Home Real Estate Mortgages

Financing a home can be very tricky and confusing to many and can bring with it many risks that are difficult to see from the beginning. During the real estate boom I was a realtor and a mortgage consultant; many lenders were offering home buyers all sorts of mortgage programs with confusing term, they would do this to keep the purchaser confused just in hopes to entice the home buyer into getting their loan from them.  With all these weird mortgage deals it helped to cause the real estate melt down in 2008 Many people had no idea how their mortgage worked and all the crazy fees that were built into their mortgage, because of this many people walked away from their homes thus the

starting of the real estate meld down. This melt down caused the latest economic recession that we are still trying to come out of today. Back before the melt down lenders were giving away money on loans like it was candy. I went to a lot of mortgage closings as a mortgage closing agent and could not believe what people were signing, they had no idea what the terms of the loan were for, or they had no clue as to the thousands of dollars in closing fees that were rolled up into their loan. People would not read the documents, all they wanted to do was sign the forms and be done with the whole mortgage process.

Since the melt down lenders have gotten smarter and more conservative. Even today you need to be smart on finding a mortgage that works best for you and your family. You do not want to get yourself in over your head in debt in order to have that dream home you and your spouse has always wanted.  You want to be smart and get a home that is comfortable for you and your family to afford.

There are a lot of different types of mortgage programs out on the street even today after the melt down. Let’s take a look at some of the more common mortgage programs that you may want to consider when purchasing your dream home.

Fixed Interest Rate Plans

A fixed interest rate mortgage is a home loan that has an interest rate that does not go up or down during the life of the loan. The loan is amortized which means that the lender takes the total principle amount and adds in the interest that will accrue to give the lender a total figure. The lender then divides up the total amount into monthly payments usually 360 monthly payments if it is a 30 year loan.  The lender will front end load the interest which means that the majority of your early monthly payments go’s towards the interest that is due on the loan. Once a majority of the interest is paid then more of the portion of your monthly payment will be paid towards the principle. Your payments still remain the same from day one till the end of the mortgage.

Adjustable Interest Rate Mortgages

Adjustable interest rate mortgages sometimes called ARMs have interest rates that change from time to time. These mortgages can sound very complex and confusing but many homeowners find these mortgage plans very attractive. Fixed interest rate mortgages will have a little bit higher interest rate when signing the mortgage papers where ARMs will have a lesser interest rate in the beginning to intice home buyers to purchase them over a fixed rate loan.

Lenders create these loans based on an index number which is essentially a measure of money current value. The value of money goes up and down and these ARMs allow lenders to respond to this increase of decrease of the value of the money. If you are looking at an ARM take a look at the terms of the loan, lenders will have a low interest rate in the beginning of the loan, this rate will be locked in from three to five years. After this fixed rate of time has expired the rate of your loan may go up a few percentage points. But don’t get scared, these ARMs always have a cap which prevents rates from jumping to high.

Interest Only Mortgage Plans

These hybrid loans I do not care for. They are very confusing because the lender take parts of a fixed interest rate loan and parts of an adjustable rate mortgage to make these loans attractive. These loans are usually for home buyers on a tight budget. They allow the borrower to make payments towards the interest part of the loan for the first few years. This allows the purchaser to make lower monthly payments at first in order to adjust their budget to start making larger payments which will go towards the principle.

Assumable Mortgage

You may come across a property that has an assumable mortgage on it. This is where an owner of a property can sell you the property and you can take over his or her mortgage. There can be several issues with these loans so make sure that you have an attorney review and explain all details and drawbacks that you may inquire from these types of mortgages.

Conclusion

Mortgages and home financing can be difficult and time consuming. Knowing the basics before you get started can save you a lot of frustration and sleepless nights. Take a look at your budget  and your finances and know where you stand today and in the coming years and then take action and find a mortgage program that suits your family’s needs. Again don’t go overboard,  find a mortgage program that you and your family can comfortable afford.

Do you coupon?

Do you coupon? Do you ever wonder if couponing is really saving me money or am I just spending money on things I really don’t need?

There are researchers that state that couponing can be bad for you and can hurt your finances in the long run.

Like ever good thing, there are pro’s and con’s to couponing.

Let’s take a look at some of these con’s in couponing.

Coupons can cause impulse buying. When shopping especially for groceries it is always recommended to use a grocery list so you don’t over spend. But most people that use coupons will usually make purchases of items that they have coupons for. You may not have a need for the item but because you have a coupon for it you purchase it.

Junk food. Studies have shown that a large portion of online coupons are redeemed junk food and candy.  If you are trying to diet then couponing might not be good for you.  

Processed foods. If you are into purchasing processed food then couponing will be good for you. Studies have shown that many of the coupons in papers and online are for processed foods like frozen pizzas, tv dinners and other frozen of frozen food. These prepackaged foods are typically higher in sodium, fat, calories and preservatives. If you are into making your own meals with fresh products then couponing may not work for you.

Unhealthy drinks. Most coupons for soda’s and energy drinks may  be appealing to people that don’t drink a lot of water. Most of these drinks are high in sugars and caffeine. 12% of coupons are for drinks that are not really good for you.

Online coupon. I do a lot of computer repairs and virus removals from computers. I find that several of the computers I have worked on removing viruses the people got the virus from couponing sites. I try to tell the people to not use these sites, many of the stores don’t take coupons from these sites anymore and the sites seem to be loaded with computer viruses. A local restaurant chain I just visited would not take a coupon I had found on my smart phone. The owner said that there has been several sites that make online coupons to look like real coupons but they are a scam. So even stay away from couponing on your smartphone.

There are some good to couponing if it is done correctly. I just advocate that you be careful and not overspend and purchase things that are not needed when using coupons. If you use coupons correctly you can diffidently save some serious money, we will take a look at this later on in a different post.

But like everything there is both pro’s and con’s to couponing. Just be careful and don’t get taken by some of the scams that are out there in couponing.

Take time when making a major purchase.

How often do you ever think of what you are purchasing before you buy it? I try to take a couple of days before I make my purchases.  I am talking about groceries and essentials but what I am talking about  are things that I am wanting and not really needing. For an example I just bought a fishing pole. I saw the one I wanted and the cost of it was $150.00 but before I purchased it I went to the store to really make sure that this was the one that I really wanted. I really thought this was the one that I really wanted, but before I would spend that kind of money for a fishing pole I would check around at a couple of other stores before spending that kind of money. I went to a couple of stores and I found one that was just as good if not better for $60.00. Now if I was an impulse buyer I would have wasted $90.00 on something that is just as comparable as the one for $150.00.

I was really glad that I did not purchase the one for $150.00 even though I would have liked it very much but if I would have purchased the more expensive one then I would have had buyer’s remorse when I saw the one for $60.00. We have all had buyer’s remorse at one time or another. I find that taking my time when purchasing things I can usually avoid getting upset for spending extra money on something that I could have found cheaper.

Here are a few questions that I ask myself before I make purchases.

Am I just making this purchase because of emotion or logic? You should never make a serious purchase just out of emotion. Most of the time when you make a purchase with just emotion then you will probably regret the purchase later on. For an example you are walking through a store and a new television catches your eye and you make the purchase just because you get attached emotionally to the item, then a week later you get hit with the credit card bill you forgot about and you don’t have the money to pay for it because you spent it on the television. You let your emotions get the best of you and you did not think the purchase through all the way.

Do I really need this item? I ask this question at every purchase I make. A lot of times I find that the purchase is a want, so I weigh out how much enjoyment am I going to get out of this item. Wants are fine as long as they will give you plenty of enjoyment over the years.

Do I have the spare money for this item? I will not make a purchase unless I know for sure my bills are paid and there are enough funds in my account for any emergency that may come up, If I have any question about whether my bills are paid or not then I will hold off on the purchase until I know for sure that all my bills are paid for the month.

Have I done my research on the item? I will not make any purchase until I have shopped around to make sure that I am getting the best price. There are many times when you can make the purchase online. Most of the time by shopping online you will save money on gas and time. Again by not being an impulse buyer I save a lot of money by shopping around. 

In today’s times it is hard to save money and we are all trying to become financially independent. We all need to make our purchases smart and wise. Each purchase needs to be thought through and analyzed to make sure the purchase is the right decision and we are getting the best price for it.