Mortgages, Tips to Getting the Best Deal
March 12, 2010
The credit crunch has bought good and bad news for home buyers. The good news is that house prices are sliding, bringing homes within the reach of first-time buyers. The bad news is that mortgage loan conditions have tightened up so much that only those with the largest deposits and the cleanest of credit records stand a good chance of getting exactly the loan they need.
In fact despite no change in base rate since the 0.25% cut in April, fixed-rate, tracker and discounted rate mortgage costs have been rising – not for existing customers but for those looking to arrange a new mortgage or a remortgage. Inflation fears, thanks in large part to the soaring oil price, have sent money market interest rates, on which many of these mortgage deals are based, sharply higher.
Getting the best mortgage deal
If you are not a first-time buyer and are thinking of moving, you probably have some equity in your property from past years’ rise in prices. So, unless you bought your current home very recently, you should still be able to move your mortgage without difficulty. While you may get less for the sale of your present home than you might have done last year, you will also be paying less for your new house.
Unless you are trading down a long way to release equity, the general fall in prices should mean that things will even out in the end. You might even find yourself paying less stamp duty if the fall in prices brings the cost of your new home below one of the tax thresholds.
Hard times for new borrowers
The prospects for new borrowers are not so rosy – and this applies to first-time buyers, existing borrowers whose current deals are coming to an end and anyone needing to move house whose current deal is not “portable”, so they will need to take out a new loan.
Over the past few years, fixed-rate mortgages have been all the rage, because even with the arrangement fees that they attract they have worked out cheaper for borrowers. People who opted for short-term fixed rate deals felt they could easily find a new, and maybe even cheaper, rate when their first deal came to an end. Indeed, some people found it tempting to cash in existing mortgage deals and suffer an early repayment penalty because it could be cheaper to remortgage at a lower rate.
Mortgage arrangement fees are higher
To make matters worse, fees are also jumping. According to recent research, the number of fixed mortgages with high fees has rocketed by as much as 1,368% in the past 18 months, as lenders get tough on customers looking for the best deals.
Some 323 fixed mortgages – 34% of the total fixed rate mortgage market – charged application fees of £750 or more. This compares with September 2006 – before the credit crunch hit the UK – when only 22 fixed mortgage deals charged that much.
Average application fees on fixed mortgages have risen by 66% over the same period, from £517.19 in September 2006 to £860.25 now. The highest fee on record 18 months ago was £1,499 on Halifax’s two-year fixed mortgage for homeowners with a 25% deposit or more.
But now the Halifax charges a fee of £3,999 on a three-year fixed deal for its existing customers who have homes worth between £500,000 and £2 million.
Figures from the Council of Mortgage Lenders (CML) have shown that, ironically, fixed-rate mortgage deals grew in popularity in April, with the proportion of borrowers taking out a fixed-rate mortgage up 5% to 59%, compared with 54% in March, the largest proportion since last December.
Go for a longer fix
However, anyone taking out a two-year fixed rate mortgage could be tying themselves in, not just to a deal with high fees, but to the prospect of paying out all over again in just two years’ time. Darren Cook of analysts Moneyfacts, said: “With fears of base rate increases, swap at over 6.3% and rising, and lenders continuing to price more for risk, it is likely that mortgage rates will continue to follow suit. Under these uncertain times, many borrowers are looking to fix their mortgage payments and a five-year deal could become a preferred option rather than the popular two years.
“The current average rates for a two-year fixed deal stands at 6.68%, which equates to a monthly repayment of £1,029.75 on a £150k repayment mortgage. In comparison, the average five-year fixed stands at 6.66%, with a monthly repayment of £1,027.86.
“There is little difference between the initial monthly repayments of these two deals and, in my view, we have now seen the end of loss leading product pricing within the two-year market.
“With the short and medium term economic outlook not looking too promising, homeowners are less likely to move home due to falling property values and banks lowering the maximum loan to values available. There is now new scope for a borrower to possibly take a more prudent approach, to look past previously popular two-year deals and look for longer term stability.”
Beware of tracker mortgages?
It seems like only yesterday that mortgage experts were telling everyone to go for tracker loans. Fixed rates were going up, but the Bank of England base rate – to which most trackers are linked – seemed likely to fall.
The experts are changing their minds, or maybe the pessimists have louder voices, as economists are now warning that the Bank of England base rate may need to increase to keep inflation under control. Opting for a tracker loan could be a bit of a gamble until the outlook for base rates seems more certain.
Bigger deposits attract the best mortgage deals
In its report the CML warned that lenders need not only to pass their own higher borrowing costs on to borrowers, but they also need to protect themselves in case house prices fall further. Therefore some lenders have been putting up the cost of mortgages for borrowers who can put down only a small deposit.
According to Moneyextra.com’s most recent monthly review of the mortgage market, the average loan-to-value (LTV) being considered by first-time buyers in May was just under 82%. However, many lenders are routinely restricting borrowers to loans of no more than 75% of the value of the property they want to purchase, while some will only offer their “best” rates on 60% LTVs. There are now none of the plentiful 100% loan deals that were on offer at the start of the year.
Robin Amlôt, senior editor of Moneyextra.com, said: “First-time buyers are being pushed out of what’s left of the housing market – being asked for deposits that could run to several tens of thousands of pounds.”
The CML said that new buyers put down an average of 13% during the month, the highest figure since November 2004 and up from 11% in March.
Taking Steps to Get Cheap Auto Insurance
March 12, 2010
It’s a well known fact that people procrastinate and put off things that they don’t like to do and aren’t required to do right now. One of the things involved with this procrastination is switching auto insurance companies. You probably know that if you did some comparison shopping to find cheap auto insurance, you almost certainly would be able to do so, so what is stopping you from starting the process?
With just a few phone calls and a few clicks online, you could quickly compare your current auto insurance policy to find out how it stacks up against the same coverage from other auto insurance companies. There is really nothing unpleasant about it. Maybe you don’t want to disappoint the insurance sales agent that you’ve been with for years, but isn’t it worth disappointing him if he has been overcharging you for years, and if you could save literally hundreds of dollars per year on your car insurance?
The reality of the matter is that auto insurance is a very competitive industry and all of them are doing what it takes to earn your business. In most cases, what it takes is having the best price for the best coverage.
But before you start clicking your mouse or dialing your phone, there are some things you need to be aware of. First of all, not all auto insurance policies are created equally, so you need to make sure that you are comparing apples to apples when you are comparing insurance quotes from multiple companies. What are the deductibles? You can set a different deductible amount for almost every type of coverage to keep your premiums as low as possible. For example, you can have $500 deductible on collision, $1000 deductible on theft, $1500 deductible on fire, and so on. Keep in mind that the lower the deductible, the more the insurance company is required to pay if you make a claim in that area, and therefore the higher your premiums will be.
Do you even need collision insurance? This is where a lot of people waste a lot of money. If you are driving an old clunker, it makes no sense to have collision insurance on it, since if it gets into an accident, chances are high that the cost to repair the car is going to be more than the cost of declaring it totaled and just paying you’re the fair market price for it. You can save a bundle by taking collision coverage off your policy, although if you are still making payments on the car or it is a lease car, you will almost certainly be required to carry collision insurance on it to protect the interests of the title holder.
Also compare the limits of liability for property damage and personal injury. Some “standard” limits might be $250,000 but if someone is severely injured, you know that with hospital costs these days, that limit can be reached in a heartbeat. So make sure that the limits are the same when comparing policies.
You can find cheap auto insurance if you put a bit of time and effort into it, and it can save you hundreds of dollars per year. Don’t forget to get an online auto insurance quote, since online quotes can frequently save you even more.
7 Reverse mortgage tips you shouldn’t ignore
March 10, 2010
When you wish to cash out equity in your home without having to pay anything on a monthly basis, a reverse mortgage is what you should choose. Reverse mortgages are primarily meant for
seniors aged 62 and above. Whether you wish to supplement retirement and social security income, pay for healthcare or home improvements, reverse mortgages can provide you with tax free cash flow in lump sum amount or through monthly installments. Given below are 7 helpful tips for those willing to avail reverse mortgages.
1. Ask questions: When you approach a lender for a reverse home loan, ask him questions such that you understand the terms and conditions of the mortgage clearly. Accept the loan offer only when you’re clear about how it works and whether it can serve our purpose.
2. It’s worth waiting till you’re older: The older you are, the higher can be the loan amount you may qualify for.
3. How to get the funds: There are different ways to receive funds in a reverse mortgage. You need to understand whether you want equal monthly payments, lump sum cash, a line of credit or a combination of monthly checks and line of credit.
4. Know your liabilities: When you take out a reverse mortgage on your home, you need to keep paying the property taxes, home insurance premiums and maintenance costs. Your loan may become due if you don’t fulfill these responsibilities.
5. Beware of scams: Mortgage scams are quite common these days. The scammers target senior homeowners and offer to help them in finding a reverse mortgage lender in exchange for a fee. This fee is a small percentage of the loan amount available to the senior homeowner. It’s better to avoid getting into such deals as you don’t know what you may end up with. The best thing is to contact a HUD approved reverse
mortgage counselor in order to check out your eligibility and explore options you may consider.
6. Consider the loan costs: The costs of taking out the loan are quite high. You can pay a part of the costs in cash while the rest can be added to the loan amount. So, what you need to do is, compare the costs on different loan programs before you choose the one that suits you.
7. Find if you’ll qualify for Medicaid: Reverse mortgage may affect your eligibility to qualify for public benefits such as Social Security benefits and Medicaid. No doubt, reverse mortgage is a good option to generate cash flow from the equity in your home. But you need to make sure that you’re well aware of how it works and how best it can help you.
Importance of Accounting for Assets in Business & partnership Liabilities
March 10, 2010
Asset means value with regard to accounting for business and is a business possession..You have full rights to claim for property if it has been earned through your business income or on income taken on loan, such as property used to run the business such as computer equipment. The balance sheet of a company can give you a detailed description of the asset, liabilities and capital of any particular company and in particular partnership liabilities, so it can be important to setup bank and cash spreadsheets to record all financial accounting conducted whilst running the business.
Accounting concepts
For business you can never ignore the importance of accounting. The two major asset types are tangible and intangible, using your accounts ledger to conduct accounting for business can help you record all of those assets, breaking it down further into fixed and current assets. Tangible are those which are perceptible by touch such as inventories under current and buildings and with equipment recorded under fixed. Intangible asset covers non-physical – like excellent service standards, reputation, copyrights, patents etc.
Partnership liabilities and capital
The importance of accounting helps you to be protective about your companys asset as matter of pride. In partnership liabilities and joint tenancy agreements there are great chances of losing out if accounts ledgers are not accurate. Bonds, stock values and shares act as financial accounting support, with accounting concepts using cash spreadsheets to avoid problematic situations as further support and evidence of the assetwhich should be supported with documentary evidence.
Fnancial accounting can correctly identify an asset or assets are in no way controlled by legal enforcement but are said to be the sum of liabilities and capital in an accounts ledger book as well as balance sheet. The Accounting Standards Board state an asset can be termed as a resource for future economic benefit of any company and you should disclose all liabilities and capital as such.
Current assets are those which you will convert into money in one fiscal year. They include tax and its equivalents, receivable, inventory, prepaid expenses which should all be recorded on bank or cash spreadsheets. Long-term investment includes securities, special funds etc.
Challenging yourself and ensuring you keep track of acounting for business now can help you with varying accounting concepts and will assist you in future should you expand your business and your assets. If you consider that company websites can be classed as an intangible asset so can be recorded on an account ledger in addition to other things that you see as an asset and this applies to those things you see helping to raise your business profile. Bank and cash spreadsheets record the amount expended on the assets of your company which can yield money and add value to your business, can always add charm and new dimensions to your company.
Asset management is a difficult job and keeping track of your income and outgoings on cash spreadsheets and ideally a good accounts ledger may be the sole accounting job done by your accountant, however should your company income eventually stretch, you may decide to hire someone to take care of the accounting for business such as partnership liabilites and capital internally! Purchasing an asset has a strong effect on liquidity since the asset tends to use immediate cash resources while financial benefits may be spread over future years. This can cause difficulties in regard to partnership liabilities as friends and business partners do fall out and may disagree in the future.
Home Equity Loans – Do They Really Save You Cash?
March 9, 2010
Home equity loans and lines of credit usually are repaid in a shorter period than first mortgages. Home equity loans are attractive to borrowers for a few main reasons:They typically have a lower interest rate (or APR)They are easier to qualify for if you have bad creditPayments on a home equity loan may be tax deductibleBorrowers can get relatively large loans with this type of loan.
Home equity loans have become popular for a number of reasons, including the escalation of property value during the 1980s and that many homeowners these days are remodeling their homes rather than selling them in today’s sluggish real estate market, bankers and mortgage brokers noted. Many lenders set the credit limit on a home equity line by taking a percentage (say, 75 percent) of the home s appraised value and subtracting from that the balance owed on the existing mortgage. Lenders sometimes offer a temporarily discounted interest rate for home equity lines–a rate that is unusually low and may last for only an introductory period, such as 6 months. On the other hand, because the lender s risk is lower than for other forms of credit, as your home serves as collateral, annual percentage rates for home equity lines are generally lower than rates for other types of credit.
Here is a brief list of possible fees that may apply to your home equity loan: Appraisal fees, originator fees, title fees, stamp duties, arrangement fees, closing fees, early pay-off and other costs are often included in loans. If your home has appreciated in value since you purchased it, or there is a substantial difference between the amount you still owe on your mortgage and the value of your home, a home equity loan may be a great way to unlock this money if you have a considerable expense to pay off. You of course do not want to sell your home just so you can touch the cash tied up in it and the home equity line of credit is the ideal way to do this without having being forced to sell.
When examining home equity line of credit options you should remember that different lenders have different policies and procedures and some will lend a higher percentage of the equity in your property than others. Some might even lend over and above the available equity in your house, so it’s important to compare the different deals out there so you get the amount you need and repayments that you can afford. But when homes sell for less than the value of their mortgages and home equity loans ? a situation known as a short sale ? lenders with first liens must be compensated fully before holders of second or third liens get a dime. The law prohibits a homeowner from having more than one home equity loan at a time, although a homeowner may have secondary liens from other sources, such as a home improvement loan or a tax lien.