Co-signing a Loan: Is it a Good Idea?

Any time a friend or a family member goes through hard financial times we try out best to help solve this issue and get the person out of this hole. What shall we do if we want to give a helping hand? The most common thought is to give some cash to retrieve oneself out of a financial gap. But there is another way of solving out temporary cash issues such as co-signing a loan, for example.

Most people have no idea whether it is a good option or they are not really helping out this way. Nevertheless, though it does seem as a potentially reliable option it does not mean that there are no financial hazards in a case of co-signing on a loan. Learn about the ones in this article while considering this option.

• What is the reason for a bank to demand a co-signer from a person who is actually willing to take out a loan? Usually it means that the latter is a client with bad credit history or not credible enough to be given out a loan. That is why it is never wrong to check on the personal data of this client and go through the credit history with him/ her.
• What about your credit score? Is it sufficiently high to apply for a loan and present yourself as a co-signer? In most cases primary borrowers are rejected at being issued a loan and that is why they try to find a guarantor - a person who will take half-responsibility of paying the personal loans off.
• The hugest problem will be if your co-signer does not eventually pay for the part of a loan that he or she signed for. So basically you will be the one who will get charged by bank or any company that you applied to. Moreover, it will do much harm for your credit score as it will be reported. Additionally, lender has all the rights to charge your wages according to the laws of the state which citizen you are. 
• Be careful with your credit history as in a case of delay payment or not paying off a debt at all, your credit score will be impacted as well. Do not be surprised in such situation if your credit score agency will contact you in order to get to know the details of what is going on. 

Co-signing a loan means getting a part of financial responsibility, so think it thoroughly whether you are ready to become a guarantor for one person or another. Consider how credible the applicant is. Get mentally ready for any consequences that may occur in case of a primary borrower's inability to pay a debt off. It is better to consider this loan to be yours and do not miss any payments. That is why if it is not you who needs cash, would you go for all the hazards?

Five Tips For Not Going Over Your Budget When Buying A Home

When purchasing a new home, many home buyers make key mistakes that cause them to go over budget and end up having to take on more debt than anticipated. Follow these five tips and consult with a real estate professional to ensure that you don’t fall into that trap.

1. Know Exactly How Much You Can Afford To Pay

Many new home buyers think they have a budget, when in reality, they only have an educated guess. They are making many guesses about how much money it will cost to purchase a home, make necessary improvements and move into their new home. Don't do this. Talk to experts so you know exactly how much you can afford before you start looking. 

2. Know Your Priorities And Stick To Them

It is highly unlikely that you will find a home that is truly perfect in every way and has every feature you’re looking for. You may have to make compromises to stick to your budget, so be sure to discuss your priorities with your agent.

3. Bring Your Best Offer And Don’t Engage In A Bidding War

Emotion is a budget breaker, and it is the primary reason why home buyers end up spending way more than they had planned. You will make an offer. They will counter. There may be other bids as well. Do not lose your cool. If this house is out of range, then accept that and keep looking.

4. Look For Houses That Have Been Listed For A Long Time

When a home has been on the market for over 30 days without receiving any offers, it often means one of two things: either there is a problem with the house and it might not be worth your time, or you've found an undervalued gem and should make an offer. Take a closer look at these homes to find great deals. 

5. Budget Conservatively

A few years ago, many buyers figured out their budget based on their current income and expenses without leaving room for negative financial changes. Or worse, they anticipated increased income and/or lowered expenses and budgeted optimistically. And today, they are stuck with a foreclosure and wrecked credit. Be realistic and budget with the big picture in mind.

When you want to buy a new home, consult professionals like those at Reinvest Consultants. They can help you know exactly what costs will be involved, avoid emotional negotiations, look for undervalued homes and budget realistically.

7 Keys to Making a Successful Investment

Despite what you may have seen on TV, investing isn’t easy. The market is highly unpredictable. Choosing between winners and losers may seem nearly impossible. However, there are investors who have used certain strategies to make a profit from their investments. Here are seven keys to making a successful investment.

1. Maintain a Balanced Portfolio

While it may seem like a cliché, it’s one piece of advice that works. The best way to come out ahead when investing is to maintain a balanced portfolio. This way, you won’t have all your eggs in one basket. If tech stocks suddenly crash, for example, you will be shielded by other investments that aren’t tied to that specific industry.

This means diversifying within all assets from stocks to bonds and real estate. For example, take advantage of different types of real estate investment like direct ownership and crowdfunding.

2. Consider Investing in Real Estate

Many people have made their fortune through real estate investment. It’s easy to understand why. The possibility for economic development may be obvious in a specific area well before real estate prices begin soaring. 

There are also many different ways to invest in real estate. A Jakob Pek Fund, for example, is a fund that can be used to invest in private mortgages.

3. Be Conservative

One good rule of thumb for investing overall is to be conservative when you try to assess different investments. One common pitfall of investing is getting caught up in hype. This can quickly lead to over-valuation of a stock or investment. 

Instead, make your decisions based on facts and more conservative estimates of an investment’s true value.

4. Invest When Your Conservative Estimate Is Above Market Price

If you are able to properly assess the value of an asset, investment choices shouldn’t be that difficult. In this case, you would only invest when the market price for a stock or other investment is below what you really believe it is worth. 

Remember that you always want to try and buy low and sell high whenever possible. This will allow you to not only get a return on your investment, but you will make a profit as well. 

5. Educate Yourself Before You Invest

Overall, you should always make sure you thoroughly understand an investment before you put your money down. This will prevent you from making errors and getting swindled into making bad investments. 

If things like gold or penny stocks sound alluring to you, make sure you do the proper research to understand these markets and the risk involved. However, regardless of how educated you are when it comes to investing, there will always be a risk. You will likely lose some investments from time to time. 

So with your education, make sure that you keep your expectations realistic in your investments as well. There are just some investments out there that are just not worth taking.

6. Focus on Business Performance

A trap many investors fall into is simply following the performance of a stock. Instead, you should be following the performance of the corporation that stock represents ownership in. If a stock is selling for a lot while the business is performing poorly, you should expect a correction in the very near future.

7. Minimize Fees and Other Expenses

Even if you do make the right choices, a decent portion of what should have been your profit may be eaten up by fees and other investment related expenses. If you can avoid some of these by doing some more of the work yourself, it will probably be worth it.

Investing may seem intimidating. However, with the proper knowledge and some strategic thinking, producing a profit from your investments is a real possibility.

5 Ways Buying a New Home Changes Your Personal Finances

The decision to purchase a home definitely affects your financial bottom line. The down payment alone may decimate what used to feel like a healthy savings. 

Stop and consider both sides of the process to find advantages that make it all worthwhile. Read through five ways that home purchases affect your personal finances. 

1. Tax Implications

On the whole, first-time homebuyers receive a variety of helpful-deductible options to give a bank account respite. Some of these deductions include:

• Mortgage interest: although it may take more time to complete your tax return, you’ll find that it pays off. Whatever interest comes with your mortgage opens you up to certain helpful deductions in your overall tax payment.
• Tax-deductible points: those who pay extra on their loan or “points” receive another chance for a tax deduction. Every point equals 1 percent of your home’s principal price. However many points you earn provide a tax-deductible percentage. Consult a tax expert to find out if you’re eligible. 
• Private mortgage insurance: Those with a down payment that’s less than 20 percent of the purchase price usually require mortgage insurance. Although you might dislike this added cost, most private mortgage premiums qualify for additional tax deductions.

Regardless of which deductions you qualify for, make sure to consult a tax expert and the relevant official tax forms to ensure proper payment.

2. Reduced Spending Money

Those who buy a house often experience what’s referred to as feeling “house poor.” This term doesn’t refer to actual poverty, but rather a lack of extra cash due to the presence of a monthly mortgage payment.

Although your savings might feel a little reduced now, keep in mind that your home ownership adds greatly to your net worth, and even income potential. You are also gaining equity on your property as you make payments on your mortgage. 

Look at buying a new home this way, it is a large investment, but because you can put money and other things into it, you will eventually get back more than what you originally invested. Basically, you are paying yourself in a way because you own a home. Owning a home should also help you with your tax returns at the end of every year.

3. Lasting Payments

Unlike renters, homeowners make good use of every cent they pay towards their mortgage. While a renter-landlord relationship requires monthly payments that go into the landlord’s pocket, your monthly mortgage payments go towards the eventual ownership of your home.

True, mortgage payments might exceed your previous monthly rent payment, but the end result makes it all worth it. Homeowners who stay on top of their payments may end up owning their home and having access to equity, while renters never see any part of their payments again.

4. Various Expenses

On the other hand, renters may enjoy the convenience of one all-inclusive payment. Particularly in situations where landlords include utilities in the cost of rent, renters often have consolidated costs.

Homeowners pay for their own utilities, including water, gas, electricity, Internet, and garbage pick-up. And don’t forget about property taxes.

5. Home Loans

Although mentioned before, the presence of a mortgage creates a paradox for your finances. While your monthly loan payment might seem high, it’s the consistent payment that boosts your credit score and potential for future big purchases.

Remember that despite all the new expenses you might have, your financial persona now boasts of home ownership.

Informational Credit

The information in this article is credited to Sente Mortgage who specializes in home loans in Austin, Texas.