Choose to Save® #how #to #choose #an #insurance #plan


#

FROM CHOOSE TO SAVE

HOW TO PREPARE FOR RETIREMENT

Want to know how much you should save for retirement?
The Ballpark E$timate is an easy to use interactive tool which helps you to quickly identify approximately how much you need to save to fund a comfortable retirement.

A central question to retirement planning is, how long will I live?
It is important to consider because you do not want to outlive your money. Try taking the following longevity calculator Living to 100.

What will be the impact on my take home pay if I increase my contribution to my 401(k) plan?
Use this payroll deduction calculator.

When it comes to retirement planning and saving, what kind of person are you? Are you a planner, saver, struggler, impulsive, or denier?
Take the Retirement Personality Profiler quiz and find out!

Do you know what is on your credit report?
Most people do not yet what is on this report has serious implications for your financial life. You can get a free credit report today. Learn how from the Federal Trade Commission’s document, Your Access to Free Credit Reports .

Do you have more than one credit card with a balance, an auto loan, a student loan, a personal loan?
Use this Debit Management Calculator to determine how much you owe and how long it will take to pay off that debt.

Do you have a personal spending plan that allows you to save enough money to achieve your goals?
The National Endowment for Financial Education’s SmartAboutMoney.org will help you draw a spending map so you don’t get lost. In four short steps identify income, list expenses, compare income and expenses, and set priorities and make changes — you can make sure your day-to-day expenses do not distract you from your long-term spending goals. One of the 10 basic steps to getting smart about money.

Need help balancing your checkbook?
Use this Balance Your Checkbook calculator.

Do you have any emergency savings?
Having adequate emergency savings can make unforseen unemployment, auto repairs, medical emergencies, property damage and even legal issues more manageable. This Emergency Savings Calculator helps you determine how much emergency savings you may need and how you can begin saving toward this important goal.

HOW TO TALK WITH YOUR KIDS ABOUT MONEY

Is there a tool that will help students learn the complexities of investing?
Visit the Stock Market Game . The Stock Market Game gives students the chance to invest a hypothetical $100,000 in an on-line portfolio. They think they’re playing a game, but you know they’re learning economic and financial concepts that they’ll use for the rest of their lives.

How can I help my children get realistic about managing money ?
Reality Check . is a free and easy to use tool provided by the Jump Start Coalition for Personal Financial Literacy. The tool is designed to give you a general snapshot of your financial future and is not a precise budgeting tool.

How do I get my teenager to become more financially savvy?
The Money Talks Web site, from the University of California Cooperative Extension, offers teens, and their teachers, a fun and interactive opportunity to learn about money management. Teens can play games, take quizzes, watch videos, read or download colorful teen guides, and more. The Web site is available in English or Spanish.

Where can I turn for help if I am facing a foreclosure?
There are several resources available for you provided by the federal government. The Federal Reserve, Board of Governors maintains a Web site containing all of the different resources provided by various federal government agencies on foreclosure. Foreclosure Resources for Consumers .

Savings Tips from Savingsman and Benjamin Bankes

Savingsman says:
This is the time of year when many people receive their tax refund. Consider some of these options for a portion of your tax refund.

Make an extra payment on your credit card, spend down that debt.
Purchase U.S. government savings bonds which can be purchased directly from the Treasury’s web site such as I Savings Bonds .
Open a traditional IRA or a Roth IRA.

Benjamin Bankes says:
Do you ever wonder where your money goes each month? Does it seem like you’re never able to get ahead? If so, you may want to establish a budget to help you keep track of how you spend your money and help you reach your financial goals.

In times of crisis, you don’t want to be shaking pennies out of a piggy bank. Having a financial safety net in place can ensure that you’re protected when a financial emergency arises. One way to accomplish this is by setting up a cash reserve, a pool of readily available funds that can help you meet emergency or highly urgent short-term needs.

Sign-up to receive weekly savings tips at www.feedthepig.org.


30-year mortgage, or 15? 5 questions to help you choose #refinance #home #mortgage


#30 year mortgage

#

30-year mortgage, or 15? 5 questions to help you choose

Alexander E. M. Hess | 24/7 Wall St. Nov 7, 2013

It has been a slow and painful process, but the housing market is now in recovery and foreclosures have been dropping. Since the housing bust, regulators have focused on preventing borrowers from entering into potentially toxic loans. To help accomplish this, the U.S. government established the Consumer Financial Protection Bureau (CFPB) in 2010.

As part of this effort, the CFPB has proposed new disclosure forms to help borrowers understand the real risks and costs associated with their mortgage. But many potential borrowers are still unsure about the type of mortgage that is right for them. Many borrowers may be attracted to 15-year mortgages, which have a shorter term and lower interest rates than 30-year mortgages. But such a mortgage may not be right for their needs.

Despite the rise in popularity of the 15-year mortgage, it is not necessarily for everyone. For borrowers, it is important to get as much information about the different common mortgages institutions offer — and to understand the different terms. While the amount being borrowed, or principal of the loan, is often clear, the cost of the loan, or interest rate, is often less so.

In an interview with 24/7 Wall St. Guy Cecala, publisher of Inside Mortgage Finance. said borrowing to buy a home is a more complicated decision than refinancing. It is “much more of a calculation about what you can afford, how secure you are about your job, what’s the likelihood you’re going to want to move in less than five years.”

Borrowers must understand how payments, which consist of principal repayment and interest, will be structured under the different types of mortgages. They need to consider how much they will be paying for the loan, not just now, but in the future as well. And they should also consider their budget, age and other factors before deciding on a mortgage.

These are the questions to ask when deciding between and 15 and 30-year mortgage.

1. Can you afford to pay off the mortgage in 15 years?

Although a 15-year mortgage offers a lower rate relative to a 30-year mortgage, thereby allowing borrowers to pay interest for only half as long, a 15-year mortgage comes with a higher total monthly payment. This is because the principal must be paid off faster, making each principal payment larger.

Because borrowers pay down the principal balance faster, in the longer run they save on interest payments. Inside Mortgage Finance publisher Guy Cecala noted, “if you can afford the higher payments associated with the shorter-term 15-year mortgage, there is no reason not to take one.”

However, because the monthly payments are higher, it can strain borrowers’ ability to set aside money for retirement or their kids’ college tuition. These borrowers may be better-off with a 30-year mortgage. Similarly, if the higher payments of a 15-year mortgage mean borrowers have less money to invest elsewhere and diversify their portfolios, they may be better off with a 30-year mortgage.

2. Are you buying your first home?

First-time home buyers often benefit from selecting a 30-year mortgage because the monthly payments are lower. A longer-term mortgage can make a more expensive home more affordable for a new buyer. According to Cecala, most first-time home buyers “are trying to get in as much house as they can.”

Of course, 15-year and 30-year mortgages are not the only options available to consumers. Borrowers can take an adjustable-rate mortgage, which offers a low initial rate that stays unchanged for some period, such as five years. When the period expires, borrowers could pay more if interest rates rise. But for buyers who are not looking to own their home for too long and who are confident that they will be able to resell the home, an adjustable rate mortgage may be a sensible option.

3. Are you looking to refinance?

Continue reading below

You may also be interested in

$117 million gone: Oprah loses more than weight

Stock slide gains speed as Dow plunges 258 points and oil skids 3%

American families finally got a big pay raise. Why it might not feel like it.

Bond lovers may be in for a nasty heartbreak

Oprah to Weight Watchers: You get a new CEO

If you already have a mortgage and would like to refinance, now may be a good time. Cecala noted that if your current payments on a 30-year mortgage are high enough, you might be able to refinance into a 15-year mortgage and make similar monthly payments while shortening your mortgage term.

An additional factor that may make refinancing more attractive is the current difference, or spread, between interest rates on 15-year and 30-year mortgages. According to Cecala, “historically, the difference between the 30-year fixed rate and the 15-year fixed rate has been about 25 basis points,” or about 0.25%. Currently, the spread between the two rates is especially large, at close to 1% in some cases.

4. Are you planning on retiring soon?

How close a borrower is to retiring plays a major role in whether to take out a 15-year mortgage. Typically, borrowers who take 15-year mortgages are at least 40 years old, according to Cecala. These borrowers are often willing to pay off the balance on their mortgages faster in order to retire with little or no outstanding debt on their homes. However, many older homeowners also must weigh prepayment — making early payments on their mortgage — against the need to save for retirement. According to the CFPB, 30% of homeowners aged 70 and older have outstanding mortgages.

5. Do you have a strict savings plan?

Choosing a 15-year mortgage over a 30-year mortgage also may be a worthwhile choice if you are not a disciplined saver. But many people may lack the discipline needed to save long-term, Cecala noted, especially in amounts that would offset what they would save by switching to a 15-year mortgage. He also added that “a lot of times people need that extra money for something else,” and so they choose to keep their money in a 30-year mortgage with lower individual monthly payments.

Some truly disciplined savers may actually benefit from carrying their mortgages into retirement. According to a May story published by Time magazine: “if you expect to earn more after tax on your investments than you pay after tax on your mortgage, keep the mortgage.” What you want to avoid in retirement, however, is a situation where you are juggling a mortgage on top of your basic costs of living, taxes and health care payments.

24/7 Wall St. is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

Share This Story


30-year mortgage, or 15? 5 questions to help you choose #cheap #mortgage #rates


#30 year mortgage

#

30-year mortgage, or 15? 5 questions to help you choose

Alexander E. M. Hess | 24/7 Wall St. Nov 7, 2013

It has been a slow and painful process, but the housing market is now in recovery and foreclosures have been dropping. Since the housing bust, regulators have focused on preventing borrowers from entering into potentially toxic loans. To help accomplish this, the U.S. government established the Consumer Financial Protection Bureau (CFPB) in 2010.

As part of this effort, the CFPB has proposed new disclosure forms to help borrowers understand the real risks and costs associated with their mortgage. But many potential borrowers are still unsure about the type of mortgage that is right for them. Many borrowers may be attracted to 15-year mortgages, which have a shorter term and lower interest rates than 30-year mortgages. But such a mortgage may not be right for their needs.

Despite the rise in popularity of the 15-year mortgage, it is not necessarily for everyone. For borrowers, it is important to get as much information about the different common mortgages institutions offer — and to understand the different terms. While the amount being borrowed, or principal of the loan, is often clear, the cost of the loan, or interest rate, is often less so.

In an interview with 24/7 Wall St. Guy Cecala, publisher of Inside Mortgage Finance. said borrowing to buy a home is a more complicated decision than refinancing. It is “much more of a calculation about what you can afford, how secure you are about your job, what’s the likelihood you’re going to want to move in less than five years.”

Borrowers must understand how payments, which consist of principal repayment and interest, will be structured under the different types of mortgages. They need to consider how much they will be paying for the loan, not just now, but in the future as well. And they should also consider their budget, age and other factors before deciding on a mortgage.

These are the questions to ask when deciding between and 15 and 30-year mortgage.

1. Can you afford to pay off the mortgage in 15 years?

Although a 15-year mortgage offers a lower rate relative to a 30-year mortgage, thereby allowing borrowers to pay interest for only half as long, a 15-year mortgage comes with a higher total monthly payment. This is because the principal must be paid off faster, making each principal payment larger.

Because borrowers pay down the principal balance faster, in the longer run they save on interest payments. Inside Mortgage Finance publisher Guy Cecala noted, “if you can afford the higher payments associated with the shorter-term 15-year mortgage, there is no reason not to take one.”

However, because the monthly payments are higher, it can strain borrowers’ ability to set aside money for retirement or their kids’ college tuition. These borrowers may be better-off with a 30-year mortgage. Similarly, if the higher payments of a 15-year mortgage mean borrowers have less money to invest elsewhere and diversify their portfolios, they may be better off with a 30-year mortgage.

2. Are you buying your first home?

First-time home buyers often benefit from selecting a 30-year mortgage because the monthly payments are lower. A longer-term mortgage can make a more expensive home more affordable for a new buyer. According to Cecala, most first-time home buyers “are trying to get in as much house as they can.”

Of course, 15-year and 30-year mortgages are not the only options available to consumers. Borrowers can take an adjustable-rate mortgage, which offers a low initial rate that stays unchanged for some period, such as five years. When the period expires, borrowers could pay more if interest rates rise. But for buyers who are not looking to own their home for too long and who are confident that they will be able to resell the home, an adjustable rate mortgage may be a sensible option.

3. Are you looking to refinance?

Continue reading below

You may also be interested in

$117 million gone: Oprah loses more than weight

Stock slide gains speed as Dow plunges 258 points and oil skids 3%

American families finally got a big pay raise. Why it might not feel like it.

Bond lovers may be in for a nasty heartbreak

Oprah to Weight Watchers: You get a new CEO

If you already have a mortgage and would like to refinance, now may be a good time. Cecala noted that if your current payments on a 30-year mortgage are high enough, you might be able to refinance into a 15-year mortgage and make similar monthly payments while shortening your mortgage term.

An additional factor that may make refinancing more attractive is the current difference, or spread, between interest rates on 15-year and 30-year mortgages. According to Cecala, “historically, the difference between the 30-year fixed rate and the 15-year fixed rate has been about 25 basis points,” or about 0.25%. Currently, the spread between the two rates is especially large, at close to 1% in some cases.

4. Are you planning on retiring soon?

How close a borrower is to retiring plays a major role in whether to take out a 15-year mortgage. Typically, borrowers who take 15-year mortgages are at least 40 years old, according to Cecala. These borrowers are often willing to pay off the balance on their mortgages faster in order to retire with little or no outstanding debt on their homes. However, many older homeowners also must weigh prepayment — making early payments on their mortgage — against the need to save for retirement. According to the CFPB, 30% of homeowners aged 70 and older have outstanding mortgages.

5. Do you have a strict savings plan?

Choosing a 15-year mortgage over a 30-year mortgage also may be a worthwhile choice if you are not a disciplined saver. But many people may lack the discipline needed to save long-term, Cecala noted, especially in amounts that would offset what they would save by switching to a 15-year mortgage. He also added that “a lot of times people need that extra money for something else,” and so they choose to keep their money in a 30-year mortgage with lower individual monthly payments.

Some truly disciplined savers may actually benefit from carrying their mortgages into retirement. According to a May story published by Time magazine: “if you expect to earn more after tax on your investments than you pay after tax on your mortgage, keep the mortgage.” What you want to avoid in retirement, however, is a situation where you are juggling a mortgage on top of your basic costs of living, taxes and health care payments.

24/7 Wall St. is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

Share This Story


30-year mortgage, or 15? 5 questions to help you choose #pay #off #mortgage #early


#30 year mortgage

#

30-year mortgage, or 15? 5 questions to help you choose

Alexander E. M. Hess | 24/7 Wall St. Nov 7, 2013

It has been a slow and painful process, but the housing market is now in recovery and foreclosures have been dropping. Since the housing bust, regulators have focused on preventing borrowers from entering into potentially toxic loans. To help accomplish this, the U.S. government established the Consumer Financial Protection Bureau (CFPB) in 2010.

As part of this effort, the CFPB has proposed new disclosure forms to help borrowers understand the real risks and costs associated with their mortgage. But many potential borrowers are still unsure about the type of mortgage that is right for them. Many borrowers may be attracted to 15-year mortgages, which have a shorter term and lower interest rates than 30-year mortgages. But such a mortgage may not be right for their needs.

Despite the rise in popularity of the 15-year mortgage, it is not necessarily for everyone. For borrowers, it is important to get as much information about the different common mortgages institutions offer — and to understand the different terms. While the amount being borrowed, or principal of the loan, is often clear, the cost of the loan, or interest rate, is often less so.

In an interview with 24/7 Wall St. Guy Cecala, publisher of Inside Mortgage Finance. said borrowing to buy a home is a more complicated decision than refinancing. It is “much more of a calculation about what you can afford, how secure you are about your job, what’s the likelihood you’re going to want to move in less than five years.”

Borrowers must understand how payments, which consist of principal repayment and interest, will be structured under the different types of mortgages. They need to consider how much they will be paying for the loan, not just now, but in the future as well. And they should also consider their budget, age and other factors before deciding on a mortgage.

These are the questions to ask when deciding between and 15 and 30-year mortgage.

1. Can you afford to pay off the mortgage in 15 years?

Although a 15-year mortgage offers a lower rate relative to a 30-year mortgage, thereby allowing borrowers to pay interest for only half as long, a 15-year mortgage comes with a higher total monthly payment. This is because the principal must be paid off faster, making each principal payment larger.

Because borrowers pay down the principal balance faster, in the longer run they save on interest payments. Inside Mortgage Finance publisher Guy Cecala noted, “if you can afford the higher payments associated with the shorter-term 15-year mortgage, there is no reason not to take one.”

However, because the monthly payments are higher, it can strain borrowers’ ability to set aside money for retirement or their kids’ college tuition. These borrowers may be better-off with a 30-year mortgage. Similarly, if the higher payments of a 15-year mortgage mean borrowers have less money to invest elsewhere and diversify their portfolios, they may be better off with a 30-year mortgage.

2. Are you buying your first home?

First-time home buyers often benefit from selecting a 30-year mortgage because the monthly payments are lower. A longer-term mortgage can make a more expensive home more affordable for a new buyer. According to Cecala, most first-time home buyers “are trying to get in as much house as they can.”

Of course, 15-year and 30-year mortgages are not the only options available to consumers. Borrowers can take an adjustable-rate mortgage, which offers a low initial rate that stays unchanged for some period, such as five years. When the period expires, borrowers could pay more if interest rates rise. But for buyers who are not looking to own their home for too long and who are confident that they will be able to resell the home, an adjustable rate mortgage may be a sensible option.

3. Are you looking to refinance?

Continue reading below

You may also be interested in

$117 million gone: Oprah loses more than weight

Stock slide gains speed as Dow plunges 258 points and oil skids 3%

American families finally got a big pay raise. Why it might not feel like it.

Bond lovers may be in for a nasty heartbreak

Oprah to Weight Watchers: You get a new CEO

If you already have a mortgage and would like to refinance, now may be a good time. Cecala noted that if your current payments on a 30-year mortgage are high enough, you might be able to refinance into a 15-year mortgage and make similar monthly payments while shortening your mortgage term.

An additional factor that may make refinancing more attractive is the current difference, or spread, between interest rates on 15-year and 30-year mortgages. According to Cecala, “historically, the difference between the 30-year fixed rate and the 15-year fixed rate has been about 25 basis points,” or about 0.25%. Currently, the spread between the two rates is especially large, at close to 1% in some cases.

4. Are you planning on retiring soon?

How close a borrower is to retiring plays a major role in whether to take out a 15-year mortgage. Typically, borrowers who take 15-year mortgages are at least 40 years old, according to Cecala. These borrowers are often willing to pay off the balance on their mortgages faster in order to retire with little or no outstanding debt on their homes. However, many older homeowners also must weigh prepayment — making early payments on their mortgage — against the need to save for retirement. According to the CFPB, 30% of homeowners aged 70 and older have outstanding mortgages.

5. Do you have a strict savings plan?

Choosing a 15-year mortgage over a 30-year mortgage also may be a worthwhile choice if you are not a disciplined saver. But many people may lack the discipline needed to save long-term, Cecala noted, especially in amounts that would offset what they would save by switching to a 15-year mortgage. He also added that “a lot of times people need that extra money for something else,” and so they choose to keep their money in a 30-year mortgage with lower individual monthly payments.

Some truly disciplined savers may actually benefit from carrying their mortgages into retirement. According to a May story published by Time magazine: “if you expect to earn more after tax on your investments than you pay after tax on your mortgage, keep the mortgage.” What you want to avoid in retirement, however, is a situation where you are juggling a mortgage on top of your basic costs of living, taxes and health care payments.

24/7 Wall St. is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

Share This Story


30-year mortgage, or 15? 5 questions to help you choose #mortgage #rate #calculator


#30 year mortgage

#

30-year mortgage, or 15? 5 questions to help you choose

Alexander E. M. Hess | 24/7 Wall St. Nov 7, 2013

It has been a slow and painful process, but the housing market is now in recovery and foreclosures have been dropping. Since the housing bust, regulators have focused on preventing borrowers from entering into potentially toxic loans. To help accomplish this, the U.S. government established the Consumer Financial Protection Bureau (CFPB) in 2010.

As part of this effort, the CFPB has proposed new disclosure forms to help borrowers understand the real risks and costs associated with their mortgage. But many potential borrowers are still unsure about the type of mortgage that is right for them. Many borrowers may be attracted to 15-year mortgages, which have a shorter term and lower interest rates than 30-year mortgages. But such a mortgage may not be right for their needs.

Despite the rise in popularity of the 15-year mortgage, it is not necessarily for everyone. For borrowers, it is important to get as much information about the different common mortgages institutions offer — and to understand the different terms. While the amount being borrowed, or principal of the loan, is often clear, the cost of the loan, or interest rate, is often less so.

In an interview with 24/7 Wall St. Guy Cecala, publisher of Inside Mortgage Finance. said borrowing to buy a home is a more complicated decision than refinancing. It is “much more of a calculation about what you can afford, how secure you are about your job, what’s the likelihood you’re going to want to move in less than five years.”

Borrowers must understand how payments, which consist of principal repayment and interest, will be structured under the different types of mortgages. They need to consider how much they will be paying for the loan, not just now, but in the future as well. And they should also consider their budget, age and other factors before deciding on a mortgage.

These are the questions to ask when deciding between and 15 and 30-year mortgage.

1. Can you afford to pay off the mortgage in 15 years?

Although a 15-year mortgage offers a lower rate relative to a 30-year mortgage, thereby allowing borrowers to pay interest for only half as long, a 15-year mortgage comes with a higher total monthly payment. This is because the principal must be paid off faster, making each principal payment larger.

Because borrowers pay down the principal balance faster, in the longer run they save on interest payments. Inside Mortgage Finance publisher Guy Cecala noted, “if you can afford the higher payments associated with the shorter-term 15-year mortgage, there is no reason not to take one.”

However, because the monthly payments are higher, it can strain borrowers’ ability to set aside money for retirement or their kids’ college tuition. These borrowers may be better-off with a 30-year mortgage. Similarly, if the higher payments of a 15-year mortgage mean borrowers have less money to invest elsewhere and diversify their portfolios, they may be better off with a 30-year mortgage.

2. Are you buying your first home?

First-time home buyers often benefit from selecting a 30-year mortgage because the monthly payments are lower. A longer-term mortgage can make a more expensive home more affordable for a new buyer. According to Cecala, most first-time home buyers “are trying to get in as much house as they can.”

Of course, 15-year and 30-year mortgages are not the only options available to consumers. Borrowers can take an adjustable-rate mortgage, which offers a low initial rate that stays unchanged for some period, such as five years. When the period expires, borrowers could pay more if interest rates rise. But for buyers who are not looking to own their home for too long and who are confident that they will be able to resell the home, an adjustable rate mortgage may be a sensible option.

3. Are you looking to refinance?

Continue reading below

You may also be interested in

$117 million gone: Oprah loses more than weight

Stock slide gains speed as Dow plunges 258 points and oil skids 3%

American families finally got a big pay raise. Why it might not feel like it.

Bond lovers may be in for a nasty heartbreak

Oprah to Weight Watchers: You get a new CEO

If you already have a mortgage and would like to refinance, now may be a good time. Cecala noted that if your current payments on a 30-year mortgage are high enough, you might be able to refinance into a 15-year mortgage and make similar monthly payments while shortening your mortgage term.

An additional factor that may make refinancing more attractive is the current difference, or spread, between interest rates on 15-year and 30-year mortgages. According to Cecala, “historically, the difference between the 30-year fixed rate and the 15-year fixed rate has been about 25 basis points,” or about 0.25%. Currently, the spread between the two rates is especially large, at close to 1% in some cases.

4. Are you planning on retiring soon?

How close a borrower is to retiring plays a major role in whether to take out a 15-year mortgage. Typically, borrowers who take 15-year mortgages are at least 40 years old, according to Cecala. These borrowers are often willing to pay off the balance on their mortgages faster in order to retire with little or no outstanding debt on their homes. However, many older homeowners also must weigh prepayment — making early payments on their mortgage — against the need to save for retirement. According to the CFPB, 30% of homeowners aged 70 and older have outstanding mortgages.

5. Do you have a strict savings plan?

Choosing a 15-year mortgage over a 30-year mortgage also may be a worthwhile choice if you are not a disciplined saver. But many people may lack the discipline needed to save long-term, Cecala noted, especially in amounts that would offset what they would save by switching to a 15-year mortgage. He also added that “a lot of times people need that extra money for something else,” and so they choose to keep their money in a 30-year mortgage with lower individual monthly payments.

Some truly disciplined savers may actually benefit from carrying their mortgages into retirement. According to a May story published by Time magazine: “if you expect to earn more after tax on your investments than you pay after tax on your mortgage, keep the mortgage.” What you want to avoid in retirement, however, is a situation where you are juggling a mortgage on top of your basic costs of living, taxes and health care payments.

24/7 Wall St. is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

Share This Story


30-year mortgage, or 15? 5 questions to help you choose #types #of #mortgages


#30 year mortgage

#

30-year mortgage, or 15? 5 questions to help you choose

Alexander E. M. Hess | 24/7 Wall St. Nov 7, 2013

It has been a slow and painful process, but the housing market is now in recovery and foreclosures have been dropping. Since the housing bust, regulators have focused on preventing borrowers from entering into potentially toxic loans. To help accomplish this, the U.S. government established the Consumer Financial Protection Bureau (CFPB) in 2010.

As part of this effort, the CFPB has proposed new disclosure forms to help borrowers understand the real risks and costs associated with their mortgage. But many potential borrowers are still unsure about the type of mortgage that is right for them. Many borrowers may be attracted to 15-year mortgages, which have a shorter term and lower interest rates than 30-year mortgages. But such a mortgage may not be right for their needs.

Despite the rise in popularity of the 15-year mortgage, it is not necessarily for everyone. For borrowers, it is important to get as much information about the different common mortgages institutions offer — and to understand the different terms. While the amount being borrowed, or principal of the loan, is often clear, the cost of the loan, or interest rate, is often less so.

In an interview with 24/7 Wall St. Guy Cecala, publisher of Inside Mortgage Finance. said borrowing to buy a home is a more complicated decision than refinancing. It is “much more of a calculation about what you can afford, how secure you are about your job, what’s the likelihood you’re going to want to move in less than five years.”

Borrowers must understand how payments, which consist of principal repayment and interest, will be structured under the different types of mortgages. They need to consider how much they will be paying for the loan, not just now, but in the future as well. And they should also consider their budget, age and other factors before deciding on a mortgage.

These are the questions to ask when deciding between and 15 and 30-year mortgage.

1. Can you afford to pay off the mortgage in 15 years?

Although a 15-year mortgage offers a lower rate relative to a 30-year mortgage, thereby allowing borrowers to pay interest for only half as long, a 15-year mortgage comes with a higher total monthly payment. This is because the principal must be paid off faster, making each principal payment larger.

Because borrowers pay down the principal balance faster, in the longer run they save on interest payments. Inside Mortgage Finance publisher Guy Cecala noted, “if you can afford the higher payments associated with the shorter-term 15-year mortgage, there is no reason not to take one.”

However, because the monthly payments are higher, it can strain borrowers’ ability to set aside money for retirement or their kids’ college tuition. These borrowers may be better-off with a 30-year mortgage. Similarly, if the higher payments of a 15-year mortgage mean borrowers have less money to invest elsewhere and diversify their portfolios, they may be better off with a 30-year mortgage.

2. Are you buying your first home?

First-time home buyers often benefit from selecting a 30-year mortgage because the monthly payments are lower. A longer-term mortgage can make a more expensive home more affordable for a new buyer. According to Cecala, most first-time home buyers “are trying to get in as much house as they can.”

Of course, 15-year and 30-year mortgages are not the only options available to consumers. Borrowers can take an adjustable-rate mortgage, which offers a low initial rate that stays unchanged for some period, such as five years. When the period expires, borrowers could pay more if interest rates rise. But for buyers who are not looking to own their home for too long and who are confident that they will be able to resell the home, an adjustable rate mortgage may be a sensible option.

3. Are you looking to refinance?

Continue reading below

You may also be interested in

$117 million gone: Oprah loses more than weight

Stock slide gains speed as Dow plunges 258 points and oil skids 3%

American families finally got a big pay raise. Why it might not feel like it.

Bond lovers may be in for a nasty heartbreak

Oprah to Weight Watchers: You get a new CEO

If you already have a mortgage and would like to refinance, now may be a good time. Cecala noted that if your current payments on a 30-year mortgage are high enough, you might be able to refinance into a 15-year mortgage and make similar monthly payments while shortening your mortgage term.

An additional factor that may make refinancing more attractive is the current difference, or spread, between interest rates on 15-year and 30-year mortgages. According to Cecala, “historically, the difference between the 30-year fixed rate and the 15-year fixed rate has been about 25 basis points,” or about 0.25%. Currently, the spread between the two rates is especially large, at close to 1% in some cases.

4. Are you planning on retiring soon?

How close a borrower is to retiring plays a major role in whether to take out a 15-year mortgage. Typically, borrowers who take 15-year mortgages are at least 40 years old, according to Cecala. These borrowers are often willing to pay off the balance on their mortgages faster in order to retire with little or no outstanding debt on their homes. However, many older homeowners also must weigh prepayment — making early payments on their mortgage — against the need to save for retirement. According to the CFPB, 30% of homeowners aged 70 and older have outstanding mortgages.

5. Do you have a strict savings plan?

Choosing a 15-year mortgage over a 30-year mortgage also may be a worthwhile choice if you are not a disciplined saver. But many people may lack the discipline needed to save long-term, Cecala noted, especially in amounts that would offset what they would save by switching to a 15-year mortgage. He also added that “a lot of times people need that extra money for something else,” and so they choose to keep their money in a 30-year mortgage with lower individual monthly payments.

Some truly disciplined savers may actually benefit from carrying their mortgages into retirement. According to a May story published by Time magazine: “if you expect to earn more after tax on your investments than you pay after tax on your mortgage, keep the mortgage.” What you want to avoid in retirement, however, is a situation where you are juggling a mortgage on top of your basic costs of living, taxes and health care payments.

24/7 Wall St. is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

Share This Story


best mortgage companies


#How to Find – Choose a Mortgage Lender or Broker

A knowledgeable mortgage professional can help you set goals and secure a loan that is suited to your needs. Home loans are available from a number of institutions from banks and credit unions to mortgage bankers and mortgage brokers. Within a few miles of almost everyone in America, there is a terrific mortgage professional working for a trustworthy company. That is not to say that all lenders and brokers are trustworthy. The newspapers are filled with story after story of companies that took advantage of homebuyers to the tune of billions of dollars. But don t worry; by following the advice in this course, you will be able to find a lender or broker you can trust. As a first step, you should make sure that you understand the difference between a mortgage lender and a mortgage broker.

Mortgage lenders such as Washington Mutual Inc. and Bank of America specialize in making mortgage loans. Many, though not all, are associated with banks. Mortgage lenders typically deal with borrowers through one of their retail banking branches or through a mortgage broker.

Most mortgage lenders have both retail and wholesale divisions. Retail divisions offer loans to borrowers through bank branches or local offices. Wholesale divisions offer loans through mortgage brokers. Wholesale mortgage interest rates offered to brokers are lower than the retail rates offered to the general public.

Loan programs and qualifying standards will vary from one lender to the next, and it can be challenging for a homebuyer to shop around among many lenders. Mortgage brokers have easy access to a large number of lenders and can use their knowledge of the many mortgage offerings to find a loan that matches the borrower s profile and needs at a favorable rate. Brokers do not approve the loan themselves; they find a lender who will approve the loan. The broker then adds his fee to the wholesale rate, and in the end the borrower should get a rate that is about equal to the selected lender s retail rate.

In today s market it s not always entirely clear if you are working with a mortgage lender or a broker. Don t be afraid to ask your mortgage company if they act as a lender or as a broker. Regardless of which type of institution you deal with, it is important to find an individual loan officer or broker that you are happy with, and can trust.

Get a Free Credit.com Account Sign up for Credit.com and get your FREE Credit Score & Personalized Action Plan to help improve it. Free & updated every 30 days.

Why is it Important to Choose the Right Mortgage Professional?

Like the stock market, the mortgage market is fluid, and rates change daily. Unfortunately, today s paper is yesterday s news. Getting rates from one lender on one day and another lender the next day could show disparities that are a product of the marketplace rather than differences between the lenders.

Some lenders even advertise rates that are not real. You will often see such rates in internet ads and unsolicited e-mails. You re better off ignoring most ads. You should choose your lender, don t let them choose you. And be sure that you choose carefully. Many of the loan representatives that you are likely to talk with are not trustworthy. If given the chance, they will make choices that benefit themselves or their employer rather than you.

Part of the problem is that disclosure laws designed to protect consumers are not enforced. Take the Good Faith Estimate of Closing Costs that your lender is required to give you within 3 days of application. Let s say that you read yours and it says that the lender will make 1 point (1% of the loan amount) as a Loan Origination Fee and an additional $1,000 in other fees. The form also discloses fees that are beyond the lender s direct control, such as settlement fee and title insurance fees, your first year home insurance premium, and County recording fees. You think it looks pretty good because the estimate is slightly lower than what you believe other lenders are charging, so you feel confident.

Guess what? The lender is not bound by that estimate. He can change it at will, deciding, perhaps, to charge you 2 points instead of one, doubling his income. When you finally see the loan documents at closing, you may find out that you are being cheated, but what can you do about it at that point? Everyone expects you to close, and it s unlikely they will be sympathetic if you say, I need another 30 days to get another loan. You ll have to close and pay the extra fees. The bottom line is that when something like this happens, you were purposely misled from the beginning, kept in the dark through the process, and shielded from viewing documents until the last moment, at which point it s too late for you to do anything about it.

So how do you avoid this terrible situation? The answer is that you have to ask questions designed to tell you what kind of person and institution you are dealing with.

How Can I Find a Knowledgeable, Trustworthy Mortgage Professional?

If you could listen in on 100 phone conversations between borrowers and prospective lenders, you d find that the most common questions are:

What are your rates?

What are your points?

What are your fees?

First of all, some loan representatives purposely lie to phone shoppers about rates in order to lure them in. Secondly, up-front costs should not be your main concern. Your goal is to get trustworthy answers about loan choices and interest rates. That can t be done with phone calls to strangers. I d be surprised if one person in 100 even asked, How Do I Know I Can Trust You? Yet this is the most important question of all. So how can you find out if your trust is well placed? Begin with referrals and then make sure you ask the right questions.

Know Your Score Before You Apply Get your free Credit Report Card and see what the banks will see before you apply. See your credit score & learn ways to improve it. It’s free & updated every 30 days.

Get referrals from friends who have recently gotten loans. Ask these friends about how well they were treated. Ask the following questions:

  • Did the lender describe the available loans in easily understood language?
  • Did he/she lock in the rate that was promised?
  • Were there any hidden or unexpected fees that were not fully disclosed in the initial meeting?If they still have the documents, see if the fees on the loan documents were the same as were originally disclosed on that initial Good Faith Estimate.
  • Was the broker or banker responsive and able to deal with problems quickly?

Get referrals from real estate agents. Experienced agents can refer you to lenders they ve worked with in the past. But don t simply take the agent s word as gold. Be sure to ask the same questions you d ask if you were finding the lender on your own. When you speak with a lender, ask questions about their experience. Use the following list of questions to help you decide if you are satisfied with a lender s knowledge, experience, professionalism, integrity, and commitment to service.

Questions to ask potential lenders

  • Can you give me the HUD-1 closing statement on the last three deals you completed?
  • What are your loan programs? Do you offer VA loans (for example)?
  • Can I see a Good Faith Estimate right away?
  • Could you estimate closing costs for my loan?
  • Can you estimate and explain your fees?
  • How and when will you earn your income from this loan?
  • Will you get approval for my loan locally?
  • Are you certain you can get this done in time for closing?
  • Additional questions for mortgage brokers

    • How do you get paid, in points or commission?
    • How much will you make on this loan from the lender?
    • Name some of your top lenders.

    By following these simple steps, you can develop a trusting relationship with your lender and move forward with confidence.

    To learn more about buying a home and how the financing process works, read more from our experts by visiting our Mortgage Learning Center .


    mortgage lenders


    #A Look Behind The Curtain: How To Choose A Mortgage Lender

    (Photo credit: TheTruthAbout)

    Last week I saw a restaurant review on a local blog that touted “The New York Times says. ” and I thought, wait a minute, the Times didn’t “say” anything, somebody that works for the Times did! One person, one opinion, not the entire staff and their collective opinion, but one individual. Invoking the mighty Times just because the reviewer works for the NY Times, transfers the credibility and credentials of the institution to the individual and turns an individual opinion into a powerful endorsement.

    When someone refers to this writing, chances are they will say; “forbes.com said ” and not “Mark Greene said on forbes.com. ” See what I mean? “Who’s Mark Greene” is replaced with the towering credibility of the forbes.com brand. Unknown uncertainty instantly transformed into concrete factual evidence.

    The mortgage lending business is hyper-competitive and mortgage originators come in all forms of education, training, experience and affiliation. With 25 years in the trenches, an undergraduate finance degree from a reputable university, countless hours of training and continuous education, and the trust and goodwill I have built with the many sources that refer their clients to me, you would think my capture rate would be bullet proof. Not even close! I have lost business to mortgage people with less experience, less training and less education, simply because they work for lenders with household names. A prospective client will tell me that they have “talked to” Wells Fargo or Chase or Bank of America or whoever, and they have adamant and unwavering faith in the information they received.

    When I hear “Wells Fargo told me” or “Chase told me” or “(lender name here) told me,” I recognize that I am competing with the institution and not the rep or employee of the institution that the borrower actually spoke with. I am thrust into a mortgage contest with the Great and Powerful Wizard of Oz with the booming voice and the pyrotechnics, not the little man behind the curtain. And it is the little man behind the curtain that is quoting terms and offering up the advantages of working with the “biggest” and most “amazingest” mortgage lender on the planet!

    In the past I have proposed that the person spoken to was merely a representative of the institution, not the institution itself, often to no avail. Credentials are not a prerequisite for assessing expertise or even competence when consumers shop for a mortgage lender. Name recognition is a big deal. Transferring the credibility and credentials of the institution to the individual gives consumers a sense of comfort and security that eases the requisite leap of faith when choosing a mortgage lender.

    Here is where I share an industry secret, are you ready? Mortgage people are salespeople. First and foremost, the primary goal of a mortgage originator/loan officer is to convince you to apply for your mortgage with them. Financial acumen is helpful but not required; the best salespeople are the biggest producers in the mortgage industry. Consumers looking for the most skilled financial mortgage expert often choose the best salesperson; expertise and wherewithal vary along a greatly disparate continuum.

    Mortgage originators are fond of titles, so choosing a lender based on how remarkable the rep’s title is may be perilous. Starting with Loan Officer and of course Senior Loan Officer, I have seen; Advisor, Consultant, Planner and the more impressive senior versions of these. Add in initials based on graduate education (MBA) or related field licensing (CPA) and title crowning can become quite prestigious. Although I have to admit that I have always been impressed with the CPA moniker on my colleague Matt Gratalo’s business card. Matt is a very senior, highly respected loan originator and manager that I have worked with for many years and he is in fact a CPA, which garners lots of respect from his clients and appropriate deference from his peers, me included. Initials as part of a title speak to credentials and expertise, originators with initials should go on your short list.

    Even so, titles may not be the best starting point when selecting a mortgage originator, remember, even the Great and Powerful Wizard of Oz is really just a guy behind a curtain.

    In 1992, I was a Loan Officer with Paine Webber Mortgage in Cranford, New Jersey and the great Chris Puorro (legendary mortgage management tough guy), was my sales manager. I knocked on his door one day and asked him what the requirements were for me to become a Senior Loan Officer. He looked up at me, asked how long I had been there and when I said two years, he smiled and said “congratulations, you’re a Senior Loan Officer!” And that was that, I had new business cards within a week. No test, no additional training, no scorecard, just presto! Senior Loan Officer. Beware the fancy title!

    Nowadays, just about every real estate office has an “in-house” lender with an originator right there in the office. Convenient and accessible, this must be the right answer; why else would the lender have such coveted positioning? In-house reps exist because there is a mutually beneficial financial relationship, the lender has unrestricted access to agents and buyers, and the real estate company is compensated by the lender. Marketing Services Agreements (MSA), Joint Ventures, Desk Rentals and whatever other form these relationships take, may seem counter to RESPA (Real Estate Settlement and Procedures Act), rules governing compensation for real estate referrals, but they are industry norms. That being said, an in-house rep can be a great choice, but again, “expertise and wherewithal vary along a greatly disparate continuum.”

    The web has exploded with “discount” mortgage financing options offering fantastic terms and lightning fast closings. The idea being that the absence of “brick and mortar” costs associated with traditional lenders, allows for discounted, below market rates. Sounds great but not true. The largest online lender has over 8,000 employees manning phones and populating cubicles in office buildings, getting loans closed. Brick and mortar costs are part of their income statement. Online financing is popular with tech savvy consumers and can be a convenient alternative to traditional lending sources. Significant interest rate discounts offered by online financing sources are advertisements, like everything else, if it sounds too good to be true, it is.

    And what about all of those local or regional mortgage companies with names that are not so well known, the “correspondent” mortgage lenders? Correspondent lenders employ their own processing, underwriting and closing staff, and use warehouse lines to fund loans. They specialize in residential mortgages, they tend to have more entrepreneurial cultures and originators are generally independent and experienced. But just like the big banks, the in-house lenders and the World Wide Web reps, “expertise and wherewithal vary along a greatly disparate continuum.”

    So just how is a consumer supposed to choose a mortgage lender? What should the decision tree look like?

    Start by asking someone close in your universe that has recently gotten a mortgage, see if they can recommend their lender. Ask a financial adviser, an accountant, your attorney or your realtor to help you with a short list of lender referrals. These people deal with mortgage lenders regularly and can help you filter that continuum with the greatly disparate expertise and wherewithal and add real confidence to your decision.


    mortgage lender


    #How to Choose a Mortgage Lender: Criteria and Help?

    Determine what matters most to you when selecting a mortgage lender

    On Zillow Mortgage Marketplace you can sort quotes you receive by whatever matters most to you: APR, interest rate, monthly payment, lender fees, loan program, lender rating or cheapest cost over a certain amount of time.

    Observe the way the lender responds to you when you first contact him or her

    Are they prompt to respond to your initial contact? Are they friendly and courteous? Do they honor their quote that you saw online or in an offline ad? Are they willing to explain things to you or educate you about different choices? Do they proactively discuss the timeline of the loan (estimated closing date, when to lock the rate)? Do they discuss when/how rates will change?

    Check out the lender’s reviews

    Zillow has tens of thousands of lender reviews on our site. One of Zillow’s main goals is to empower consumers with information to help them make mortgage-related decisions. We think lender reviews are an incredibly useful tool to help consumers choose a lender to work with because the experiences others have had with a particular lender are good indicators of subsequent experiences with the same lender.

    Our lender reviews are based on four categories – responsiveness, knowledge, helpfulness and follow-through and all include detailed descriptions of their experience. The reviews are left by past and current clients of the lender. All reviews are moderated by a specially trained team of moderators who evaluate all reviews before they are published.

    When choosing a mortgage lender we always encourage you to look for a lender who quotes live custom mortgage quotes on Zillow Mortgage Marketplace .