What Are The Different Types Of Mortgage Loans

Image via WikipediaIf your about to make a home purchase, the biggest factor in the process is finding financing. There are a large number of possible choices in the financial market today. You need to know as a consumer what they are and how they work. So you can find the best possible loan for your circumstances.

Basic Home Mortgage.

The most popular home financing option is the fixed rate mortgage. Nearly 70 percent of people chose this type of loan. Why people like this type of loan is that it is stable. Every month you make the same payment. It never changes. Also the interest rate will never change, it will always remain the same.

Adjustable Rate Mortgages.

Adjustable rate mortgages are a popular choice among home buyers. Their interest rate is tied to an index that change according to prevailing market rates. The intervals are specified in the mortgage documents and the interval of adjustment can be anywhere from one year to seven years. When the adjustment time arrives, according to the prevailing market rate, your payment will rise or fall. This doesn't happen once, it happens again when the interval comes around again.

Government Guaranteed Mortgage Loans.

The FHA loan is a fixed rate mortgage that is designed for the first time home buyer of moderate or low income. Guaranteed by the Federal Housing Administration, these loans can be easier to qualify for than a traditional FRM and allow a smaller down payment than most other home loans, generally about 3 percent. Interest rate are usually lower than standard fixed rate loans, and programs are available for the purchase of single family homes or multi family ones, as long as they are to be owner occupied.

Veterans Administration Loans(VA).

VA loans are another government guaranteed mortgage. To be eligible for a VA loan, one must have a history of active military service or be the surviving spouse of an active service member. Often, a veteran can obtain a VA loan with little or no down payment, but must demonstrate the ability to make monthly payments.

USDA Rural Development Guaranteed Housing Loan.

The USDA Rural Development Guaranteed Housing Loan is another government guaranteed home loan option. This type of home mortgage loan is provided to low and moderate income individuals who are purchasing a home in an area designated as a Rural Development eligible area. No down payment or mortgage insurance is required with this loan program, and qualification can be much easier than your average home loan, allowing consumers with less than perfect credit to obtain financing for home purchases.

Option ARMs

Also referred to as flexible payment ARMs, Option adjustable rate loans have an interest rate that adjusts every month with no adjustment caps. These loans allow borrowers to make very low mortgage payments initially, but these monthly payments will rise over time, often quite steeply.

Balloon Mortgages

Balloon mortgages are structured with a payment schedule similar to that of a thirty year fixed rate loan, although the term of the balloon loan is shorter, most often spanning five to seven years. At the end of the loan term, the outstanding balance must be paid in one lump sum, either out of pocket or by refinancing the home.

Interest Only Mortgages

Interest only mortgages are loans that allow the borrower to pay only the interest on the loan for a predetermined period of time. The principle of the loan is not paid down during this period at all, leaving the homeowner a lower monthly payment to meet over the short term. However, once this initial interest only period expires the payments increase to include repayment of the principle and are steeper than a standard loan, as the principle must be paid over a shorter time period. The longer the interest only period, the higher the payments will rise after its expiration.

Biweekly Mortgages

Biweekly mortgages are loans in which the borrower makes payments every two weeks instead of the typical monthly payment arrangement. The result of this practice is a slightly shorter repayment term. Paying biweekly results in 26 payments a year, which is equivalent to thirteen monthly payments, rather than the twelve payments made with a standard monthly mortgage payment.

Bimonthly Mortgages

Bimonthly mortgage plans do not require any extra payments, but save slightly on interest by advancing the payment by half the month. On average, these types of arrangements only shorten the loan term by approximately one month on a thirty year mortgage.

While each option may prove itself best for a segment of loan seeking consumers, none will be a perfect fit for everyone. Depending upon personal finances, the length of time one intends to reside in the home to be purchased, and many other factors, the perfect home loan option will vary widely from one consumer to another.

Big Bird Wants To Teach Your Children About Money

Image by LR_PTY via FlickrBecause of our current economic climate, financial literacy, or lack of it, is in the forefront. Teaching of these vital skills have been put on the back burner at many schools. Researchers and educators think it's time to bring financial education back to the schools and even to the very youngest of children. Even without a basic organized education, children are being educated by their parents whenever Mom and Dad use a credit card or use an ATM. Through observation of their parents behaviors in life, children are learning behaviors, both good and bad.

There is a lack of educational materials to help teachers in the classroom. To combat this lack of educational materials for children to use to learn about money, Sesame Workshop has started a program called "For Me, for You, for Later: First Steps to Spending, Sharing, and Saving". With a 100 million dollar program, over a ten year period, Sesame Workshop has developed a learning experience for children. This program is being paid for by PNC Bank.

All this is happening at sesamestreet.org/save and pncgrowupgreat.com. Also more video content is available at Itunes and Amazon.com VOD. The titles to search for are called "Learn Along with Sesame".

At Sesamestreet.org/save there is a large amount of teaching materials amount money lessons. There are games to play, videos to watch, and printable items for fun and learning. All the Sesame characters are used in the videos to teach about money and the proper ways to use your money.
What's Being Taught?

The foundational teaching is concerned with showing the children to properly use their personal money. They are taught that you divide your money up three ways. In three separate piggy bank jars you label each jar "Saving, Giving, and Spending". The saving jar is to teach how you must save for future wants and needs. The Spending jar is for current purchases, and the giving jar is used to help others. In the videos, children are shown with their parents shopping with their spending jar, at the toy store. Also the children use their savings jar to save money to buy a more expensive item, sometime in the future. There are videos showing how the giving jar is used to buy cat food for abandoned cats at a shelter.

These videos are at the perfect level for small children. There are no religious subjects mentioned. Also purchases by a small child is are mainly things a 8 year old would like to buy. All the materials are politically correct and do not step on anyones toes. It's nice to see how basic moral values could be taught without bringing in any specific religion.

The website has many things to explore. Your child's favorite characters like the Count, Elmo, Cookie Monster, and others also appear. There is a mobile site if needed. Also there are parent-educator materials to help in implementing the great content. Also on the site are more links to Sesame Streets interesting educational websites.

I liked the idea of using Sesame Streets well known characters to teach a basic foundation on money. The three jar system is a great stepping stone to more mature teachings in the future. I was surprised at the section on the teaching of "Giving". That was the hook that got me interested in the program. They could of just of taught about saving and spending, but the giving part, helps you teach on being unselfish. A hard concept for to teach a 5 year old. 

How To Save $1000 Per Year On Groceries Without Clipping A Single Coupon

Image via WikipediaThe cost of food and gasoline has been rising at a disturbing rate for a long time now. The rising prices at the supermarket can sometimes make a big impact on the families budget. Finding ways to save money on food is especially important, today.

The cost of food and beverages has jumped 3.5% in the last year according to the Consumer Price Index that the US Bureau of Labor Statistics compiles. This percentage seems to low according to my own shopping experience.

Researchers have found consumers waste about 15 percent of their food every year. That amounts to about $1500 of wasted food for each household. On average, an American households that earns $52,000, spends 20% of their income on food purchases. Also according to the USDA a family of four spends between $611 to $1,200 on food every month. So reducing 20% of that waste can amount to a savings of $1000.

Prepare only the amount of food you will actually eat or store it in the refrigerator to eat the next day. My biggest beef is that people throw away good food after they have made too much for a meal. If there is food leftover, store it in the refrigerator for a left-over meals later in the week.

For one week a month, eat only what is in your house, so you can clear out your pantry. If you revolt at eating asparagus soup, well, you know never to waste your money again. You can sometimes extend this technique for a longer time period depending on the amount of food you have. Out of habit we tend to keep our refrigerators full like the apocylype is going to come and the stores will be closed for months. Don't fall for this, some people have a discomfort upon seeing a half empty refrigerator. Our they thinking they are Mother Hubbard and the cupboards are bare.

Don’t shop when you are hungry. Studies show consumers buy more on an empty stomach — including items you end up throwing away. This a big one for me and it's so true. You start to get a taste for a particular item and it's usually an expensive one.

Buy only the fresh fruit and vegetables you know you will eat before they rot. If you buy three bananas, for example, plan on eating one a day. Bananas and tomatoes are the worse offenders. Before you know it they are to over ripe to eat. Don't purchase any fruit or vegetables without having them incorporated into you meal plan.

Don’t let coupons and buy-one get-one offers lure you into buying more than you can use. The thrill of a bargain isn’t worth dollars wasted in never eating the food. This is where people waste money. The thrill of the deal does not last very long when you have bought something you rarely use or need.

Have a plan to consume the food you buy. Don’t impulsively pickup groceries that may sit on your pantry shelves. Remember, even cake mixes have a shelf life. Food can be frozen for about three months before it risks losing taste or absorbing aromas from other items.

Take home a doggie bag when eating out. Even the free bread and chips and salsa can be taken home. Don't feal bad, the restaurant just throws it away. My wife has made this into an art form. She can make one restaurant meal last for days. We take home the bread, extra dressings and everything we can scrape up.

Pull the plug on that second refrigerator. There are some homes that keep an extra refrigerator in the garage. This only encourages buying more food to fill it. When we had 6 kids in the house we needed it because we went through 4 gallons of milk per week. I suggest to pull the plug on it and just use the kitchen refrigerator. Putting all your food in the one refrigerator, makes it look like you have plenty, filling it up will keep you from thinking you need to go shopping.

Saving money on food isn't hard, it takes planning and paying attention. When you see the rising prices on bread, milk, eggs and juices everyday it can be very motivating to have a  plan and save some cash.

The New Google Advisor Is Your One-Stop Source For Financial Products.

Image via CrunchBaseGoogle has launched a website where you can get information on mortgage, credit card, CD, or checking and savings accounts. This type of information has been the life blood of many personal finance blogs for many years. Now here is a one stop place to get all types of financial products.

We’ve all experienced the hit and miss associated with comparing financial products such as mortgages or credit cards. Often information is presented in an incomplete or otherwise opaque manner, and comparison between businesses and offers is confusing. Google has taken up the challenge of simplifying the process by creating a new service, Google Advisor, that makes it easy for users to compare products side by side.

Quote from the Official Google Blog

Financial decisions may be some of the most difficult decisions we face—whether it’s finding the right credit card or understanding the impact of paying an extra point on a mortgage. And these days, it seems like we have more financial options than ever.To help solve these problems, we began testing a mortgage comparison tool in 2009 and have added other financial products such as credit cards, CDs, checking, and savings accounts. Today, we’re rolling these tools into one place: Google Advisor, a site designed to help you quickly find relevant financial products from many providers and compare them side-by-side. Google Advisor is currently only available in the U.S.

Mortgage Results Page

I tried out the Mortgage function by entering my information. I clicked on refinance. Then value of the home, mortgage balance, cash out, loan type, and points. My state, county, home type was already entered magically. I was given 21 results. The list consisted of mortgage lender, interest rate, APR, Fees, points, and Contact details. As I enter different details the page updated dynamically. If I found one I wanted to pursue the contact details had links to email or phone numbers, and hours of operation. Overall a very thorough and well laid out page.

Credit Card Results Page

The Credit Card section results was divided by balance transferred, Intro purchase APR, Cash back, Air Miles, And Points. There was a total of 87 credit cards offered on this page. It states on the page that Google receives no commission from when you click on an offer. Also that the credit card information is updated twice a week for accuracy. The credit card results page can be sorted by intro APR, Ongoing APR, Annual Fee, and Reward Type.

CD Results Page

The CD section results allows you to enter the amount to deposit, maximum term,and account type. Whether it's a regular account or an IRA. The results page is divided up into columns APY, Minimum Opening Balance, Term Length, Actual interest earned for the term, Early Withdrawal penalty, and Apply details. There is a link to apply online.

Savings Results Page

The Savings Section asks for savings amount, regular savings or money market, and zip code. The results are displayed by name of institution, APY, Minimum to open, Monthly fee, Interest earned, and details with a link to apply online.

Checking Results Page

The Checking Section wants your initial deposit, a check box for no monthly fee and interest checking, and zip code. There is a check box if you want to exclude Internet only banks. The results give you Bank name, APY, Minimum, monthly fee and details with an apply online link. In the checking and Savings account section you can also search by a specific bank.

Again, Google is saying they receive no compensation on the credit card, CD's, checking, and savings applications. But on the mortgage page, Google does admit they get paid when you contact a lender through the site.

I like the overall experience of Google Advisor. It's laid out well for navigation. The search results are many. I also especially like the link to apply for the products, it takes you to the actual site to make an online application, making the application progress almost painless.

The only other competition to Google Advisor is Bankrate.com. Bankrate.com has more bells and whistles than Google. But I'll have to give it to Google for an easier to navigate interface. Bankrate's interface is a little dated and could use a little modifying.

Give Google Advisor a try. advisor.google.com