Money and SafeMoneyMetrics Written by Marlee-Jo Jacobson
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concrete groundwork for constructing investments with an increased probability of positive returns over unknown future market conditions.
Marlee-Jo Jacobson is founder of SafeMoneyMetricsä and Sanctity Capital Management www.sanctity.com. As second generation in futures her experience includes hedging and capital management from both on and off the exchange floor. She wrote a Series 3 Training Manuel for Securities Training Corporation. She designs limited risk investments and builds profit centers for financial service professionals and institutions.
| | WHEN IS IT RIGHT TO REFINANCE?Written by Tim McMahon
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But what if you took it one step further? What if you kept your payment same and reduced term of your mortgage as far as possible? A $111,000 mortgage at 5% with a payment of about $765 would require a term of 223 months or about 18.5 years. Assuming you could get an 18.5 year mortgage and you intended to stay in your house that long, this would be an excellent move! You have drastically reduced amount of money you will pay bank over life of mortgage and you are free and clear 6.5 years earlier! Even if you move sooner, your equity will be building faster so you will have more money when you sell. Unfortunately, lenders do not usually let you choose an odd term length like 18.5 years , so you would have to choose either a 20 year term with a payment of $732.55 which would still save you about $30/month but also knock 5 years off your loan (and build equity somewhat faster). Or you could choose a 15 year term with a payment of $877.78 which would actually cost you about $110/month more than what you are currently paying but would knock a full 10 years off your mortgage. If your income has risen since you got your initial mortgage and you could swing it... it would be money well spent. For those with higher incomes who have difficulty saving, this is a great idea because it actually forces you to save a little bit more each month and once you get used to it, you won't even miss it. Perhaps you can remove mortgage insurance off your mortgage. On original loan, you might have to pay it for first 10 years, so you would still have to pay it for 5 more years. But... if you have made improvements to home... or property values have increased dramatically in your neighborhood... you might be able to get new loan without mortgage insurance. If you can, you will save an additional $100/month! With that savings you can move to 15 year mortgage without mortgage insurance for same amount that you are currently paying for a 30 year mortgage with mortgage insurance. Not bad eh? Whack 15 years off your mortgage just like that! Another way to reduce monthly payment is to reduce amount you borrow. If you could come up with additional $3000 in closing costs from savings, your monthly payment on a 15 year mortgage would drop from $877.78 to $854.06 ... or only about $89. per month more than what you are currently paying. Is it worth $89/month to knock another 5 years off your mortgage? That depends on your personal circumstances! If your budget is already stretched to limit, or it will put you at risk if you lose your job, NO. But if you can find a way to come up with $3.00 per day, (perhaps by giving up cigarettes, or skipping a trip to vending machine or to McDonalds) it will save you thousands over life of your mortgage! To choose from dozens of places to search for best mortgage rates check out http://yourfamilyfinances.com/yff/Resources.aspx Useful Mortgage Calculators http://yourfamilyfinances.com/yff/calculators.aspxTim McMahon, Editor Financial Trend Forecaster and InflationData.com The Place in Cyberspace for Inflation Information www.YourFamilyFinances.com www.fintrend.com www.InflationData.com
Editor of Financial Trend Forecaster since 1997. Also editor of InflationData.com and YourFamilyFinance.com
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