June 2009

Protecting Your Most Important Asset

Have you worked hard to maintain a good credit standing? You’ve been responsible about assuming debt, making payments on time, and careful not to have too many credit accounts. What if all your hard work could be erased, without you even being aware of it?

Unfortunately, it’s a modern day fact of life that our credit history can be damaged in a blink of an eye without our knowledge. Credit identity theft is a common crime in our nation, happening every day.

Professional thieves prey on opportunities to intercept your credit information. They use it to either make fraudulent charges to your credit accounts, or even worse, establish new credit accounts under your name.

How to Protect Yourself

Of course, the thieves need access to your personal information. Where do they get what they need? They can be quite ingenious. You could be at risk if:

• Someone peeks over your shoulder while you enter personal data into a phone or an ATM machine.
• The thief goes “dumpster diving” and looks through garbage for documents that include sensitive data.
• The thief steals pre-approved credit card offers from your mailbox.
• You receive emails, called phishing, from seemingly legitimate companies requesting your account number.
• You’ve recently lost your wallet with either credit cards or your license.

Don’t Fall Victim

With a few pieces of information, your credit world can be turned upside down. Even if you aren’t held liable for fraudulent credit payments, getting the incident off your credit report can be difficult and require months, sometimes years of attempts to rectify.

You could potentially lose out on a chance to own a home, refinance your home, or take out other loans. All because of these false credit reports.

So make sure you protect your most important asset: your credit rating. If you’d like more information about how I can help please contact me.

Mortgages 101

The commotion of house hunting is finally over. You found just the right house, and your offer has been accepted. It was a great buy. Now, just one more piece to the puzzle: getting a loan.

Often, buyers are so eager to get this “final piece” behind them, they rush through this portion of the transaction and end up with less-than-ideal terms. In order to avoid this, make sure you take the time to educate yourself about mortgages in general.

A mortgage lender will often work directly with the home buyer. However, mortgage loans vary considerably from bank to bank, lender to lender, and person to person. Many factors determine what’s right for you, including the size of the mortgage, your financial history, the interest rate, and the maturity date of the mortgage.

Globally there are dozens of different types of mortgage loans offered by mortgage lenders, but they all share common features:

• All loans earn interest, which is either fixed (meaning it remains the same during the life of the loan) or variable (meaning at pre-defined periods during the life of the loan it will change).
• Mortgage loans all have a maximum life, or term. This is the amount of years you have to pay back the amount in full. After this you officially own the property and will secure the full deed to the land.
• Mortgage loans set a predefined amount you must pay each pay period. This will also determine how often the mortgage is due, depending on the type of mortgage you secure.

Some mortgages have additional terms, including prepayment penalties if you decide to pay off the loan before the end of the term. So make sure you discuss this with your lender before signing the contract terms of your loan.

Giving Your Home a Makeover

You would probably be hard pressed to find a single person that loves every feature of their home. Most of us have a laundry list of things that we would like to be done to make the house perfect. But is it important to implement those plans?

Our homes are one of our most important investments. And the design and function of our home affects our lives every day. But in terms of investment potential, are we more likely to make money on our property if we remodel or move to a home that’s a better fit?

Sometimes remodeling pays off and sometimes it doesn’t. Almost always, the remodel represents a significant investment of money. No one wants to invest in something that won’t pay off, but it can be hard to determine if your plans offer true potential profits.

Just like with clothing, there are parts of a home that become fashionable and parts that aren’t. For instance, stainless steel appliances are far more appealing than old generic white ones. Think about trends and the length that it will be in place before you make final decisions about what to add to your home and how buyers may view it.

Renovating is something you do for yourself and your family to make your home more enjoyable, but it’s also something you have to think of in terms of attraction to others. Depending on how long you intend to be in a home, unless the remodel makes the home more “sellable”, it may just not be worth it. On the other hand, some changes add great value to your personal enjoyment of the home.

Remodeling your home can help you fall in love with your home all over again, and it can be a great long-term investment strategy. A good remodel can add years and dollars to your home.

Thinking About the Future

If you read my previous post about getting in debt the right way, we talked about how it can be a good idea to hold off on paying down your mortgage as quickly as possible. So instead of paying off your mortgage, you could be using the extra money for investments. And when you use that money for investments now, you will be working towards your future and your retirement. You could be using that money to invest in stocks, or even take out another mortgage on an investment property. Visit here and learn about the different types of investments

Home equity loans will also provide you with cash, but it’s not necessarily a good idea to use the cash for investment. When you compare the interest you would pay on a home equity loan against the return on investment, it doesn’t really make sense. Instead, you could take the cash from a home equity loan to pay off high interest credit cards or loans. Again, you free up more of your monthly income to invest in other things.

Remember, before making any big decision that will impact your financial future, talk with a professional and find out what will work best for you.