Here's an article from www.mortgage-resource-center.com regarding 30-year fixed mortgages. I can't say I agree with them; in fact, I would argue that a 30-year fixed mortgage is the wrong loan for most people. However, knowledge is always a good thing and if you always read things that you agree with, then you're really not learning are you?


30-Year Fixed Mortgages

The 30 year fixed mortgage is the most common type of mortgage. To determine if the 30 year fixed mortgage is the right type for you, you need to consider several things. First you must analyze your finances.

The first fact to consider is the length of the mortgage. You will be making payments for 360 months - an extremely long time. Can you be reasonably certain your income will remain constant or increase over the next thirty years? Are you young enough that you will be employed for that long? If the answer is no, then where will the funding come from to make your payments on time?

You should consider the interest rate. Interest rates on mortgages increase & decrease depending on the economy. When you sign 30 year loan, you will make the same payments regardless of interest rate changes.

Is there any flexibility with a 30 year mortgage? Yes - and this represents a big advantage. If you obtain a 30 year mortgage, you can apply additional funds towards the principal any time you wish (some loans have pre-payment penalties so investigate your mortgage very carefully). If you pay toward principal regularly, you can pay off your 30 year loan in only 20 years!

You are not obligated to pay any more than your regular fixed monthly payment. If you are faced with an expensive repair or other unforeseen expense, you can pay only the minimum amount. If you win the lottery or receive an inheritance, you can apply toward mortgage principal as much as you want.

How much can you benefit from applying additional funds towards mortgage principal on a 30 year fixed mortgage? Here are some examples:

If you finance $100,000 on a home with a fixed rate 30 year mortgage, the payments would be $665/month if the interest rate is fixed at 7%. Multiply 665 x 360 (the number of payments). You would pay the lender a total of $239,400 over the life of the 30 year mortgage. The payoff date would be thirty years from initiation.

By adding only $100 each month to you payment, you would own your home free and clear about 9 years and 6 months sooner!

Better still, if you were able to add $200 each month towards principal, your thirty year mortgage would be paid off in 16 years and 1 month! And you would save $73,000!

You could make extra payments toward the principal, and have the flexibility of not making extra payments. This is a terrific advantage over financing for a shorter period. The shorter loan would mean you would be required to make larger payments every month.

A $100,000 loan financed over 15 years at 7% would mean you would pay $898.83 each month. Can you see the advantage of financing over a 30 year period!

Unless you are 100% certain of your ability to make the larger payments for a shorter mortgage, then a 30 year mortgage may be your best option.

What if interest rates decrease significantly during the life of your mortgage? Refinancing would be the answer.

Careful study before obtaining any type of mortgage is critical. In the instance of the 30 year mortgage, you can plan in several beneficial options without obligating yourself to pay a higher amount. Begin your mortgage research by studying the advantages provided by the fixed 30 year mortgage before taking into consideration a shorter mortgage.

Here's an excellent article on credit, what it is and how it works. Definitely an extremely important part of any financing activities. The more you know, the better off you'll be when it comes time to accomplish your goals.


Credit Scores

If you have been in the market for a mortgage loan recently, whether to purchase, refinance or obtain a home equity line, you have most likely heard a new term in the mortgage industry lingo: credit score. What is a credit score? And why is knowing about credit scoring important to you?

What is a credit score?

A credit score is a number, ranging from the high 300’s to the mid-800’s, which is developed from information contained in your electronic credit files maintained by the three private credit repositories: Equifax, Trans Union, and Experian (formerly TRW). It is commonly referred to as a "FICO" score, because the scoring model widely used by lenders was developed by the Fair, Isaac & Co. Your credit score represents your credit risk – how likely you are to repay a loan.

How is my credit score derived?

All of the information in your credit file is analyzed. Your score is then calculated, based on many factors, some of which are:

• your credit payment history (have you been late with payments? frequently? recently?); mortgage rates have a more serious affect on your score
• how you utilize your available credit (have you maxed out your credit cards?)
• the number of recent credit inquiries (are you incurring more debt?)
• the types of credit you use (do you have a lot of finance company accounts?)
• legal items filed against you (judgments, liens, bankruptcy, foreclosure)
• length of credit history

The scoring model considers each of these variables, weighs each factor according to a formula, and then ultimately yields a single composite score. According to Fair, Isaac & Co., the two most heavily weighted factors are past payment history and credit utilization. The factors of age, race, gender, religion, national origin, marital status, employment, income and where you live are not evaluated. Although Fair, Isaac & Co. provide data to support the validity of their scores, scoring models are proprietary and they do not publicly release information about exactly how the formulas work.

Is credit scoring new?

Credit scoring has actually been around since the mid-1950’s, used for approving credit cards and auto loans. However, it is only in the past three years that credit scoring has been used by mortgage lenders, so most consumers are not aware of it.

Why are mortgage lenders using credit scores?

Mortgage lenders believe that credit scoring accurately assesses credit risk and predicts loan performance: higher scores represent a greater likelihood of repayment and lower scores represent a greater risk of delinquency. This belief is substantiated by an analysis performed in 1996 by economists at the Federal Reserve Board of the correlation between credit scores and loan performance. Additionally, investors who purchase mortgage loans have also endorsed the use of credit scoring: they now price loans (determine the interest rate) based, in part, on credit scores. Since the three private credit repositories (Equifax, Trans Union and Experian) each have their own credit scoring model, and consequently give their own individual credit score to your credit file, lenders typically use the middle of the three scores when underwriting your loan.

What is a "good" credit score?

Credit scores are broken down into three ranges: a score of 680 and above is considered a low-risk borrower; a score of 620-680 is considered medium-risk; and a score of less than 620 is considered high-risk. In the medium-risk range, other factors, such as loan-to-value and debt ratios, are taken seriously into consideration by the mortgage underwriter. So, if a person has a 625 credit score, but has low loan-to-value and debt ratios, he/she is looked at more favorably.

Why should I care about having a high credit score?

The primary reason is that your credit score is a major factor in determining the interest rate you will pay for your loan. Borrowers with low credit scores (high-risk) are given higher interest rates than borrowers with high credit scores (low-risk). Almost every lender now uses credit scoring as a factor in pricing loans.

How do I find out what my credit score is?

You can contact each of the three private credit repositories for a copy of your credit file, which includes their individual credit score: Equifax @ 800-685-1111; Trans Union @ 800-916-8800; Experian @ 800-682-7654.

How can I improve my credit score?

First, and foremost, review your credit file from each of the three private credit repositories for accuracy, and begin immediately to correct errors. Then, according to Fair, Isaac & Co., the three key things to remember are to pay your bills on time, keep credit card balances low, and apply for new credit sparingly. All of these things will make you a good credit risk and produce a high credit score.

Why is credit scoring so controversial?

One reason is that credit scores are calculated on the raw data found in your electronic credit file, which is not always accurate. And correcting inaccurate information can take a lot of time. The scores also do not take into consideration such variables as a recent illness, job loss or the like, which can temporarily affect credit. For these reasons, as well as several others, many feel that credit scoring should be approached cautiously and not be given too much weight in the final decision of whether to grant a mortgage loan. However, the use of credit scoring as an evaluative tool is increasing dramatically in the mortgage lending industry, so consumers need to be aware of it and how it is used.

As I mentioned previously, second mortgage and home equity lines of credit (HELOCs) have become increasingly popular in the last year or so, as people who locked in rates at the bottom of the market 2-3 years ago need cash out but don't want to lose their low rates. This is an excellent article on how to choose between a second mortgage and a HELOC. Generally speaking, second mortgages have fixed rates and you have a set payment, paying down the balance over a period of years. A HELOC acts like a credit card - you have a preset limit, you pay interest on the amount you borrow, and you can borrow money again once you'd paid it back.

A Second Mortgage Vs. A Home Equity Loan
by: Jay Moncliff

If you own your home and need a loan for whatever reason you have probably considered a second mortgage or a home equity loan to help you pay your bills, buy a new car, or pay for some other investment. However, you probably don’t know whether a second mortgage is better or worse than a home equity loan for your particular situation. However, don’t despair because there are some tips that will help you decide whether a second mortgage or home equity loan is for you.

Second Mortgage Tip #1 One Time Expenses

A second mortgage is the preferred option if you have a one time big expense you need to cover. Examples of this include remodeling your kitchen, paying for a wedding, or buying a new car. In these instances a second mortgage will probably work best for you; however this will depend on the equity in your home and your credit score.

Second Mortgage Tip #2 Recurring Expenses

If you are going to have recurring expenses then you might not want a second mortgage because a home equity loan will work out better for you. The second mortgage is best for large amounts of money at once while recurring expenses like tuition are better paid for with a home equity line of credit.

Second Mortgage Tip #3 Repayment

You will also need to consider your ability to repay and which option will suit you best. A second mortgage can be financed similarly to your first mortgage, while the home equity loan can be paid back more like a credit card. Consider your financial position and ability to make monthly payments before applying for either a second mortgage or a home equity loan.

If you still don’t know whether a second mortgage or home equity line of credit is for you, then talk with your lender and see what is recommended for your equity, credit, and ability to repay the loan.

Today we have a great article on costs, and one reason why it might not be a good idea to always look for the lowest cost. This is true in mortgages as well. Although there are times when it makes sense to look for the lowest costs and fees on a mortgage, there are also situations when it makes sense to pay more for a mortgage, usually because paying more will actually save you more in the long run. This is one reason why it's extremely important to talk to a mortgage professional you can trust, who can show you different options and let you make a decision that's right for you and your family.

Also, there's a special right now for a great mortgage ebook called Mortgage Secrets Revealed, which you can get for free right now at http://www.homemortgagetruths.com!

The Cheapest, Forget It !
by: Steven Schneidman

Wouldn't it be great if we got get the cheapest price on everything. I know I wouldn't want it. Would you? Do you strive to get the cheapest automoblie? The cheapest mobile home to live in? The cheapest place to eat? Rather than look for the cheapest we tend to look for value for our money. We know we all work hard for our money and would like to be compensated if we are to give it up.

The first thing a buyer should look for is if he's comparing apples with apples. Any person who's been to China lately can tell you that you can find a knockoof Louis Vitton handbag for $10.00, $20.00, $50.00 and $100.00. The $10.00 bag looks good from a distance but up close you can notice it's not a real one. The $20.00 bag looks real until you see the seems. The $40.00 bag looks perfect on the outside but the inside is noticeable different. Lastly, the $100.00 bag is an identical bag that can fool even workers at Louis Vitton.

Secondly you should look for reliability. If you need the goods for a certain date and are saving 5% dealing with one questionnable supplier, think what would happen if they are late. If you run a sale on an item, advertise starting this date, and then not have the merchadise, think about the impact on your company. Your company's image is not viewed favourably, secondly the likelihood of this customer returning to your store for a future sale is unlikely and your advertising budget was wasted. Now how much was that 5% savings worth?

Thirdly, look at indirect costs. My company Solutions Ink has set up many companies on our e-commerce ordering systems for printing and promotional products. A daily dreaded routine for most large companies is ordering business cards. The time to compile a list, fax or email, receive a proof, verify with the end user, return the proof or make changes on the proof, all takes considerable time. Along with this time the idea of maintaining a data base for future orders seems like a great idea which even speeds up the ordering process further. By giving our customers instant proofing we can save them hundred of hours annually. This is one direct cost savings not usually looked at, the other is that these employees can use their time more effectively to make their comapny's more efficient and economical. The smarter larger company's have realized this, now the middle size companies are coming on board. Another example of this are cellular phones or blackberries. The direct monthly cost of these items is certainly more than finding a public telephone and putting in a few coins or buying a calling card. However the reason most people use these items is that it saves us time, allowing us to multitask other items which are more beneficial to our companies.

Fourthly, sometimes it's an emotional decision and not a purely financial one. If all companies looked only at the bottom line, no companies would have corporate suites, no executives would be driving luxury cars, their would be no Ritz Carlton Hotels, no luxury development or condominiums. If there would be none of these things life would be a lot less interesting. We could exist but not really live well. If you would like to know more about really helping your company drop me a note at steve@solutionsink4u.com.

The subject of taxes is an interesting one, and seems to be a contentious topic among people of different political views as well. Whether you believe in a progressive tax, regressive tax, or flat tax, it's an issue that we should all know more about and try to understand other people's positions. Here's an interesting article on how taxes affect different parts of the population - hope you enjoy!

Taxes, Taxes, Taxes: Who Really Pays The Most?

Each April our thoughts turn to the coming of spring and the coming of the tax man. I hear a lot of people complaining about taxes at this time of year. Not just that they have to do their taxes and spend hours pouring over old records and trying to figure out indecipherable forms, but also musings and opinions about taxes in general.

I often hear the opinion expressed that businesses, property owners and "rich people" do not pay their fair share of taxes. And I agree. I agree that they don't pay their "fair share" as defined in most people's minds. But I also think that in certain circumstances, these businesses and people shouldn't have to pay any taxes.

That may sound a bit radical for many people reading this, but allow me to explain my reasoning.

First, why are we taxing businesses on their profits?

A business exists, whether it is a sole proprietorship or a large international corporation, to make a profit. People create businesses and invest in stocks with the idea that they will get a share of the profits. This is the basis of our system of capitalism. It is the motivation for a free marketplace and private ownership of property.

Why would anyone go to the trouble of starting a business unless they expected a significant return on their investment of money and time? Why would you bother buying stock in a company if the company never gave you any dividends (yes, stocks can appreciate, but bear with me)?

There comes a point when deciding where to invest your time and money that you have to figure out how much return you need to make your effort worthwhile. If you work at a job and earn $30,000 a year, how much will your business have to make to replace your income? How much more do you want it to make for taking the risk of quitting your job and building a business?

If you can't make much more than the $30,000, it hardly seems worth it to spend all the extra time and take the extra risk of starting the business. So let's say that you figure you can earn $50,000 with your business. And that is enough to take the risk.

But now the government comes along and tells you that you have to pay $7,000 in taxes on your $50,000 business profit. Now you have a choice. Live with less or increase your business income. Living with less defeats the whole purpose so let's look at increasing your business income.

You can either increase your business income by getting more clients, selling more goods or raising your prices. When you are in a less competitive market, raising your prices is the easiest thing to do. So you raise your prices. Now you are earning the $50,000 you wanted in the first place and you have effectively passed your business taxes on to your customers.

But not only are your customers paying a higher cost for your product or service but they may also be paying more in sales taxes. They get a double-whammy. If your customers are businesses, they will pass on their increased costs to their customers. This cycle continues until the cost of every business' taxes are eventually passed on to the consumer - me and you.

Let's look at a specific and simpler example of how this works. I know a person who owns some rental units. The city in which they are located passed a tax on rental units.

Some politicians and local activists were anxious to punish the "gouging landlords" and "rental robber-barons". They figured that they could play Robin Hood and redistribute some of the rich landlord's profits to the "needy".

Now my friend's costs have gone up. So what did he do? Naturally, he raised the rents to cover the cost of the additional tax. And since it is easier to accept a reasonable rent increase than to move, his tenants stayed put and paid more.

Ironically, most of his tenants are the same people who the politicians and activists consider the "needy". So now the government takes an extra $20 a month out of their pockets through the "tax on the landlord".

If the tenant is on an assistance program they may get some of this money back. Of course the amount they get back will be reduced by expenses and administrative costs for the government to collect, control and distribute the money. So who really paid for this tax? The landlord? No, in the end it is always people - you and me.

All taxes are paid by the citizens themselves, regardless of whether they are paid directly, as in sales and income taxes, or through increased prices of products and services, or through "fees" imposed by governing agencies. How does your car registration "fee" differ from a tax?

Not only does each citizen directly or indirectly pay every penny of tax money that is collected in this country, but most people's perception that the "rich" and "corporations" don't pay their "fair-share" is accurate.

These people and businesses can afford to pay an attorney $10,000 to show them how to save $500,000 in taxes. Most likely, you can't. The tax laws are made with loopholes for the "rich" and for certain businesses.

Part of this is because it is these people who own or control the majority of the property in this country. And no progress can be made with out a significant investment of capital. If these people and businesses are given the right reasons to invest their capital (such as tax breaks) the economy will continue to function and grow.

If they are overburdened with taxes they will either move to Bermuda or start a cycle of inflation by raising prices. Either way, you, Joe Citizen, will end up paying more either directly in the form of taxes or indirectly as your cost of living increases.

It is a double-edged sword. Joe Citizen wants "rich people" and businesses to pay their fair share (though Joe does not realize that he ends up paying it anyway) but the government knows that they can't kill the golden goose (and the economy needs a good "goose" every once in a while).

So tax laws and regulations are passed which seem to target the "rich people" and businesses but with enough loopholes so that no real tax increase occurs. And the politicians can blame the other party for the loopholes. But both know this is business as usual.

Make Joe Citizen feel good about paying his taxes by raising taxes on the "rich" and "wealthy corporations", but give them loopholes so that little more is accomplished than adding another volume added to the tax code. And Joe Citizen continues to pay his taxes each year.

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© Simple Joe, Inc.
David Berky is president of Simple Joe, Inc. a marketing company that sells simple software under the brand name of Simple Joe. One of Simple Joe's best selling products is Simple Joe's Money Tools - a collection of 14 personal finance and investment calculators. This article may be freely distributed so long as the copyright, author's information and an active link (where possible) are included.

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