Financial Blog

by marsmet462

Can Getting a Fixed Mortgage Rate Really Save You Money?

The foreclosure boom created by the economic downturn has left many homeowners and potential homeowners feeling as though adjustable rate mortgages are evil.  However, there has been a great deal of debate on whether or not fixed rate mortgages really save you money.  The big fixed rate draw is that you know how much your payments will be throughout the life of the loan, in other words there will be no surprises.  Still, having peace of mind and saving money are two different aspects of fixed rate mortgages.  If you are considering a fixed rate mortgage there are few things you need to consider when determining whether or not you will be saving money.

The first question to ask yourself is what rate are you looking to lock in, or what is your target rate?  The rate you start off at will be the determining factor on whether or not you are able to save money with a fixed mortgage.  If you are starting at a rate of 5.3% and your initial monthly payments are more than 60% of your monthly income(s) the odds are you have started off with one foot in the ground.  Since, you are not leaving yourself any room to save money.  Homeownership is expensive and the first year is often plagued with costly repairs, taxes, and insurance.  So, the idea is to get the lowest rate upfront.  Although, it is only fair to point out that fixed rates are set usually set higher than those of initial adjustable mortgage rates.

And, you may still wind up with a higher rate than the market rate.

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Will there be any other fees or costs that will have a bearing on your payments?  Although fixed rate mortgages are not affected by rising interest rates keeping payments constant, there is a chance that you could still end up paying more for your home.  The costs of homeowner’s insurances, private mortgage insurance (PMI), and taxes are usually tied to your overall mortgage payment and the costs of insurance and taxes can and usually does rise over the time of the loan.  These are aspects of fixed mortgages that are often afterthoughts when homeowners are looking to lock in a fixed rate.

How long do you plan to be in the home?  Fixed rates are great long term loans.  However, if you are not ready to settle in a particular area for at least 10 to 15 years, then fixed rates mortgages may do more harm than good.  Homeowners with fixed rates, who decide to sell their home often, find themselves selling the home for less than what is owed on the loan when the market is down.  If you are not planning to be in the home for at least 10 years odds are good you will end up loosing money in the long run.

Finally, are you really going to budget wisely? Again, the major advantage to fixed rate mortgages is the peace of mind in knowing that interest rates will not cause your monthly payments to increase.  Theoretically, this feature gives homeowners the opportunity to budget wisely.  However, most people don’t follow a budget until they have no other choice.  And it should be noted that budgeting doesn’t necessarily lead to saving money.  Knowing how much your payment will be each month will not change your income and what you are able to put aside for a rainy day.  It simply shows you where the majority of your money is going.

Adjustable rate mortgages have been painted as the enemy, but in reality these mortgage rates offer a flexibility that fixed rates do not allow.  There is no doubt that fixed rate mortgages offer a peace of mind that adjustable rate mortgages just cannot provide.  Still, having a budget and saving money is totally different.  So, you may want to really weigh all options before deciding on a fixed rate, especially if you are attempting to save money.

LeahCoss.ca Hi, everyone. How are you? It’s Leah Coss with The Mortgage Centre. And there’s many of you coming to me these days. Now that you’re starting to buy homes after the April scare of new qualifying rules, you’re coming to me saying, “Look, I went to my bank, and they told me that I can’t get a variable. What is up with that? I thought variable was for one and all.” Well, not anymore. In April, the government basically saw what happened in the States and they wanted to put in some safeguards to ensure that that doesn’t happen here in Canada. So what they did is they’ve now made a variable a luxury. It’s no longer a right. With that, they also made one, two, three, and four year fixed rates something that’s also a luxury, not a right. Now, what is this thing that they’ve done? Well, I’m going to use variable as an example because it’s the easiest way to describe this occurrence. With variable, it fluctuates based on prime, so that means it can go up or down at any point without notice, and you’re going to have to be able to bounce back from an increased payment. Now, with a variable, say you’re in it for five years. Over the course of five years, prime could go way up all of a sudden. And especially in the economy that we’re dealing with right now, it’s anyone’s guess on what could happen. So prime could very well go up by a couple of percents, which means now you went from having to pay X amount of dollars to X plus 1000 more dollars every month. And many of you …
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by Mocodragon

Getting the Greatest Home Loans

There are millions of available home loan items available in the Australian real estate property market. This causes it to become difficult for aspiring house buyers to get the best home loan for their situation. Though with the help of a home loan broker and different mortgage calculators, the procedure will become significantly less difficult. Having a mortgage broker on your team is like having a guide. They’re going to be able to answer the questions you have regarding your mortgage loan. In the mean time, mortgage tools like mortgage calculators will let you figure out the value of your loan. As an example, you may use a refund mortgage calculator to know just how much cash rebates you can obtain for a particular mortgage loan amount. One more mortgage calculator, the LMI calculator, can help you have an estimate of just how much your LMI premium will be.

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Listed below are some of the different types of home loans which you will want to take into account for your unique situation:

1. Interest Only Loans – In this kind of bank loan, you are paying just the interest, therefore you will be paying out the interest and not the principle. You might be paying very low payments monthly but you will not manage to possess the house by the end of the loan duration.

2. Line of Credit Loans – Fundamentally, line of credit loans ensures that you have been pre-approved to invest money and buy a brand new property or home or invest in maintenance functions. Usually, you won’t have to make payments until you have consumed the entire line of credit amount of the loan. You will only be faced with interest payments for the total that you withdrew. Line of credit loans also permit you to obtain a house when it is available for purchase.

3. Honeymoon Loans – After you sign up for a honeymoon rate loan, the rate of interest at the initial duration of your mortgage is significantly lower. Once the honeymoon period has expired, the monthly interest reverts to the standard rate. If you’re going to take out this type of mortgage, be sure that you can prepare for the period when the rates go back to the standard rate.

4. All-in-One-Loans – As opposed to having separate saving, transaction and debt accounts, you will save valuable time and effort by not separating service fees into unique accounts. For those who have extra income in the account, the interest sum is reduced. The only challenge with such type of home loan is you will not be capable to keep an eye on the uses of your cash.

is.gd if you want one of these… Fancy reading some eBooks in LIVING COLOUR? Well this device claims to allow you to do just that! And it does. Pretty much. This jolly eBook reader lets you listen to music, watch videos, read books and even play with a little piano. But is it actually competent at any of these tasks? I won’t spoil it for you, but you know how these things usually go down… At least it comes with its own screen protector and USB cable. And a nice box which opens up like a book. View more game reviews and hilarious* stuff @ www.youtube.com (*Due to the subjective nature of humour, hilarity cannot be guaranteed. Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.)
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Home Mortgage Loan : Tips on Getting the Best Package Revealed

Before you pick your lender and home mortgage loan, try to make further check on some important aspects of the loan, such as finance costs, interest rates and lenders. This move assures your obtaining the best mortgage loan in the end. If you have a good credit rating, preferably 680 or even much higher, you have a wealth of home mortgage loan options. You can have the privilege of selecting the loan term of your liking, but then first you have to make sure you choose the best home mortgage loan package. How do we do this? By focusing on finance costs, loan terms and lending companies. Finance Costs The most competitive in the mortgage market is the general loans which includes both the fixed rate and adjustable rate mortgage. Most competitive loans only mean having the lowest interests. Add some twenty percent down payment and you have lenders gravitating all over you. Fixed-rate home mortgage loan somewhat offers security because of its flat rate of interest. This means you will pay with the same rate during the entire term of your loan. You can also opt to lock in when times do happen to have low rates. An adjustable rate home mortgage loan on the other hand offers lower rates. However, this comes with the risk that they might increase with the coming years. One advantage of ARM is that home buyers who don’t plan to stay in the property for the long term can actually help in you saving significant amount of dollars in interests. Lender Conventional lending companies offer competent financing, even if your need is on an unconventional loan. They can actually process subprime mortgages. They can likewise find an underwriter for you, which will slightly add to your home mortgage loan rates. Or perhaps you still want to work thoroughly on your loan options. You can start by making a list of all interest rate quotes on a loan amount. With this method, you will find out which lender gives the best offer. You must also focus on the fees; this ensures closing costs do not offset interest savings. After selecting a lender, you can now request for a bid. The lender will then check on your credit rating and provide you will real numbers. This is when the lending institution will actually look at your credit history and give you real numbers. Now it is up to you if you are agreeable to the terms, otherwise your next move is to look for another prospective lender. Loan Terms The shorter the term of you home mortgage loan, the less amount that you will have to pay in charges. However, you monthly payments will have higher amount, you term being short in duration. The most commonly applied for mortgage loan lasts for 30 years; however, you have an option of 25, 20, 15 or even 10 year mortgage loan. You have to base your term on your capacity to pay every month.

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by vignettando con Dario Levi

Question by ted: please teach me some Forex Hedge Strategy other than getting interest?
Because receving interest is not alowed in some religion

Best answer:

Answer by Paul U
Hi Ted,

I believe that you are referencing Islamic Finance. It is my understanding that

The main principles of Islamic Finance include:
- The prohibition or taking or receiving interest at exorbitant rates (Riba), but this does not preclude a rate of return on investment.

I would question if the rate of return offered by the central banks and the foundation of a Forex currency hedge trade would be considered Riba.

I would appreciate any additional information which you could provide.

Paul

What do you think? Answer below!

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by chrome76

Forex Brokers?What You Should Be Getting Out of Yours

Forex trading is an adrenaline rush.Think about it–there is no opening or closing bell, trades can be done in a virtual endless supply of currencies, and even the littlest development in the global economy can instantly change everything.

When it comes to working on a forex trade, you need someone who can help you along the way.Good forex brokers will do just that.

Especially in the beginning,forex trading is tricky.If you jump in too quickly, you can lose a ton of money before you even completely understand what’s going on!

That’s why you need good forex brokers.

What will a good one do for you?

A good broker will make sure you are ready before you dive into the forex online world.Look for a broker that will let you start off with a practice account.That way, you can get used to forex trading–and see how the deadlines, the currencies, and the strategies work–before you invest any real money.After all,you don’t want a beginner’s mistake to cost you big bucks!

And, once you are playing with real money, a good broker will give you everything you need to make wise trades.The quality ones will give you charts that assess the market and future predictions, all in an easy to understand visual form.  Some brokers will even give you access to their software, which can include up-to-the-minute developments and even forex robots that can take the reins when you can’t be there to personally make decisions!

While the toys and tools that they offer may vary, above all else, forex brokers should make you feel comfortable – whether you are brand new to the forex game, or a seasoned veteran.

But what about brokers’ own forex online portfolios?

Sure, brokers do their fair share of forex trading, too, but they shouldn’t let their own needs rise above yours.  After all, you are paying a broker for his time,expertise, and tools.You should expect the very best, most honest service!

Some forex brokers, however, only reserve their best stuff for their highest-paying clients.If you feel like you’re getting swept under the rug because you’re not a major player, it’s time to find a new broker.There are great brokers out there who really will “look out for the little guy”.You don’t have to be a millionaire to get the attention you need from a forex trade broker.

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