Refinancing Your Mortgage

Refinancing may refer to the replacement of an existing debt obligation with another debt obligation under different terms. The terms and conditions of refinancing may vary widely by country, province, or state, based on several economic factors such as, inherent risk, projected risk, political stability of a nation, currency stability, banking regulations, borrower’s credit worthiness, and credit rating of a nation. In many industrialized nations, a common form of refinancing is for a place of primary residency mortgage.

Refinancing can also be referred to as the process of obtaining a new mortgage in an effort to reduce monthly payments, lower your interest rates, take cash out of your home for large purchases, or change mortgage companies. Most people refinance when they have equity on their home, which is the difference between the amount owed to the mortgage company and the worth of the home.

Why refinance?

1. To secure a lower interest rate.

The main reason to refinance your current loan is taking advantage of a lower interest rate. A general rule of thumb is that a refinancing option should be considered if it is at least 2% below the current interest rate. Reducing your interest rate not only helps you save money, but it increases the rate at which you build equity in your home, and it can decrease the size of your monthly payment. For example, a 30-year fixed-rate mortgage with an interest rate of 9% on a $100,000 home has a principal and interest payment of $804.62. That same loan at 6% reduces your payment to $599.55.

2. Tapping Equity

A major benefit of refinancing is that it allows you to access the equity in your home. You can get a line of credit based on the value of your home and the amount that you’ve already paid on your mortgage. This is a great way to fund home renovations, pay for university costs or make an essential big-ticket purchase. The interest rate is equal to your mortgage rate, so borrowing from the equity in your home tends to be the most cost-effective financing option available to homeowners.

3. Shortening the Loan’s Term

When interest rates fall, there is an opportunity for homeowners to refinance another loan without much change to the monthly payment but a significant change in the term of which the loan is paid back.

Risk involved

One of the largest risk of refinancing your home is that it may incur penalties as a result of paying your existing mortgage with your line of home equity credit. The penalty is incurred as most mortgage agreements has a provision which allows the company to charge you for this and can amount to a few thousand dollars. Along these same lines, there are additional fees to be aware of before refinancing. These costs include paying for an attorney to ensure you are getting the most beneficial deal possible and handle paperwork you might not feel comfortable filling out, and bank fees. To counteract or avoid entirely these bank fees, it is best to shop around or wait for low fee or free refinancing. Compared to the amount of money you may be getting from your new line of credit, but saving thousands of dollars in the long run is always worth considering.

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Smart Tips On How To Pay Off Christmas Debts

The new year has set in. The Christmas tree’s been taken down, decorations put away in the closet and all the fruit cakes are gone. Just about the only reminder of Christmas left with us are the credit card statements. About two years ago, the American Research Group Inc. had placed the planned spending average for Christmas at about $854 per shopper. That was two years ago. For the past Christmas ? Who knows? It doesn’t matter. What matters is that most of your past Christmas spending was, in all likelihood, done with the use of your credit card and paying them off quickly will make sense for it will help you minimize interest and other charges. What follows are some smart steps you can take to get over the Christmas money hangover.

Determine Now How Much You Owe: In a frenzied Christmas shopping rush, there’s just no way you could have kept track of how many times you pulled out your credit card from your wallet. Before the credit card bills start coming in to shock you, take some time to note down how much you spent and where. Check your purchase receipts as reference to sum up the figures or you might review your purchases on line. Most credit card companies anyway post purchases in real time. Don’t leave out purchases you made on payment plans, deferred credit lines or your use of store credit.

You’ll Need To Budget For The First Quarter Of The Year: To pay off your Christmas debts aggressively, assess how much excess money you’ll have every month to pay credit card balances. Work out a budget for the first 3 months at least. Find out the amount that will be coming in from wages, investments and other income. Find out how much you’ll need for the non-negotiable payments like mortgages, car loan, utilities and groceries. Whatever leftover money there is should be directed towards payment of your credit cards. If you’re unable to pay the full amounts, pay as much as you possibly can. This will reduce the interest on the balances that remain.

Check Your Income Tax Return And Earmark Any Refund For Paying Your Credit Card: If your credit card balances are way beyond what you can pay, assess your tax situation, do some pencil pushing and determine if you’ll be receiving a refund. If there is, file your tax return electronically by end of January so that it’s processed early enough for you to get a windfall by February, if there really is. The timing would be perfect for paying off the balance of your credit card.

Set Up A Savings Plan For Next Christmas: Once your Christmas spending last year has been settled and cleared, you can now look forward to the next holiday season. But this time around, plan for it. Don’t get into any instant loans or incur new debts. Deposit a certain amount into a high-interest savings account monthly and lay off it till next Christmas comes around.

Overspending during the Christmas season can easily happen. It’ll leave a big impact on your wallet and bring in hefty credit card bills. Just pay them off as quickly as you can and plan ahead so you don’t get that debt hangover.

Sources:

Investopedia.com
The Guradian.com

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Why Your Business Should Hire Freelances

For small businesses opening in a recession, it can be hard to hire full-time employees or try to do all the work yourself. Even if you have part-time workers, there is no guarantee that you’re going to have constant activities for them. One simple solution can fix this problem. There are three reasons why you should hire a freelancer for your business.

1. Save on Employee costs

If you choose to hire a freelancer, you can determine the number of projects they will work on, how long, and for how much. Once the job is done, it can be done permanently. You don’t need to hire a full-time person and shell out benefits and a retirement right away. A freelancer will save you employee costs because you don’t have to maintain that person for long. It is generally just one lump sum of money paid for a project. You also don’t have to hire someone when there is no work to be done, which saves money. Unlike in an office, where you have to pay the employee regardless if there is customers coming in, a freelancer works when you want them to.

2. Save time

When you hire employees, you have to take away time from your activities to teach them exactly what to do. It’ll probably be a few days minimum where you have to babysit them in order to make sure that they’re getting the job done correctly. With freelancers, you give them the specifics and then they are off to work. Of course they may ask a few questions for verification once in a while, but it is nothing compared to having an employee.

3. Access high-quality talent

Most freelancers have a long list of skills and talents. Many carry college degrees and know how to make you money. These people are generally budget friendly and are highly qualified. To hire someone like this full-time would cost a lot more than if you just use them ever so often. They know exactly how to get the job down and can work whenever you need them. They can even continue working long after your business hours are closed.

If you have a small business or you’re just starting out, a freelancer can be an excellent resource for you. They save time and money. If you’re anxious to hire someone right now but don’t have enough cash, there are many options for finding capital. To make sure that you are picking what’s right for you, this link will explain some more. Overall, a freelancer is worth the investment. However, if you’re still not convinced, here are some more reasons to hire a freelancer.

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