Golden Tips for Refinancing your Mortgage

Interest Rates (Photo credit: 401(K) 2013)

Mortgage rates are going through a good phase now. The interest rates for thirty ear mortgages are at a low end. This means that it is good news for all those who are looking to refinance their mortgages in the hopes of getting a better rate of interest. Many financial experts have opined that if you are looking for a good time to refinance your mortgage then that time is now. Low interest rates mean that you will be able to save more money. So if you have around 20 per cent equity on your house and a credit score of at least 740, then a creditor could give you a good refinancing package. 

If you are a homeowner looking for a refinance then here are some things that you should do and consider before taking the plunge. These are some of the things that experts recommend home owners should do.

Look around

The funny thing about mortgage interest rates is that they can shift really drastically from place to place. So don’t despair and lose hope if you a creditor is offering you a high rate of interest. Do a lot of research into different places before you make a choice. There are quite a few financial websites where you will find reviews of lenders. Also remember not to blindly go in for the interest rates alone. Look at things like customer support, fees, etc. Experts say that interest rates can differ by 1 percent or even more from lender to lender. That can translate into a huge difference in your monthly payments.

Don’t jump for a low rate

It is vital to remember that when you are refinancing a mortgage, there are many costs like closing costs which you will have to pay. These can be quite high. So if you already have a mortgage with a low rate of interest like 5 percent and the rates have dropped to 4 percent, it might not be an excellent idea to refinance. Think of how many months you will take to cover the closing costs and so on. Don’t go in for a refinance if you are not able to cut the rate of your mortgage by at least 0.5 percent or more.

There’s always a closing cost

Many refinancing offers will come with the tempting “no closing costs” line. Don’t fall for it. There will always be some costs for the loan. Even if it isn’t called “closing cost”, companies will charge you something or the other in some form. If they don’t call it closing costs, they could call it “up front charges” where you will be asked to pay an amount to cover certain expenses. It could be added to your new loan principal, instead of being charged separately as closing costs. In case you do happen to find a no or low cost refinancing, you will notice that the rate of interest is slightly higher than the others. They will find some way or the other to recover the money from you.

The best thing to do is to as your creditor to show you all the options available. Ask for a clear breakdown of all the costs you will incur if you do go in for a refinancing. Then, you can choose the one best for you. The main thing to take away from all this is that there will always be costs involved in a refinancing, and if you are aware and are able to handle it, then you can go ahead.

About the author

Jon has been working as a senior loan officer for a bank since the last eight years at RateZip. He advises homeowners on the kinds of mortgage options available to them. In his free time, Jon loves to read graphic novels.

Protecting Your Income

The reality is that, even in this modern first world life, people are still living on the brink on financial ruin. Precautions need to be taken to protect yourself and your family. If the worst should happen and you end up out of work (or worse,) you need to guarantee that your family finances are secure. 

Why it matters

There is a common misconception that the only insurance other than automotive worth having is life insurance. However, life insurance only pays out on death or permanent disability. Given modern medicine, you are a good deal more likely to become temporarily incapacitated than killed. Income protection insurance offers coverage in the event that you are unable to work for an extended period of time for health-related or other reasons. Life insurance isn’t concerned about your kids starving because an earthquake destroyed your place of work. Dying isn’t the only way that you can be prevented from taking care of yourself or your family. People are vulnerable, both physically and mentally, jobs can disappear, and you can be displaced. If you’re in Australia, you can protect your income with AAMI insurance. 

What it does

This coverage is not unemployment insurance, and it certainly doesn’t function an excuse for taking an extended vacation from work. Income protection is specifically for extended lengths of time where you are unable to work. There are specific jobs where this coverage is highly recommendable. For example, if you work in food preparation and contract a severe stomach bug, you can be forced out of work for weeks at a time. In fact, your employer is legally liable if they allow you to work while ill and preparing food. 

How it works

When are unable to work, you get a certain amount of pay in the form of disability benefits; but this usually comes at a fraction of your usual income. That is where income protection insurance comes in. The payout from income protection takes into account all of your payable benefits on top of your regular income, and will match up to three quarters of that income This is not a lifetime fix. 

Most income protection plans only cover one to two years. You can get a policy that will cover you for longer, but serious problems which mean that returning to work is implausible qualifies you as permanently disabled (which is often a part of life insurance.) Since both the benefits and the monthly fees are calculated based on your income over the twelve previous months, income protection insurance is pretty likely to fit into your budget. 

This type of coverage can fit into a wide range of budgets, which is convenient since less affluent people are more likely to lose their income, and less likely to absorb the loss of that income without catastrophic effects. You are very likely to need income insurance at some point. Most people don’t make it through life unscathed. Keeping a safety net under your feet with precautions such as income protection insurance can help tremendously in maintaining your way of life without suffering financially

How to Keep Your Car When Filing for Bankruptcy After Retirement

You need to make serious changes in your life when you are filing for bankruptcy after retirement. You will probably need to give up your credit cards and live a more frugal lifestyle. This is a common problem that many people face in their first few years after they stopped working, because they aren’t used to living with less money. 

Most of the changes that you need to make probably won’t be as bad as you would expect. However, there are some changes that you may not be able to accept. Giving up your car would be a hardship that you may not be able to make. Many people in retirement couldn’t possibly survive without their car.

You depend on your vehicle to get to run important errands. Fortunately, you may be able to still keep your vehicle if you play your cards right. Ideally you will be able to keep your car if you intend to keep driving during retirement.
Understanding Bankruptcy Exemptions

Most people assume that they will need to forfeit their vehicle after filing. However, there are a few exemptions that you should be aware of.

Some states have wildcard exemptions. These exemptions mean that you can protect the equity of your vehicle if it less than the state’s wildcard exemption. For example, Alabama has a wildcard exemption of $3,000. You would need to see what the equity in your vehicle is to see if you can protect it. For example, your lender can’t legally sell your vehicle if it is valued at $25,000 and you owe them $23,000. If you only owed $20,000 then you wouldn’t qualify for this exemption because your equity would exceed the state’s wildcard limit.

There is also a federal wildcard exemption which allows you to protect up to $3,450 in equity. You may be able to combine the state and federal wildcard exemptions to fully protect the equity of your vehicle.
Consider a Reaffirmation Agreement

You can also work with your lender to keep your vehicle. One way that you can do this is by forming a reaffirmation agreement. This agreement allows you to keep your car after bankruptcy as long you keep making payments. It is possible to negotiate lower payments, but most people aren’t successful. There is no harm trying though. You should also find out what your loan payments are going to be to ensure they will be affordable.

It sounds great to get a second chance, but this isn’t always a great option. You are reestablishing liability when you sign this agreement. You need to be certain that you can make the payments if you go this route. If you miss a payment then the debtor can both repossess your vehicle and force you to pay the remaining balance. This may not sound equitable, but it is a real risk that you need to be aware of.

Unfortunately, approximately two thirds of lenders require people to sign a reaffirmation agreement to keep their vehicle if they don’t fall under the exemptions. Therefore, signing a reaffirmation is an option that you need to be aware of if you think that you can make the necessary payments.
Motion to Redeem

The motion to redeem option allows you to buy your vehicle back at the current market value. This may not seem like a great solution at first, but it can be helpful if your car has depreciated considerably. You may owe $20,000 on a car that you bought a few years ago that is currently only worth $8,000. If you have $8,000 then you may want to use it to pay down the remaining balance on your loan.

About the author: Kalen is a freelance financial writer with an MBA from Clark University. He shares tips on budgeting and money management.

What to Think About When Getting Home Insurance

Home insurance is a necessary expense when purchasing a house. A home or a house is a valuable investment, and it is important to protect it. Home insurance covers a number of different events, from natural disasters to theft. In the event a homeowner experiences any of these events, the cost of rebuilding the home or replacing the stolen items is not wholly the homeowner’s responsibility. Home insurance, in essence, provides a great deal of peace of mind to the homeowner. 

The Basic Requirements and Offerings

Anyone who has a mortgage is required to carry home insurance, so any home purchase will come with this requirement. Beyond this basic requirement, there are many different levels of protection. There is one level of protection that insures the home in the event it is burglarized or damaged in a fire. More protection is offered for additional expense and will cover problems such as those caused by ice and snow accumulation, or problems with the water heating or plumbing systems. These levels of protection can be as comprehensive as the homeowner wants, but it is important to remember that those who live in areas where floods or earthquakes are common will have to purchase separate insurance policies to guard against these disasters as standard home insurance does not cover these events.

Do Research Before Deciding

The process of choosing a home insurance policy will require the homeowner to make a list of all of the valuables in their home that they would like replaced in the event of a loss. Taking photographs of these items to document them is recommended. It is also important for the homeowners to familiarize themselves with the different policies that exist and to have a conversation with a knowledgeable insurance broker. If the homeowner finds that there is a good insurance policy available through their current auto insurance company, they can often get a discount by getting both insurances through one broker.

Questions to Ask

During this meeting with the insurance broker, the homeowner should find out as much as possible, including the process for reimbursement for those items claimed to be lost due to theft or disaster, the amount of the deductible, the rate of personal liability coverage, and the cost of adding on additional coverage. Learning about special circumstances, such as the potential for reimbursement if the homeowner needs to call Portland pest control, is also a good idea. It is also important to learn more about the customer satisfaction rates of the insurance company. Homeowners should find out about complaints filed against their insurance company through their state board.

Home insurance is a necessity, and purchasing it can be confusing. Homeowners should educate themselves about the amount of insurance they need, and find out which company can provide it at the lowest costs. It is important to be as informed as possible about what each insurance policy covers in order to avoid unpleasant surprises or unexpected expenses later on.