Should you refinance your mortgage?

The average U.S. homeowner refinances his or her mortgage every four years. Sometimes it’s to take advantage of lower interest rates, but there are many other reasons to refinance. Are any of them right for you? Find out by seeing if you can answer “yes” to one or more of the following questions.

Are interest rates rising?
If you have an adjustable-rate mortgage (ARM) and expect interest rates to rise, you may want to switch to a fixed-rate loan. By locking in the interest rate, you won’t have to worry about your payments climbing in the future. On the other hand, if rates are rising and you have a fixed-rate mortgage, you’re in good shape. You may still have other reasons to refinance, but obtaining a lower rate isn’t one of them.

Is your monthly payment straining your budget?
You may want to consider refinancing to lower your monthly payment.
Even if rates are the same as when you obtained your current mortgage, you may want to refinance to extend the term of your loan if you’re having difficulty meeting your monthly payments. For example, assume you have a $200,000 mortgage at 6 percent for 30 years and have been paying $1,200 a month for seven years. Refinancing to a new 30-year loan at the same rate would lower your monthly payment to $1,075.

Is your ARM causing stress?
Perhaps you were attracted to an adjustable-rate mortgage because the initial rate and payments were lower than a fixed-rate loan. However, many ARMs are adjusted annually. That means if interest rates go up so too will your monthly payments. If you aren’t comfortable with this variance and would prefer the peace of mind of a consistent payment, consider refinancing to a fixed-rate loan or to another ARM with more favorable rate caps (limits on how much the interest rate can increase).

Has your credit rating improved?
When you applied for your mortgage, perhaps you had little credit history or maybe even a blemish or two on your borrowing record. Your credit score was a big factor when your lender determined the interest rate on your mortgage. If you had a low or mediocre score that has since improved, you may now be eligible for a better rate if you refinance.

Have you recently begun to earn a higher income?
Refinancing isn’t always about lowering your monthly payment. Maybe you’ve received a salary increase at work, or your spouse has recently returned to the workforce after staying home to raise a family. You may want to put that extra income towards your mortgage. Converting to a 15- instead of a 30-year amortization, for example, will pay it off much faster and save you tens of thousands of dollars in interest payments.

Has your home equity climbed above 20 percent?
If you obtained your mortgage with a down payment of less than 20 percent, chances are you incurred Private Mortgage Insurance. However, if rising house prices have increased the value of your house, your home equity may now exceed 20 percent. If this is the case, you have several options. First, you can ask your lender to cancel your PMI. To do this, you’ll need to get an appraisal to prove that your home’s value has increased and that you have exceeded 20 percent equity. However, if you can’t persuade your lender to drop the mortgage insurance, you might want to consider the refinancing. If your new mortgage is for at least 80 percent of your home’s appraised value, you’ll avoid paying PMI and could save $100 a month or more.

Do you need to consolidate debt?
If you have built up considerable equity in your home, but you’re mired in other debt, consider cash-out refinancing. That involves getting a new mortgage for a larger amount than you currently owe. For example, if your home is worth $285,000 and your outstanding principal is currently at $185,000, you have $100,000 in equity. By refinancing to a new mortgage with a principal of $215,000, you can free up $30,000 to pay down high-interest credit card or other debt. You’ll save money if your new mortgage has a lower rate than the other loans, and you’ll have the added convenience of only having to make a single monthly payment.

Do you need money for a major expense?
Cash-out refinancing isn’t just for consolidating debt. If you have available equity in your home, it may enable you to undertake some major home improvements, or to free up money for your children’s education. If you do plan on taking cash-out, it's important to be realistic about your future goals. Remember that taking cash out will increase the principal you owe on your home. This may impact you when you go to sell your home.

Remember, refinancing doesn’t come without a price: closing costs will eat into your savings at first, so the longer you plan to stay in your home, the more you’ll benefit. Before considering refinancing, use the LendingTree refinance calculator to help determine your break-even point.

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Introduction to Risk Management

By Muhammad Haidar

Risk is a fact of life. Risk is inherent in all human activities. Risk is a natural phenomenon that has its uses. All Risk is not bad. Risk is also related to reward. If one were to take a philosophical view of risk, it is difficult to imagine life without risk, and risk can also be invigorating to the mind, extracting the best out of it.

However, in the context of Risk Management in a business, we are concerned with the negative impact of risk, and how it can be eliminated or at least minimized.

A business may face risk from various quarters. Basically there are two categories or classes of risk. One, that is by chance, and the other by design. Let us assume that a Company is faced with a certain situation that occurs once in a blue moon. Being unprepared for this situation, the Company loses, say, USD: 10,000.00. However, in order to be prepared for this risk the Company might have had to spend USD: 100,000.00. This risk was purely by chance. On the other hand, many American Banks have gone under the burden of their poor housing mortgages. This is a risk by design. These Banks got themselves into trouble with their eyes open.

Dealing with Risk:
Whatever the category or class of risk, the first step that businesses need to take to deal with it is to set up a mechanism to foresee and forestall risk. The second step would be to minimize the risk that cannot be altogether eliminated. The third step would be to transfer or divert the risk. And the fourth step would be to accept the remaining part of the risk and try to go with the tide, that is, to endure the risk, and the pain associated with it, and then to bounce back into action.

The following sequence of steps may be taken to deal with Risk in order to get the best results possible. It needs to be borne in mind that there is no single, perfect way of dealing with risk. Much depends on the nature of the risk, the surrounding circumstances, and the resources available at a particular time to deal with risk. But the wisdom of being prepared for risk cannot be disputed.

1) Identification of Risk: Look and you shall find! Risk is everywhere. Every activity or even inactivity has certain inherent risks. The idea is to break down every activity into independent components, and identify the risk associated with each and also as a whole.

Identification of risk is part of the ground work in risk management, and the more thorough and efficient the ground work, the better the end result. Every business activity must be studied end to end, and all potential problems, and risks associated with them, must be mapped and dealt with.

2) Elimination of Risk: Once the risks are identified, the next step is to naturally eliminate them. Of course, not all risks can be eliminated. Nor all of them need to be endured. To the extent possible, and viable, risks must be eliminated through a combination of strategies, depending upon the context, the nature and the extent of the probable risks faced.

3) Mitigation of Risk: Risks that cannot be eliminated must be reduced. The quantum of loss to a business from risk depends upon the severity of the risk. By reducing the severity of such risks, a business can reduce the potential loss on account of it.

4) Acceptance of Risk: "What cannot be cured must be endured". But one can make one's life safer and more comfortable by accepting the inevitable in a planned way, and channeling the risk within the ecosystem of the organization in such a way as to make the impact of it bearable.

5) Diversion or Transfer of Risk: Another way of dealing with risk is to imaginatively divert or transfer risk to another entity. In other words, one's risks may be outsourced to others, an example being insurance.
All said and done, risk can be dealt with in many ways, and there is no perfect way of dealing with it, except that being prepared for it can give us a better chance of tackling it.

However, the methods employed to deal with risk must not amount to the cure being worse than the disease.

Article Source: http://EzineArticles.com/?expert=Muhammad_Haidar

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Good Credit Habits Can Keep You Out of Trouble

By Tony Banks

The credit system is a good one no doubt. But as most things in life, it has its other side too. Recently, creditors started slashing consumers' limits. The consequence of this action is that it lowered the debt-to-credit ratio of many of them. Just imagine this scenario: Your limit is $9000 and for no apparent reason your creditor slashes this limit to $6000. With this reduction your debt ratio will consequently increase by an average of 30%. So if you had a debt ratio of 20% initially, it will now be 50% as a result of the credit limit slash.


The good news here is that you can still overcome the odds of having your limit slashed and still maintain a good balance. There are two ways to do this. It is either you make drastic reductions in your monthly spending or you make a plea with your creditor to restore your limit to its original state.

Bear in mind that a clean report is built by years of good history, regular debt payment and reduced spending. These are strategies you need to deploy in your race for a healthy profile if you must survive in the current financial world. However, the prospects of attaining scores above 800 are worth getting a make-over kit for repairing your credit report. This method will require from a few weeks to several months of work that will improve your rating significantly if you handle it properly.

Alternatively, looking up the directory of credit repair agencies in search for a repair agency that will handle restoration of your profile is another positive step to help you stay out of financial trouble. Good luck!

Visit do-it-yourself-credit repair or credit repair services to learn more on raising your credit score 200+ points to get approved for car, home and credit card loans.

Article Source: http://EzineArticles.com/?expert=Tony_Banks

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How to Pay Off Your Mortgage Fast

By Graham Couper-Smith

Pay off Your Mortgage fast with these simple tips and techniques. Are you horrified at the thought of paying off your mortgage for 30 years? Get rid of the home loan fast.

Finance doesn't have to be this expensive. The key is to get rid of it quickly. Home loans have a purpose: To help you buy a house. Once you own the house, it's time to get rid of the mortgage. Here's how:

1. The weekly/monthly rule.
If your mortgage payments are monthly, ask if you can change them to weekly. The bank will probably adjust your weekly payment to reflect the exact monthly payment. To pay the bank's revised payment will remove the advantage. Instead, do this: Take the previous monthly payment and divide it by 4. Make the result your new weekly payment. It will be more than the bank's figure and this will help get rid of the home loan faster.

2. Big interest savings are made by paying larger payments, so, just like the weekly monthly rule think about what you could add to your payment without causing hardship. Add that amount to your payment and make the payment come out of your account or from your pay automatically, so you don't have to do anything to make it keep happening.

3. Resolve to put any windfall money (like a tax refund for instance) into your home loan and always do this.

4. Create a windfall by having a garage or yard sale and get rid of unwanted stuff, and pay the proceeds off your home loan.

5. If you have 2 incomes in your household, is it possible to live on one and pay the other entirely off the loan?

6. Take advantage of offset accounts etc.

One final thing, review the payments every 6 months and check if you can increase them. The sooner the loan is gone, the sooner that entire payment belongs to you!

If you follow all of these strategies, your home loan should start to drop much much faster than the planned rate. You're on your way to getting rid of the mortgage.

Graham Couper-Smith

co-author of 'Recession Proof Yourself'

The book and more tips and tools to help get rid of debt are available on our website at: http://www.manageyourfinance.com.au

Article Source: http://EzineArticles.com/?expert=Graham_Couper-Smith

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4 Ways to Help Yourself Get the Real Deal With Debt Consolidation Loans

By Santhana Chann

Companies that offer assistance and in return, they earn from it. That is always the case for every business.

For one who is in debt, you need to come up with a solution on how to deal with your current financial status, be it a bad credit, low credit rating, so on and so forth. Debt consolidation loan companies are out there to help but they are also out there to earn a living, earn an income. That is a fact.

So, as a debtor, you would naturally, look for the best option to help you lessen your debt, improve credit rating, and eventually, get rid of your debt. As debt consolidation companies help you out, also know how to help yourself in dealing with a debt consolidation company.

Here are four ways that you could include in your list as you scout for debt consolidation companies.

1. Annual percentage ratio of the loan, how much does it amount to?

2. Is the annual rate on a variable interest rate, that would change depending on the period of the loan, or is it a fixed interest rate?

3. Are redemption fees offered? These are the interest rates being paid for should you pay your loan off after a year, or should you follow the number of years noted in your loan.

4. Is there hidden loan insurance when you ask for a quote?

So, really, what help you would get for yourself should always be checked, perused and carefully studied. After all, if you are being helped, then you should not be given any hidden charges, right?

Click on the link to apply Bad Credit Debt Consolidation Loans and let an online expert help you with your Debt Management today!

Article Source: http://EzineArticles.com/?expert=Santhana_Chann

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Is a Student Credit Card Right For You?

By Jeremy Biberdorf

The life of a student is synonymous with being short on cash and needing to maintain a tight budget in the minds of many individuals. With books and tuition to cover on top of just day to day expenses, it's easy to see how that can be the case. When used prudently and sparingly, a credit card can go a long way in regards to making managing a student budget a little bit easier. However, it's important to make sure that it's the right credit card! Student credit cards are a new breed of card designed especially to meet the needs of students and help them build a good credit rating that will benefit them later in life. The question, of course, is whether or not one of these cards is right for you.

How is student credit different from regular credit?

To qualify for a regular card, an applicant needs to have a steady income and an established job. This isn't the case with a variation meant for students, as credit providers that offer student credit understand that many students either go to school full time or don't enjoy a long term employment situation. These cards also do not come attached to any annual fees to help make them easier to maintain and use as well. In addition to this, student credit cards are meant to be used to manage college expenses and typically feature a lower credit limit than regular credit cards - somewhere around $1,000 - which is ideal for covering the costs of items like school books.

What is the advantage of applying for a student card instead of a regular card?

Student credit cards are designed specially to help students manage their expenses while allowing them to build a stellar credit score that will benefit them later in life. These days, good credit is necessary for everything from being approved for an apartment, to getting a car loan, to even landing certain jobs so the sooner a good credit rating is established, the better. Student credit programs also often come attached to rewards and benefits from financial institutions that can help make the journey through the school system smoother. A lower credit limit, online access, and stellar customer service all ensure that the card is easy to manage and use as well.

How can I apply for student credit?

The easiest way to apply for a student credit card is by filling out an application online. However, be sure to adequately consider and determine your individual needs before hand, as each program is different. Luckily, the convenience of the internet makes researching and comparing different programs a snap as well. Read over the terms and conditions of each card carefully. Then once you find the one for you, fill out an application and you could find yourself approved for credit within minutes! It really is that simple.

Building good credit and learning to use your credit to manage your everyday expenses is an important step in every modern life and student credit cards are the perfect way to get your life, your budget, and your credit score off to a great start right from the get-go.

Apply for college student credit cards online to get your financial freedom. Once you have credit built up, check out these cash back credit cards and earn free cash on your purchases.

Article Source: http://EzineArticles.com/?expert=Jeremy_Biberdorf

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