. These differ from traditional mortgages in one very important way: they are not amortized. In other words, instead of paying a mix of interest and principal each month, you pay only interest. And in the case of a negative-amortization mortgage, you're not even paying all of the interest due.

These mortgages can make sense for homeowners experiencing a short drop in income -- such as a job loss or a partner going back to school for a year or two -- as long as their income will rise in the near future, at which point they should refinance to an amortized mortgage. Interest-only loans may also be a good choice for investors who only plan to hold a property for a short time before selling it.

Some borrowers, however, are choosing interest-only or negative amortization mortgages without understanding that they may be losing equity with every passing month. What's more, after a specified period the interest-only option disappears and the loan must be paid back on an accelerated schedule. If the borrowers can't meet these new, much higher payments, they could end up having to sell their home.

Piggyback loans
are another option helping homeowners avoid the added expense of private mortgage insurance (PMI), which lenders usually charge on mortgages that exceed 80 percent of a home's value. If buyers can come up with a down payment of just 5 or 10 percent, they can often get a piggyback loan to cover the rest. This is a second mortgage, often structured as a home equity line of credit, which may be less expensive than PMI, in part because it's tax-deductible. Of course, it requires another monthly payment on top of the first mortgage.

Personal Finance

Personal finance is not an issue you should be forced to face
when in a crisis like so many people end up doing. Your personal
finances are vital for your life, security and prosperity. Face
it and don't hide your financial issues under the rug. Learn and
practice personal budgeting. Create your own financial destiny
and your life will be so much better.

You’ll have to:

know your current personal financial situation

estimate how your financial situation will develop in a short
term perspective

set long term financial goals, make a plan to achieve them
and then execute your plan.

Get a view of your current financial situation

Collect accurate information about your personal financial
situation. Calculate your your net worth, This information

real estate

saving and retirement accounts

stocks and bonds

all other assets.

What is the total? Are you surprised?

Make a budget

A personal budget is information made up of your income and
expenses and the more accurate this information is, the more
likely you are to be able to meet your goals and realize your
dreams. An income/expenses budget should be made for at most
one year at a time and include a list of your monthly expenses.
All expenses must be included. To be sure of that go through
all your paid bills, check register and credit card receipts
to find expenditures that recur every month and expenditures
that happen less frequently. Divide that total by twelve and
you have your monthly average expenses. To be able to make
good personal financial decisions and set priorities, you
must know where your money is actually going.

Get electronic bill pay

This is a very convenient way to pay your bills. You pay them
electronically, by direct withdrawal from your bank account.
The transaction is processed immediately. You can even link
your bill pay service to your budget, so that your expenditures
are automatically entered in the appropriate category. Personal
financial management can be really easy, don't you think? Check
out programs for enabling this on the internet

Make an investment and finance plan

Now that the fundamental state of your personal financial security
has been established, the time has come for the more prosperous
part of your personal financial life. What I mean is:


retirement planning

loan shopping

other ways to build a fortune.

You need to make a plan of what you really want in life that
money can buy. Then you must find out how to get the money it
takes to finance it and finally start to implement this plan.
This is the long term part of your financial life - the process
of personal financial development from the state you are in
right now - to the state you want to be in. This journey toward
financial freedom is in my opinion the most interesting and
exciting part of personal financing you can have.

Home Equity Loans For Dummy s

Have you noticed that every time you watch your favorite TV show, a home equity loan commercial seems to pop up? Or, you rush out to your mailbox and discover yet another offer wanting you to take out a home equity loan?

Without question, home equity loans have exploded in popularity over the past few years. It has become the way of getting the money you need to solve your financial needs. But, many people don't fully understand just what they are. Here are some of the basics on what these types of loans are all about.

In simple terms, a home equity loan is money that you can borrow by using your home as collateral. The amount you can borrow is based on the current value of your home, less the amount you still have due on your original mortgage.

For example, let's say you have a home that is valued at $500,000. Your current loan balance is sitting at $400,000. You could possibly obtain a loan for $100,000.

The total loan amount will be determined by variables such as your current credit history, etc. Keep in mind though, even if you currently have some credit issues you're dealing with, a bad credit home equity loan is not that difficult to get. It just takes a little more effort in finding.

You can use the funds for whatever you wish. This can be both a positive and negative though. Here's why.

Home equity loans are great for uses such as home improvement projects, college expenses, medical bills, and of course, bill consolidation. Getting out from under debt is a major reason that people get a home equity loan.

But, people will also borrow money on the equity in their homes for items like a new car, appliances, exotic vacations, or other luxury items. Well, it's your money and you can certainly use it as you see fit, but be careful.

Make sure that you can afford the monthly payment for years to come. Since a home equity loan is secured by your home, if you go into default on the loan, the lender can take possession and sell your home to satisfy the debt.

Check out several offers before making a final decision to sign any loan agreement. Take your time and you'll be fine. Getting the right home equity loan for the right reasons could very well be the solution you're looking for.

Home Equity loan Cashing in On Your Equity

This is a type of loan under which a property owner uses his residence as collateral security and can get prearranged amount against the property. The loan allows you to use into your home's built-up equity.

Home equity is the actual difference between the amount your home could be sold for and the amount that you already owe on the mortgage. Assume that the market value of your home is $200,000 and you owe $70,000 on your mortgage, then you have $130,000 equity available on your home. Remember that if you have more than one mortgage taken on your property, then all of them have to be considered for calculating the outstanding dues.

A home-equity loan is a good way to borrow money for two main reasons:
1. The interest rate is one of the lowest loan rates a borrower can get.
2. The interest you pay on the loan is tax-deductible. Thus it is sometimes recommended by many to replace other consumer loans whose interest is not tax-deductible, such as auto loans, credit card debt, and medical debt with the Home Equity Loan.

If you don't repay the debt, you can risk losing the home and be forced to move out. Do act with care and make sure you are able to fulfil the repayment terms.

There Are Two Types of Home Equity Loans

1. The standard home equity loan,
2. The home equity line of credit (HELOC's)

In a standard home equity loan, a pre specified amount of money is loaned in a lump sum for a specified period of time and the same amount of interest is paid every month. It is also called a term loan, a closed-end loan or a second mortgage installment loan.

HELOC works similar to a credit card because it has a revolving balance. A HELOC allows you to borrow up to a certain fixed amount for a specified period of the loan which is set by the lender. During that time period, you can withdraw as much money as you need. As you clear the principal, you can use the credit again, like a credit card.

These loans are repaid in a shorter period of time than the first mortgages. They often have a repayment period of 5 to15 years.

The loan could be either a fixed interest rate or a variable interest rate.

Homeowners often use a home-equity loan for home improvements or debt consolidation or to pay for a new car or to finance their child's college education.

Homeloans Five Things to Watch Out For

Homeowner loans can be a quick and easy way to finance major investments and purchases. With these loans, you can tap into the value of your biggest asset in order to pay for things that are important to you. Those 'things' are virtually unlimited - you don't have to account for how you spend the money you borrow against your home to anyone but yourself. It can as easily be spent to finance a year trotting across the Continent as it can to pay for your education, make improvements to your home or pay for a new car.

With all the loan products available, nearly anyone who owns a home can find a company in the UK to offer them a home loan. The wide range of UK lenders who will be happy to advance you money on the security of your home also means that there's a lot of competition for your business. And that means that if you shop around, you can find some outstanding deals on home loans when you need one. Unfortunately, it also means that there are many companies offering products with lots of hooks and traps in them. To help you avoid those traps, here are five things to watch out for when you're shopping for home loans.

1. Look beyond the APR.

While the APR is generally considered the single best way to compare one option with another, the way that APRs are calculated is not quite standardised. Unscrupulous lenders have found ways to 'hide' charges from the APR calculation, making their loans a bit more expensive than the APR would lead you to believe. A better calculation for comparing loans is 'total cost' which takes into account the repayment of the loan, all interest charges and other fees that will be paid before you're done with it.

2. Be careful of repayment insurance.

Repayment insurance is meant to assure you and the loan company that your loan will be paid off in full if something should happen to your ability to make the payments. Some lenders will offer you repayment insurance through the company that they choose - often at rates so high that you'll pay nearly as much as you borrowed in the first place. Shop for repayment insurance just as you do for the loan itself. You are not ever obligated to accept the repayment insurance offered you by the lending company or bank.

3. Know all of the fees you'll have to pay up front.

Arrangement fees - sometimes called origination fees - are paid when you apply for a loan. In some cases, those fees will be due whether you are approved or not, and whether or not you accept the loan. Some of those arrangement fees can add up to (GBP)700 to the total cost.

4. Check into how interest is calculated and compounded.
The way that interest is calculated can save or cost you a surprisingly large amount of money. If interest is calculated annually, you'll pay far more in interest fees than if it is calculated daily. If possible, check your expected monthly loan repayments on the loan company's own loan calculator for comparison purposes.

5. Exit fees can make it difficult to get into a lower-cost loan arrangement later.
Checking the exit or early repayment fees can be especially important if you're shopping for higher cost home loans because of temporary credit difficulties. If you hope to transfer to a lower interest loan when you can qualify for one, then you'll want to be certain that the exit fee doesn't make it impractical to do so.

You can compare all facets of home loans at comparison web sites, from arrangement fees to APRs. Remember, no matter what your situation, you'll get the best options possible by shopping around and comparing loan rates and terms.

Should You Consider Home Refinance or Not

Home refinance seems to be the craze these days with interest rates at all time lows. However, you need to do some home refinance research before you will know if it is for you or not. In general, if you bought a home when interest rates were significantly higher, have great credit, little debt, and always pay your bills on time then you should probably at least consider home refinance. Although, if you meet any of the following criteria then you definitely need to think twice before you decide on a home refinance.

Home Refinance Tip 1 Second Mortgages
If you have a second mortgage and decide on a home refinance then you will likely find yourself paying more than with your original home loan. If you have taken out a second mortgage on your home to help pay other bills then getting a lender to consider a home refinance for you is going to be difficult.

Home Refinance Tip 2 High Debt to Income Ratio

When you apply for a home refinance option then you will have to go through the same qualification procedures you did as when you were approved for your first loan. If you have a high debt to income ratio then it will be unlikely you will be approved for home refinance, and if you are approved for a home refinance it is highly unlikely the terms would be worthwhile.

Home Refinance Tip 3 Bad Credit

Bad credit is generally the main villain when it comes to having a proposed home refinance application denied. So, if you have trouble paying your bills, are making late payments, and your credit score is declining, then you definitely need to get your credit in shape before you consider a home refinance.

Solutions For Bad Credit Home Loans

Obtaining bad credit home loans is something that more and more people are looking to do. For many, the fact that rates are so low is a sign that it is time to own your own house. But, this is hard for those who have poor scores to take advantage of these low rates. Yet, there are some things that you can do to get into your own house. In fact, there are many options in bad credit home loans for virtually anyone who has a steady job making enough money to pay the monthly payments.

Will They Give Me Money?

It's important to realize that a bank is in it to make a profit, not to make you happy. They are looking for those who are a good risk, individuals who are likely to repay back the money owed. They are not in the business of owning homes. But, the fact is, when it comes to a house purchase, the house itself is collateral. If you default on the loan, for whatever reason, they can take your home and still not lose too much money. So, in many cases, even individuals with poor credit can obtain a loan.

There are several things that they are going to look at when deciding whether or not you are a good risk. Your score is only one of them. To lend you finance, they will look at how steady your employment is. Have you held the job for a good amount of time? Are you making the same, steady amount of income at it? What other financial obligations do you have? If you have overextended yourself, you may not qualify because you cannot make your payments.

Money For You

For people who need the extra help in qualifying, you may be able to improve your abilities to get the loan when you do certain things. For example, pay off your credit cards as much as possible. The lower your credit balances, the more likelihood you'll qualify. Also, consider calling your creditors that may have placed bad marks on your file and asking them to remove them. They won't always do it, but they may. Don't open any additional lines of credit. Make sure that you are current on finance installments such as your car payments.

Options To Consider

If you are looking for funds and already own a house, consider tapping into your home's equity. If you are looking to purchase a home in California, you should consider the high market value as compared to other areas near there. There are many things that play a role in the home loan that you take out. Getting a good idea of what is available can help you to make decisions. Consider these aspects.

· Look for options on the web that offer lower rates than financial institutions in your local area.
· Look for adjustable versus a fixed rate loan.
· Consider federal government programs that help to back your loan such as a VA or an FHA.
· Browse the companies that offer loans to those who have poor credit and see which offers the lowest rates. Get a few quotes to compare them.

General Personal Finance Advice

Personal finance is an individual's financial status. It's about how much money you have, and how much you need. It is about managing your money - today and for tomorrow.
Money is the currency on which all world economies function. Income - expenditure -bills- debts - savings: These are a fact of life. A constant for most is the endeavor to tip the scales in favor of savings.

Successful financial management includes planning and keeping records of income and expenditure, budgeting, balancing your check book, insurance and investments - whether in real estate, the share market, funds or any of the other available mechanisms. You cannot overlook the necessity of planning your savings, your tax savings and your retirement.

A very interesting way to look at Asset and Liability is in the following terms:

An Asset is anything which brings in money or does not change the status of your money in the bank. A liability is anything which causes money to flow out - whether under the pretext of taxes, interest or fees.

Budgeting - This ensures that you are financially healthy and flourishing. It is a good idea to create and use a budget worksheet which allows you to make a detailed expenditure plan and helps you discover any shortage or unplanned expenditures.

Some useful tips in planning your finances:

- Handle your own money. If you choose a financial consultant, ensure you understand how your money is being managed.
- Save a huge amount in interest by opting for a shorter tenure of loan term - home/ car/ personal.
- Debt: Should ideally not be indulged in, or repaid at the earliest.
- Savings: it is easier to save more if you start early - you can put aside small sums and over the years watch it accumulate and earn interest for you.
- Retirement planning: don't wait till you are 40 to start. Begin today - and ensure a comfortable lifestyle in your old age.
Avoid cashing out your PF or breaking your Funds.
- It's a good idea to do an Annual/ Quarterly financial health check up

How can Financial Planning Help

If you are still thinking that financial planning is exclusively for the rich, you may just want to switch your mind on that now.

It is a truth that financial planning is even more important for the individual with an average income than it is for someone who earns a very high income.

The case is this: an average individual has to build his income stretch to cover many needs, and normally there is little cash left each month after paying all the bills and loan.

Hence, it is wise to say that financial planning can assist you in a number of ways, among them are:

- Financial planning can assist you set up beneficial use of your present income and savings. By having every household's outlay budgeted and a savings blueprint drawn up, it should help you spend your cash wisely and effectively.

- It can contend the effects of inflation on your savings by having your savings invested in an investment vehicle that pays higher returns than the normal bank account, it will add in a couple of muscle to your savings and help you achieve your financial goals in a shorter term of time.

- It can thrust you to take advantage of savings and investment options that exist now, but may not be available later.

For example, you want to put in some of your savings in a particular unit trust fund that pays good returns. However, the fund's approved size is fixed and the units are easily snapped up up by investors. Now, if you were to maintain some extra money and buy some of these unit trusts before they are all taken up, you will hopefully make your cash work for you through future gains from this investment.

- Finally, financial planning helps you identify the expected sources and total of your retirement income.

The key here is to START NOW!

By starting your retirement planning now (not later!), you can measure how much cash you will require to maintain your current lifestyle and where this money will come from.

Many individuals, specifically those who have just started working, often put their retirement planning on the back burner for reasons such as "I just started work" and "Oh, I am still young".

Many, however, fall short to realize that by starting early to save for retirement, you will be able to save and put in more due to the concept of "compounding interest", provided that you invest your savings wisely.

perhaps you do not want to wait till the age of 65 to retire. For all you know, by the age of 40, you might possess already reached your financial freedom and do not have to worry about getting up early to clock in or work till late hours because there are deadlines to meet.

You can then commence a business or alternative job that does not involve clocking in and reporting to your employer, especially if that person is other than you!

8 Easy Way To Save Money In Your Household

These days the amount of money needed to lead a comfortable life is increasing drastically and many of us are worried about how to make ends meet. In this article I have listed several ways in which one can save money in your household.

Telephone A Big Killer

The Telephone is not at all a new face in our homes. Interestingly this is one of the main areas where most people drain their money like an open tap. I know I did. I had a phone company that was costing me double now for what I am paying for Phone, Internet, and Cable. Another way can save with your phone is to try not to make telephone calls, such as long distance, and excessive 411 calls. Also find out the best service provider who can offer you the same service as the competitor but at a reduced cost. If you have Comcast in your area, check with them. They probably will have a package deal that will save you a lot of money, and all on one bill. Remember, by saving a few dollars every month you can add up to a bigger amount in a year's time. Just think if you are saving $50 bucks a month that is $600 for the year, that you can take, and indulge yourself to a personal treat!

Use Home Appliances That Uses Less Electricity

Generally we do not check how much energy our refrigerator or old washer is consuming. If you check how much these appliances are consuming energy, you will find out one of the main reason why you are receiving huge electric bills. So what will you do? Stop using these things? Why should you stop using your washer or refrigerator if you can get one new which only takes less power? Shop around and find a new model which is much energy efficient than the older ones. Remember to check the energy consumption of the new model you are going to buy one. If there is only a slight difference, there is no use in paying hundreds of dollars for another one. Make sure that in the long run you are selecting a right model, which can save you the highest possible energy savings.

Clip Store Coupons

Do you have the habit of clipping coupons? Clipping coupons is a good way to save money. Nowadays, most stores provide double or triple manufacturers' coupons on a certain amount so as to attract more and more customers to their shops. This is really a benefit for the customers as they can purchase products at a discounted rate. Some stores even have a discount card for shopping with them. Check with your favorite stores to see if they have, and have it with you at all times.

Before we go on to the next tip I have this story I want to share with you. I remember one day I was in the local grocery store, and I was very impatient with the customer in front of me because she had so many groceries, and then to top it off she had about 1 million coupons to go with it. ( Ok not so much, but a lot.) After the cashier cashed her order, she was over $200.00 in groceries. After all the coupons the lady only had to pay $42.00. My mouth dropped open! I was shocked, and amazed! I am still not that good, but I have learned the values of using coupons; after all they are there for consumers to use! The secret is that companies know that we will not use them that is why they always offer hem! So prove them wrong, and use them! On to the next tip!

Get Free Product Samples

Getting free samples is a good way to save money. Today, most of the manufacturers offer free samples of their products. In such cases, all you have to do is to just send an email or a letter to the respective department. The manufacturers will send you the freebie as a product or a coupon. If you receive a coupon you can purchase the product from any of their shop near your city. You might wonder why ask for a free sample, well, not only getting the coupon that comes with it, but what if you do not like the product, and you go out, and buy it? You have just wasted your money. If you are a too proud personality, better avoid using this step.

Shop At Wholesale Clubs

Shopping from the wholesale clubs can save money. Generally, most of the wholesale clubs provide 10 to 30% discounts than supermarkets. These shops also take coupons also. Wholesales clubs are like BJ's , Costco's, and Sam's Club just to name a few. I save tons of money when I shop in a bulk, yes you might spend more money upfront, but the consumables will last longer in your household.

Shop and Compare

Today, with the advent of Internet, customers are getting the opportunity to compare any product they are about to purchase. So before you make any purchase, compare the price and other details of the product you wish to buy. This helps you to choose the same product or service at a less rate. If you are one of those shoppers that must go to the store to buy, then you will have already know where to go to get the product that you want. Saving you money on gas for your car! Now if you want to find the best person that can shop, and compare, talk to my mother!

Reuse and Recycle

There are several items which you throw away thinking of no use from it. However, some of these products can be recycled and reused in numerous ways. So make sure that the objects you discard are definitely of no use. Also, certain products you think of no use can be sold at a garage so that you can earn some money than just throwing it away. Also check with your city to see if they have a recycle system in place.

Shopping Is Deadly

Another main area where most of us spent lots of money is for clothes and costumes. Over the past few years, it is seen that the price of clothes are continuously increasing. Hence it is better to purchase quality clothes which lasts for a longer run. This helps you to save money by purchasing only good clothes rather than the 'throw away' types. Most of us only buy clothes because it is the new fad, or it is the "season". Well to keep up with the fads, or season can cost you big. Static's show that consumers purchase more than they need.

These are some easy ways to save money. There are many such countless ways to save money. After all, saving money is not just putting all your income in your saving account. Saving money is about how efficiently you are spending your income by keeping an eye on all the unnecessary expenses. I hope that you will use these tips to start saving more money for your household.

Money Saving Tips For Stay at Home Moms

Making the decision to be a full-time stay at home mom can be difficult in many regards. While many moms truly feel it is in the best interest of their children and families to remain at home with their children, there is never the less the reality that it is difficult in today's society to make it on one income. Fortunately, there are several techniques you can follow that will make it easier for you, and your family to enjoy the benefits of being together, without breaking the bank.

When the decision has been made for a mom to stay at home, one of the first tasks that should be handled is to call a family meeting. It is imperative that every family member, regardless of age, understand that in order for mom to stay at home, some changes must be made. This is a great way to begin teaching children the value of money.

Another important step in making the transition to being a stay at home mom, is to sit down and consider possibilities where you can possibly save money. There are actually a lot more than you may originally think! First, let's take a look at some of the big ticket items that you may be able to work with in order to begin trimming the family budget. If you own your own home, consider whether it would be possible to refinance it in order to shave some off your monthly mortgage.

Two simple ways that you can save with this technique are to refinance at a lower interest rate and/or refinancing your mortgage in order to lengthen your terms; such as moving from a 20 year mortgage to a 30 year mortgage. In addition, if your family owns two vehicles, you may consider either selling the second vehicle or trading it for a vehicle that is less expensive. This can save you money in the monthly payment as well as maintenance and insurance fees. If your vehicle is a late model; however, you may be better off either keeping it or selling it outright in order to avoid being upside down on your note.

Many stay at home moms have also found they can save at least fifty dollars a month or more by cutting down on expenses that are not all-together necessary. Of course, this will vary from one situation to the next but possibilities you may be able to eliminate include satellite/cable television, cell phones (if not under contract) and optional telephone options such as call waiting, call forwarding, etc.

Making the decision to become a stay at home mom is also the perfect opportunity to begin exploring bargain shopping. You might very well be surprised at the great deals you can find at consignment shops, thrift stores and garage sales. In many cases, you can walk away with name brand clothing with tags still attached for a fraction of the original cost.

Finally, in order to shave some money off the family household budget, be sure to give some thought to items that you have traditionally spent money on but now may be able to either cut down or make yourself in order to save money. For example, instead of purchasing pre-packaged cookie mixes, dinner helpers and other types of foods that can eat up your grocery budget; make it a point to begin preparing more meals and snacks from scratch. Make it an adventure and you'll not only save some dough but have fun as well.

5 Action Ideas To Manage Your Personal Finance

It's unbelievable that schools does not teach us everything that we have to know but left out one important subject, that is Personal Finance Management. No wonder we see rising cases of people with bad debts and bad credit.

Here are 5 ideas to better manage your personal finance.

Build a savings account
Your money is something that you work very hard for. If you want to build a savings account for yourself, and for your family, you can do it - but perhaps a little slower than you might like. You can get started by saving all the change you get from shopping at the grocery store, from the gas station and from anywhere else you might go. Putting all this change into a container, you can then fill the container, day by day. As the container is full, roll the coins and deposit this money into your new savings account. You might be surprised, but in just two weeks it is possible you saved twenty dollars, or even one hundred dollars. Your savings account will grow, and you will be managing your money at the same time!

Paying bills on time
Paying your bills on time is going to be a something you need to make a habit for your entire life. Your credit report, your credit rating and your personal credit worthiness is going to depend on how often you are on time when paying your bills. Paying your bills on time is important for a solid financial future. As you pay bills on time, you are less likely to pay higher interest rates, you are not going to pay late fees, and you will build a good credit rating at the same time. To pay your bills on time, all the time, use a system that will have all your bills put into a pile in the same place. Put the bills that are due first on the top of the pile. Put the bills that are due at the end of the month in the bottom of the pile. Look at the pile every day, or at very least every other day. When you have the money, pay the bill on the top of the pile and work your way through all the bills for the month, and then you can start on the bills for next month!

Building good credit
To build good credit you want to pay your bills on time, and avoid paying those higher interest rates. If you have good credit, you want to keep it. What some people do not realize is that you can hurt your credit if you are moving often. Moving every month, moving every year, and moving more than needed it going to lower your credit score. If you live in the same house, the same apartment for over five years this is going to help your credit. Avoid moving when possible. Get a copy of your credit report; review the addresses that are listed for you. Remove addresses that are not applicable to where you have lived in the past.

Use coupons and save money

If you are not using coupons now, you should be. With the price of everything going up, and up, you need to learn to make your money 'go further'. To make your money last longer, and to get more for your money seek out coupons for the goods and services that you always purchase. The secret to using coupons is this: don't use, clip or keep coupons for items that you don't usually use in your home. Coupons are enticing to get you to try other items, and sometimes can cost you even more money. Clip coupons from the Sunday paper, from the Internet online coupon sites, and look for coupons on the products you already purchase. This is going to give you the best savings possible, stretching out the money you have, and that you want to make last much longer for your household budget.

Money management involves working for a living
Money management is a budgetary thing, meaning you need to know how much money you have, and how much money you can spend. If you are spending more money than you are earning, you are most likely relying on your credit cards just way too much. If you are relying on your credit cards, your payments are going up and you will never pay off those credit cards. Money management involves your earning money, and spending the money you earn, and not more than that. If you need more money in your home budget, you can do a few things: get a new job with better pay, ask for a raise, get a second job, or build a business of your own. Relying on others for handouts, making minimums payments on credit cards you can't afford, and living beyond your means is only going to come back to cause you trouble later in life.

Keeping Track Of Your Personal Finances

We have often heard about people who are known to be experts at managing finances at office but financial matters at home are relegated to a backseat. Maintaining accounts seems to be an intimidating thought for most of us who are not accountants. However, it is not a feasible idea to go about dealing with a problem this way. What is required is to take the bull right by its horns.

One of the important determinants of the personal finance is credit. In the domain of finance the credit score holds the key to the success. In the absence of respectable credit score, you would not be able to borrow money or obtain a home loan or a vehicle loan. The importance of this number can be judged by the fact that if this number goes wrong then it has the ability of leaving your goals unfulfilled.

Your credit number is directly associated with the credit that is currently in your name. Individuals who abuse credit cards and rack up high bills often have poor credit scores. Remember, it is not the amount your charge that can become detrimental to your credit, rather it is the amount you keep on your credit cards that can prove harmful. Use your credit cards wisely and carefully check your monthly statement. Once your statement has arrived, strive to pay off your outstanding bill in full each month.

In today's society, identity theft is often a problem. If someone steals your identity, they can wreck your finances, ruin your credit, and tarnish your good name and reputation. In order to prevent identity theft, carefully monitor all your financial statements and safe guard your personal information.

Most individuals put off saving towards retirement until a later date. Quite often, these individuals are often caught off guard by their rapidly approaching retirement date and the non-existent retirement fund. Instead of waiting until tomorrow, begin today. Take control of your personal finance situation and invest in a retirement fund immediately. Begin putting a portion of your income in this account in order to secure your future.

Make a budget and stick to it. It is an excellent tool to cut down spending and control your finances. When you can see exactly what numbers go in the income and expenditure columns you can easily spot the problem areas. The only money you have to spend in the month is that which remains after taking out items such as a rent or mortgage payment, car payment, insurance, utilities, and food.

If you are unsure how to go about setting your personal finance records straight, contact an accountant. He or she will be able to correct any potential problems while ensuring your future will be successful.

The world of finance is fascinating. There's no need to be scared of it. Just keep your finances straight and you will be able to build, or rebuild, your credit score.

Top 10 Tips For Saving Money On Your Next Electric Bill

Saving money on your electric bill just got easier than you ever thought. I have put together the following top 10 tips to guide you on your journey to save money and cut your electric bill down. With each tip you will see the potential energy savings you can expect.

Besides saving money, you will be making your home more comfortable, and you will be helping to protect the environment too.

1. During the summer set your thermostat at 78 degrees or higher when your home, and at 85 degrees when no one is there (you save 1 to 2 percent per degree raised on your electric bill). Also, use a ceiling fan or a fan that rotates back and forth. This can make the room feel up to 4 degrees cooler!

2. Regularly, typically once a month, replace your air conditioner's air filter (save up to 5 percent on your annual electric bill). Also, this helps with dust and dirt in the air making your home more enjoyable.

3. Keep your doors and vents closed in rooms that are not being used (save up to 3 percent on cooling costs). There is no need to waste money cooling rooms that are not being used - this can be a big savings depending on the size of your home.

4. On hot, sunny days, keep your curtains closed on windows facing to the south and west (save 2 to 4 percent on your electricity bill). The curtains will help keep the suns heat from heating up your room which means you use less electricity to keep it cool.

Caulk and weather-strip around windows and doors (save 1 to 4 percent on your electricity bill). Most people over look this step, but heat seeping around cracks means you have to use more air condition and ultimately more electricity.

6. Wash and dry only full loads of clothes and use cold water as much as possible (save 2 to 4 percent on your electricity costs). This also save time when you plan and wash a full load of clothes. Who wants to fold clothes more times than they have to?

7. Set your water heater's temperature to 120 degrees (save up to 10 percent on water heating costs; check by placing a thermometer under one of your taps). Most people don't realize that their electric water heater is almost always on heating the water.

If you can keep the water temperature near 120 degrees your water heater will not have to re-heat the water as much as it does at higher temperatures.

8. Use your microwave oven instead of your regular oven (save up to 50 percent on cooking costs). Microwaves are much more energy efficient than traditional regular ovens. A regular over uses a lot of electricity to heat up and to stay warm.

9. Install compact fluorescent lights in high-use fixtures (save about 66 percent on lighting cost per fixture). Also, these type of lights tend to last much longer than regular light bulbs most of us use.

10. Take advantage of super cheap electric rates from Ambit Energy and save up to 16% on your next electrical bill - for the average user this is almost $250 per year!

This is one of best ways to save money right off the top of your bill with doing almost nothing. All you have to do is switch your electric provider and you can do it online in less than 2 minutes.

16 Simple Everyday Ways to Save Money

As a mother with three kids and a very hardworking, hungry husband, I have discovered that absolutely nothing is cheap. I have also discovered that it is the small, daily changes we have managed to make that have had the most profound impact on our budget.

Here are 16 of the simple, everyday changes that have worked for us.

1. Use a coupon, absolutely whenever possible. I was really surprised by how many money-saving opportunities are out there when I knew where to look.

For online purchases, stick to the reputable retailers. You certainly will not save any money if you are the victim of fraud or if you are simply unable to return an item. And before you start shopping, always look for a coupon code that will allow you to save on your purchase. In the past, many online retailers sent out promotional codes as a series of letters or numbers that could be entered at checkout. Now, many retailers use a button or text link that automatically activates your coupon when you click through, so it is often a good idea to find the coupon first, before you start to shop.

2. Shop around. The internet is an amazing tool for researching products and retailers, as well as for comparison shopping. We make nearly all of our large purchases online (with a coupon code, of course). It is also important to know where to shop. For holiday gifts, plan ahead and check out the big online discount stores. and offer significantly reduced prices on trusted brands. And you can get great shipping prices, too, even on large gifts., for example, generally charges a flat $2.50 for shipping per order, not per item. I once had an enormous game table shipped to me for $2.50. Overstock often offers coupons for free shipping, too, so be on the lookout for those.

3. Keep a running list of gift ideas for your loved ones. I have found that when I am confident that a gift is perfect for the recipient, I am much less likely to overspend. But that kind of inspiration rarely hits me during the mid-December holiday rush, so I need to keep a list going the whole year through.

4. Budget. Of course, it is important to know what you are really spending. For years, the budget I had in mind was really more of a "wishful thinking" budget. But this quickly led to debt. It pays to get realistic. Whether you use a computer program or a simple ledger book, make sure you know where your money is really going.

5. Save for the future. Take 10 percent of your income and put it in savings, right off the bat. Now you know what you need to cut back on (or how much more you need to earn) to shore up the deficit.

6. Plan ahead.
You will want to make sure you have money in the bank for emergencies. Experts say you should have three to six months of living expenses set aside, for those just-in-case times. It sounds like a lot, but start socking away money each month, and it will add up fast.

7. Get organized. When your home is organized, you will be less likely to spend money on items that are already hiding in the nether reaches of your closet and drawers. The same goes for your refrigerator and kitchen cupboards. Purge and organize before you shop.

8. Simplify. There is a certain romance to the "simplify your life" movement. And having too much stuff really does weigh us down. Take a look at everything in your home. If it does not add joy, beauty, meaning, or usefulness to your life, give it away. And when you are tempted to buy something new, it must pass the same test.

On a quarterly basis, go through your house and ask yourself these same things again. Go through your closet, attic, garage, and basement and purge those items that do not add genuine joy, beauty, meaning or usefulness to your everyday life.

9. Reduce, reuse and recycle.
A simple lifestyle, for me, is about reducing my urge to over-consume. It is about being kind to the environment. It is about spending less money on material things, so that I have more time and money to spend on memories with my family. Make changes that will help the environment and your pocketbook at the same time. Install water saving kits on your toilet. Write on the back sides of paper. Use reusable containers in your lunches. All these little things really do add up, and it is important to show our children how we can all be part of the solution.

10. Shop without your kids. I know that if I get a shopping cart at WalMart and I do not have a list, I will spend $100. If the kids are with me, I will spend even more. This is another reason it makes sense to do your shopping online. You are less likely to purchase the incidentals.

11. Make sure that your credit card is paying you back via an incentive program.
I found a credit card that allows me to earn points on my daily purchases toward our annual vacation trip, including airline miles and hotel accommodations. Since most of my expenses each month are incurred at the grocery store, I found a card that rewards specifically for these types of purchases. Of course, you will need to make sure that you are paying off your balance each and every month. Paying a high interest rate on your credit card will quickly negate any savings you accrue on your incentive plan.

12. Lower your interest rates.
If you are carrying a balance on a credit card, give the credit card company a call to see if they will give you a lower rate. Sometimes, it is just that easy.

13. Shop around for insurance. The money you pay for auto insurance can vary greatly. Do some research to find out if you are getting the best rate.

Be wary of the influence of TV commercials and print ads, especially on your children. We hear fewer cries of "I want that!" when we keep our kids programming to those channels that do not rely on advertising dollars, such as PBS and Noggin.

15. Play "Time Warp." This is a technique I first learned from "My Monastery is a Minivan," by Denise Roy, and I use it quite a lot. It goes like this: When you are tempted to make a purchase, mentally fast-forward through the life of the item. For example, in her book, Roy thinks she needs new candleholders. She imagines spending time at the mall to find them, soon having to clean them, and then, years down the road, packing them in the giveaway box. She shirks the purchase and soon rediscovers the heirloom candleholders that are packed away right in her own home.

I like to play this "fast forward" technique in reverse, too, asking: What new clothes did I buy last season? (Sometimes, I can not remember). Where are those "I have to have it" items now?

16. Keep your mind on abundance. When you are thinking about money, it is really important to get out of the poverty mindset. Too often, when we are focused on saving money, we are living from a perspective that focuses on lack and scarcity, which tends to bring about more of the same. It has been really helpful for me to make a conscious effort to see the world as infinitely abundant and to rest in the notion that my needs will be taken care of. This is generally a simple matter of thinking more about what I *do* have than what I do not have.

All my days of penny-pinching have certainly proven to me that it truly does not take money to make us happy. Many of my fondest memories have occurred in the smallest homes. The favorite playthings of my children tend to be the inexpensive items that were never designed to be toys at all. And it is the simple, everyday pleasures that are the sweetest, when enjoyed together.