Loans and mortgages – Lay off the unemployment insurance

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Involuntary unemployment insurance is similar to credit disability insurance. It covers the minimum amount of your credit account payments for six to 12 months after you lose your job.

Coverage usually costs 70 cents for every $100 on the credit balance. But the policy only covers the minimum payment due, so interest adds up. You will probably wind up owing more money than you did when you had a job.

If you want peace of mind, your best bet is to put enough money for three to six months of living expenses into an emergency savings account.



All the best,



Timben

Loans and mortgages – Pass on expensive loan insurance

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Insurance is for people, not for loans. Just say “no” to anyone who offers you Credit Disability Insurance.

An individual Credit Disability Insurance policy covers your monthly loan payment if you ever become disable and can’t make the payment yourself. Typically, the policy pays the minimum amount due up to 36 months.

With costs near $21 for every $1,000 of coverage, these policies are not worth the expense. If you already have some type of disability insurance, make sure it covers loan payment along with the rest of your expenses.



All the best,



Timben

Loans and mortgages – Smart way to slash your car payment

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Refinancing isn’t just for homeowners anymore. You might never have thought about it, but refinancing your auto loan could slash your monthly payment.

You should consider refinancing if interest rates have gone down since you bought the car. It’s also a smart option if your credit rating has gone up because you’ll be eligible for a lower rate.

Applying online can get you through the process in just 10 minutes. Visit a site like www.eloan.com that offers auto refinancing options. Also try www.capitaloneautofinance.com, where your can look at available rates and calculate what your new monthly payment might be.

To compare the rates of lenders in your area, visit www.bankrate.com. They will give you contact information and tell you whether each lender charges a fee.

Usually lenders do not charge fees to refinance your car loan, but you will have to pay to have your title transferred at the local Department of Motor Vehicles. The state charges anywhere from $5 to $65 transfer the lien. That’s little to pay, though, to save thousands of dollars over the life of your loan.



All the best,



Timben

Loans and mortgages – Stay ahead of the market

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Once out of every three people buying a house today will borrow money with an adjustable-rate mortgage (ARM). Interest rates for an ARM are usually lower than fixed-rate mortgages – at first. But there is no guarantee market rates won’t rise suddenly, and your mortgage payment will rise with them.

If the economy shows signs of inflation, go ahead and convert that ARM to a fixed rate before your monthly mortgage payments jump. It could save you money and save your house.



All the best,



Timben

Loans and mortgages – Save steps and money

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Refinancing your mortgage can cut your interest charges, but what about cutting the cost of refinancing? If you’ve refinanced once or twice before, you can knock at least $400 off the closing costs using what is called, “streamlined refinancing.”

Streamlined refinancing means you skip some of the steps you had to take last time you refinanced. If it’s been two years or less since you refinanced, look into saving in these areas:

* Use the same attorney and lender. You will pay less in fees because they have already done the background work, and you will avoid state mortgage taxes.

* Ask you lender to use the appraisal plan from the last closing, and cut $200 off your closing costs.

* Use the plot plan from last time, and save another $150.

* Update your title insurance policy instead of writing a new one, and save from $400 to $1,000.

If you have a loan from the Federal Housing Administration (FHA) and you’re kept up with payments, you can take advantage of its streamlined refinancing package.

No face-to-face meeting is required, you pay no underwriting fees, and you don’t need an appraisal. You don’t even have to undergo credit check or income verification. This refinancing is available strictly to lower your monthly payments. It is ideal if your credit situation has improved since you first took out the loan.



All the best,



Timben

Loans and mortgages – Pick the right time to refinance

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Refinancing your home can save you thousands, but only if the time is right. Before you decide to refinance, ask yourself a few questions:

* How much will I save each month?

* How much will it cost to refinance, and will I live here long enough to make it worthwhile?

* Will the new term be the same or shorter than the term is now?

Experts say if you can drop your interest rate by at least one percentage point – preferably two – and plan to stay in the house at least 18 months, refinancing may be a good idea.

The refinancing will cost roughly $2,000, so figure out how long it will take before you break even and start saving. If you move out of the house before that time, it will actually cost you more to refinance.

Try using the Mortgage Refinance Breakeven Calculator at www.myfico.com. It’s a handy tool when you’re dealing with a lot of numbers. Click on Credit Education, and look in the Calculators section to find the Mortgage Refinance Calculator. Run your figures through the calculator to find out when you would start saving if you refinanced.



All the best,



Timben

Loans and mortgages – A little prepayment goes a long way

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Make an extra monthly payment on your mortgage every year, and you’ll save thousands of dollars in interest. Just add a little to you check each month. Over the course of the year, it will add up to an entire extra payment.

For example, suppose you have 25 years left on a fixed-rate 30-year mortgage of $200,000 at 7-percent interest. If you add just $150 to your $1,300 monthly payment, you’ll finish paying your mortgage more than five years early. Plus, you’ll save almost $55,000 in interest over the course of the loan.

To find out how much you can save, visit www.myfico.com, and click on Credit Education. In the Calculators section, the Mortgage Payoff Calculator will figure exactly how much time and money you’ll save by prepaying.



All the best,



Timben

Loans and mortgages – Get a free discount

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You can get an easy discount by having your loan payments automatically deducted from your checking or savings account. Most lenders will lower your APR by 0.25 percent or 0.50 percent just for making automatic payments.

Lenders like automatic deductions because it gives them less paperwork to do. At the same time, it’s good for borrowers in a couple of ways. Not only do you get the lower APR, you don’t have to worry about whether your check will arrive on time. And it’s one less check you have to write.



All the best,



Timben

Loans and mortgages – Pay off loan in half the time

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Save tens of thousands of dollars by choosing a 15-year mortgage instead of a 30-year term. Your monthly payment will be higher, but cutting the time of the loan in half cuts off years of interest charges. Plus, interest rates are lower most of the time for loans with shorter terms.

Say your annual percentage rate is 7 percent, and you choose a 15-year fixed-rate mortgage over a 30-year mortgage. For every $100,000 you borrow from the bank, you’ll save $75,000 in interest.

It may be tempting to stretch your loan out over 30 years. After all, who doesn’t want to keep their monthly mortgage payment to a minimum? Sometimes, though, you have to spend money to save money.



All the best,



Timben

Loans and mortgages – Buy your home with a HELOC

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You can use a home equity line of credit (HELOC) to actually buy a home. A HELOC is an adjustable-rate loan that works as a credit line rather than a mortgage. Usually, you get a HELOC with the equity you build up on a home. Now you can make a down payment on your home and use a HELOC to pay for the rest.

The interest rates for HELOCs are around 4 percent, which can save you a lot of money in interest charges. Since the rate is variable, it can go up or down. But it’s still better than the traditional 30-year fixed-rate mortgage with rates closer to 6, 7, or 8 percent. With a HELOC you can borrow extra cash without having to take out another loan, and all the interest you pay is tax deductible.

HELOCs usually have much shorter terms than traditional loans. Rather than being stretched out over 30 years, a HELOC will have a term of 10 or 20 years. You may want to consider a HELOC if you plan to pay off your home in a short time.

If you like having stable monthly payments, though, you should try something different. The rates for HELOCs change with the market, so the payments will, too.



All the best,



Timben

Loans and mortgages – Compare online for best price

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You already know you can save money by shopping around for the best mortgage rates. Now you just have to make sense of all the numbers you found. Put those figures into an online calculator to organize your information. You can find calculator programs at Web sites especially designed to help you compare loans.

LendingTree.com is a great place to start. You can submit an application and get rates from four competing lenders. Then compare the rates by plugging them into one of its financial calculators. For example, one will tell you if a 15-year loan or a 30-year loan would save you more money based on the mortgage amount and interest rates.

Interest.com has calculators that tell you what your monthly payments will be from the interest rate, the term, and the loan amount. You can also find out how much you can afford to borrow, how much you’d save by making additional mortgage payments, and how much you can deduct on your taxes.

FindLowerMortgageRates.com also has useful programs like a calculator that tells you how much money you should put down on your new home.

Other good Web sites to try are:

* www.compareinterestrates.com
* www.bankrate.com
* www.loanweb.com



All the best,



Timben

Loans and mortgages – Negotiate for lower points

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Nothing is written in stone when it comes to the cost of a mortgage. With some research in hand, you can use your negotiating skills to bring down lender’s rates, points, or even fees.

The key is to arm yourself with information. Check the newspaper for current mortgage rates and points. Look online at Web sites like HSH Associates at www.hsh.com and LendingTree.com to compare rates from different lenders.

Be careful of lenders who advertise rock-bottom rates and points. They may compensate by charging outrageous fees. Let lenders know you’re shopping around so they will compete for your business by lowering their points. One point equals 1 percent of the amount of the loan. So if you convince them to take off even half a point, you can save hundreds or thousands of dollars.

If you need to choose between paying lower points or a lower interest rate, keep these things in mind.

* Choose the lower interest rate if you plan to keep the mortgage for a long time.

* Go with lower points if you plan to sell the house in a few years, since you won’t get the long-term benefit of a lower rate.

The same goes for fees. The longer you plan to keep your loan, the more fees you may want to pay upfront.

Remember to deduct any points you pay on your tax return. If you bought a house and split the points with the sellers, or even if the sellers paid for the all the points, you still get to deduct the full amount.



All the best,



Timben

Loans and mortgages – Experts can save time and money

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A mortgage broker can be a big help when you need a loan but don’t know where to start. These experts can look through loan offers and find the one that’s best for you.

According to the National Association of Mortgage Brokers, more than two thirds of homebuyers choose to get a mortgage through a broker. They save you time, and depending on their fees, can save you money. Broker fees usually range from 1 to 1.5 percent of the mortgage.

Some dishonest brokers may overcharge you with fees of eight to 10 points. Follow these tips to be sure you’re working with someone who has your best interests at heart.

* Get referrals from friends and co-workers to help in making the right choice.

* Request a good-faith estimate of the broker’s fees at the start.

* Get a written description of the loan program the broker offers so you can check out the rates, fees, and points.

* Ask the broker if he is affiliated with the lender to make sure he has no conflict of interest.



All the best,



Timben

Loans and mortgages – Be smart about home equity

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Need money for home improvements? Got a kid in college who needs tuition? Maybe you need start-up cash for a new business. You may want to consider a home equity line of credit (HELOC).

Although you borrow money against the equity in your house, it works like a credit account. Rather than take out one lump sum, you have access to the money as you need it. You don’t pay interest until you actually withdraw money, and even then, the interest is tax deductible.

HELOCs have interest rates averaging about 4.5 percent, which is low when compared to 10-year fixed loans with rates around 7.25 percent. But you may have starter fees, annual fees, and other costs like minimum-withdrawal fees, inactivity fees, and early-termination fees. So check the loan terms carefully. You don’t want to take all the money you saved with a low interest rate and spend it on other costs.

Although it’s best to save for any large purchase, a HELOC may be a good move if you don’t know exactly how much money you’ll need or when you’re going to need it. It also makes a good safety net in case there’s an emergency or a period of unemployment when you need cash right away.

But don’t forget it’s a loan against your house, and you could jeopardize your home if you can’t pay it back. Stay away from a HELOC if you have a spending problem or want to use the money to pay off an enormous credit card bill. You would just replace one large debt with another.

If you take out a line of credit, plan on paying it off within a few years. The interest rate on a HELOC is adjustable, so the sooner you pay it off, the less chance your rate will go up.

A HELOC can save you money if you use it wisely. But if you think having cash at your fingertips would temp you to over-spend, then be smart and find another source of cash.



All the best,



Timben

Loans and mortgages – Save through loan consolidation

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Simplify your life by simplifying your loans. If you have several loans, you may be able to consolidate them at a low rate, saving thousands of dollars in interest.

Student loans in particular are easy to lump into one consolidation loan. If you have a child or grandchild who is graduating, he probably has more than one loan, each with its own interest rate. By combining all the loans, he can lock in one good interest rate and make one reduced monthly payment.

And because the lump sum is stretched out over a term of 10 to 30 years, the monthly payment is smaller and more manageable. The downside is you can only consolidate once, and a longer term means more interest charges on the long run.

If you choose to consolidate your loans, see if you qualify for any discounts. Some lenders offer incentives for good customers. Ask each of your lenders what kinds of discounts are available before you decide which one should consolidate your loans.



All the best,



Timben

Credit – Negotiate for a better rate

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You may get a lower interest rate on your credit card just by asking. If you’re a long-standing customer with good credit score, try bargaining with you current credit card company. You might be successful at getting a better rate.

You’ll have even more bargaining power if you get another credit card offer with lower rate. If it’s a genuinely good deal, use it to persuade your current card issuer to reconsider. Say you’ll switch unless they match the new card’s rate. If the answer is no, switch cards and enjoy your savings.



All the best,



Timben

Credit – Watch out for new credit scams

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The latest credit card scams may seem so genuine that you may not know you’ve been shammed until too late. Learn what you need to know to stop a scammer cold.

You may get a call from a con artist claiming to be the credit card issuer, your bank, or the police. The scammer may say your card has suspicious activity. He may even ask you specific questions about a purchase you never made and promise to remedy the problem.

But the scam comes when he asks for your PIN number, card expiration date, billing address, or part of the account number. The swindler already has most of the credit card information needed to steal your identity. He tries to get the rest from you.

The second new scam is the “gold and platinum card” racket. Some card offers may promise to improve your credit rating or help you get unsecured major credit or retailer cards. Not only do these cards limit you to purchase from a few select catalogs, they also do nothing to boost your rating or qualify you for unsecured cards. Watch out for these additional signs of gold and platinum card fraud.

* You only hear about one free. But once you’ve committed to pay it, you’re told you must pay even more fees to use the card.

* You must call a 900 or 976 number for more information – and pay the steep charges.

* You’re required to make a cash deposit for each item before you can put the balance on your charge card.

Protect yourself from any credit scams with these tips:

* Investigate credit card offers before you apply. Check with your local Better Business Bureau, consumer protection agency, or state Attorney General’s office for complaints against the credit card marketer.

* If a merchant promises to improve your credit rating, call the credit bureaus to see if the merchant is a member. Only members can send information about you to the bureaus.

* Keep an eye on your card during any transaction. Also, hold your card so no one can see and memorize your card number.

* Void incorrect receipts, and never sign a blank one.

* Save receipts to compare with billing statements. Open the statements immediately and check for questionable charges or wrong amounts. Report dubious charges to the card issuer right away.



All the best,



Timben

Credit – Save on unnecessary insurance

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For most of us, credit life insurance is just plain bad policy. Credit life insurance may claim to pay off your credit card debt if you die, or cover your payments if you become disabled of unemployed. But this insurance is notorious for overpricing, so consider buying term life insurance or expanding your life insurance coverage instead.

However, if you can’t qualify for regular life insurance coverage – term or otherwise – this coverage could be appropriate. If that’s the case, be sure to read the fine print before you buy.



All the best,



Timben

Credit – Ax useless card protection

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Even if you’re offered credit card loss insurance for just $7 a month, don’t take the bait. This insurance promises to pay the charges if someone steals your card and runs up a bill. But federal law would prevent you from paying more that $50 of the stolen charges anyway. If you buy credit card loss protection, you’ll spend $84 per year. Don’t waste your money.



All the best,



Timben

Credit – ID theft insurance not a bargain

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Identity theft insurance doesn’t necessarily cover the charges a thief runs up on your credit card or money stripped from your accounts. Instead, you may pay up to $180 per year just for the cost of repairing your credit after the theft. You’re better off skipping this insurance and checking your credit report regularly instead.



All the best,



Timben