When you’re finally ready to take the plunge into homeownership you should do your homework so you can make an informed decision when choosing the mortgage that’s right for you.

There are several different mortgage options available to you. Whatever mortgage you ultimately decide to go for, the decision should be yours. Don’t let pushy realtors or mortgage brokers push you into a mortgage that you don’t want. You’re the one who should be calling the shots, not them.

Mortgages that may be available to you include:

Traditional Mortgages - These are the most common mortgages available and often present the lowest risk to homeowners. With a traditional mortgage, you typically pay a 20 percent downpayment on your new home and acquire a mortgage to pay off the remaining balance within 15 or 30 years. The interest rate you agree to pay when the price of the loan is locked in will be what you pay at an annual rate throughout the life of the loan.

Mortgage Refinance - If interest rates lower significantly, you can refinance your mortgage to a lower interest rate. As with any mortgage, you’ll have new loan closing costs and other fees that may eat away at the potential cost savings associated with a refi.

80/20 Loan - If you don’t have enough money to pay a 20 percent downpayment on a home, you can opt for an 80/20 loan. With an 80/20 loan, you’re essentially taking out two mortgages; one at 80 percent of the value of the home and one at 20 percent of the value of the home. The 20 percent mortgage will have a bit higher interest rate and may be required to be paid off within 15 years. These are more expensive than traditional mortgages but can be an excellent resource if you can afford the monthly payments but can’t afford the downpayment.

FHA Loans - If you don’t have enough money to pay a 20 percent downpayment on a home, the Federal Housing Administration can provide you with funds if you can at least pay 3 percent down. These loans are more difficult to acquire than a standard mortgage, however, and you’ll also have to pay extra each month for private mortgage insurance (PMI) until you have accumulated 20 percent of equity in your home. There are also caps on the price of homes you can purchase. If the home you want is above whatever the current cap is, you’ll be disqualified for an FHA loan.

VA Loans - An excellent loan resource if you are a veteran or member of the U.S. armed services. With VA loans you may qualify for up to 100 percent of the value of a home, depending on its purchase price, and you won’t have to pay PMI.

Adjustable Rate Mortgage (ARM) - These mortgages may be an excellent resource if you’re an investor or someone planning to stay in your new home for less than 3 or 5 years. The most common ARMs available to consumers are 5/1 ARMs and 3/3 ARMs. With a 5/1 ARM you’ll have the same interest rate for the first 5 years of your loan, followed by annual interest fluctuations. With a 3/3 ARM your interest rate will fluctuate once every 3 years. The interest rates on these loans are typically lower than the standard mortgage rate for the first 3 or 5 years, which could save you a considerable amount of money in the short term.

These loans are riskier than traditional mortgages, however, as the price of the loan could increase significantly when the price resets. ARMS with a capped monthly payment can keep you from paying more than you can afford if interest rates skyrocket. The problem with these types of ARMs is that if the percentage rate rises above your monthly payment cap, any additional interest you owe will get tagged onto your mortgage balance and will have to be repaid eventually

Option ARM - This is a highly flexible mortgage that offers four different monthly payment options available - minimum payment, interest only and a fully amortized payment at either a 15- or 30-year rate. It may be an excellent choice for you if your income is unstable or your budget fluctuates quite often.

Interest Only Loan - With these loans you pay a set interest only amount on a monthly basis. Once the loan term is complete the entire entire loan balance will be due as one large balloon payment or a large chunk of the principal will begin applying to each subsequent loan payment until the mortgage is paid off.

Balloon Mortgage - Often a part of interest only loans. Balloon mortgages often feature very low monthly payments for a set period of time, say 5 - 7 years. Once the time period is up the full amount of the loan is due as one lump sum payment.

Negative Equity Mortgage - These loans are include your mortgage and additional funds to pay other bills or whatever you see fit to use the additional funds for. Every dollar you receive over and above the price of your home is considered negative equity, however. You won’t build any equity in your home until you either pay off the additional loan funds or the value of your home rises above your full mortgage value.

The mortgages mentioned above are just some of the options that may be available to you when you start looking for a mortgage. You need to consider the short-term as well as long-term implications of each loan. Choose wisely or you may be putting your financial well being at risk.

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John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.

Tired of receiving stacks of credit card offers in the mail every week? If so, you’re not alone.

Millions of consumers receive a barrage of credit offers in their mail on a regular basis. If your credit is excellent, some of these offers may seem very tempting. Zero percent balance transfers, high credit limits and lots of other perks may be in the offering. If your credit isn’t so good you may still receive numerous credit offers without all the bells and whistles you would demand with excellent credit.

When you receive unsolicited credit card offers that you don’t want or need you may end up filling your garbage with junk mail on a regular basis. Besides the annoyance of receiving stacks of junk mail every week, unsolicited credit card offers can potentially put you at risk of being a victim of fraud. If a thief steals an unsolicited credit card offer from your mailbox, the thief could apply for credit in your name. If the thief happens to have a copy of your social security number you could be found liable for any debts the thief accumulates in your good name. If you don’t have a secure mail box you may always be at risk of fraud. Even if you do have a secure mailbox, simply throwing away an unsolicited offer isn’t good enough. To ensure nobody can dig through your trash and swipe one of these offers you’ll need to fire up a document shredder if you want to be sure to completely destroy them.

Luckily, you can now stop unsolicited credit card offers by contacting the three national credit bureaus - Equifax, Experian and TransUnion - by simply calling a toll free phone number. By dialing 1-888-5-OPTOUT (567-8688), you can have the credit bureaus put on notice that you will be opting out of any pre-screened credit offers. Unless specifically informed to do otherwise, the credit bureaus typically provide credit card companies with lists of consumers matching specific criteria that qualify for various pre-screened credit offers. When you call to opt out all you’ll need to provide is your name, phone number and social security offer.

If you would like to go a step further, you can prevent the credit bureaus from sharing any of your personal information with promoters. You will need to tell the credit bureaus not to share any of your information via mail. The address to write to each of the credit bureaus is as follows:

Equifax, Inc.
Options
PO Box 740123
Atlanta, GA 30374-0123

Experian
Consumer Opt-Out
701 Experian Parkway
Allen, TX 75013
TransUnion

Name Removal Option
P.O. Box 505
Woodlyn, PA 19094

The time you take to put a stop to unsolicited credit card offers will save you a lot of time and hassle sorting through your mail in the long run and will help keep you protected from identity theft.

© cashbuzz.com
John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.

Beware cash advance companies that charge upfront fees for cash advances or payday loans. So-called companies that engage in this practice are often outright scammers. If you send them your hard earned money you’ll get nothing in return.

Legally, cash advance companies are prohibited from requiring potential borrowers to pay up front in order to get a loan or line of credit. Keep that in mind if a lender ever asks for you to pay before you can receive any funds. These “fees” can be cleverly disguised as “application fees,” “processing fees,” or insurance to protect the lender in case you can’t pay back the loan. With cash advances, the high interest rate you’ll pay when it comes time to repay is all the insurance a lender will ever need.

Beware of ads promising “guaranteed” loans or lines of credit regardless of your credit situation. These are often bait used by scammers to lure in unsuspecting consumers. Once you think you’re guaranteed to get some much needed cash you may be more inclined to take actions that you later on regret.

Never call a 900 phone line to apply for a cash advance or credit. You’ll be responsible for paying any charges on your phone bill and the lender will get a hefty fee from you regardless of whether or not you accept a loan or line of credit. The biggest red flag to avoid is any lender requiring you to pay an advance fee over Western Union or some other wire service. No legitimate lender will require you to send payments in such a manner. Scammers love to trick unsuspecting consumers into sending money via a wire service because there is no way to trace who received the funds.

Perhaps the biggest source of fraud today is the Internet, where scammers typically set up dummy Web sites with names very similar to legitimate lenders. For example, there could be a legitimate cash advance site known as payday express and a scammer sets up a similar site known as payday expres. Forget to type in the extra s in the address bar of your Web browser and you could be sent to a bogus site without even knowing it. Make sure all information on any Web site you visit can be verified and validated before doing any business with them. Check the Web address, listed company address and any other information on site. Google the company name and see if you can find any consumer reviews of the company’s performance.

And whatever you do, never share any personal or financial information with any potential lender unless you’re absolutely certain they’re legitimate. Otherwise you could be opening up your bank account or credit accounts to a scammer who can very quickly wipe them out. As always, keep in mind that if an offer seems too good to be true it probably is.

Home equity loans can be very risky propositions. If you have any problems paying off the loan, your home could be in danger of becoming the property of the lender.

Anytime you use your home as collateral, you’re taking a risk. How much of a risk depends on your own personal financial situation. If you think making a home equity loan payment could ever be a potential issue, you should avoid getting one.

Even if you’re relatively certain that a home equity loan can help you out and be easily paid off along with your other bills you still need to be very careful. Unscrupulous lenders and even outright fraudsters can turn some much needed cash on the side into a financial nightmare for you if you don’t know what you’re getting into.

The first thing you need to watch out for are lenders making wild and outrageous claims that sound just too good to be true. If a lender promises to finance any loan regardless of your credit history or promises to refinance your loan at better rates in the future are some early warning signs that you may be dealing with a bad lender. You may pay very high fees to get a loan with bad credit and it may also cost you an arm and a leg to refinance, even though you might get what on paper appears to be a better interest rate.

Before you even begin shopping around for a loan you should have your home independently appraised. . That way you’ll have be able to get an honest professional opinion as to the current value of your home and will be able to avoid getting too large of a loan from a lender who happens to appraise your home for much more than it’s actually worth. You should also get a copy of your credit report and see what kind of interest rates are being offered to people with similar credit scores. This is when you can begin doing some comparison shopping to ensure you won’t get a raw deal by jumping on the first loan offered to you. Remember to factor in your monthly payments as well as the overall cost of the loan to ensure you’re getting the best all around deal.

When you begin talking to potential lenders, avoid those that try to pressure you into a loan you may not be ready for. If a lender is being “pushy” that may mean the lender really has something to hide and doesn’t want you to do your homework before deciding that you want a particular loan. Also avoid giving out any personal information unless you’re dealing with a lender face-to-face. With a vast amount of fraud currently being generated over the Internet, you never want to give your social security number or other sensitive data to an anonymous individual.

When you finally find a lender that seems to offer a good loan at a reasonable price, next comes the tricky part of maneuvering through all the paperwork. This is where you could lose the supposedly good deal, if you don’t read all the fine print. Beware of prepayment penalty clauses or you’ll be penalized for paying off your loan early. You should also avoid agreeing to pay loan fees totaling more than 3 percent of the financed amount of the loan, or 4 percent in the case of FHA or VA loans. Any credit insurance premiums you may be required to pay to protect the lender from any losses if you fail to pay off the loan should also never be financed into the loan as a lump-sum payment. This will increase the overall cost of your loan and cost you potentially more money in the long run. If you pay off the loan early, you’ll also have to pay off insurance that is never used. You’ll be wasting your money.

When signing your loan paperwork, don’t falsify any information even if the lender tells you to with a wink and a nudge. Also never sign any loan documents if there are blank pages or spaces where additional loan terms could be added after the fact. Once you’ve signed the dotted line, it may be very difficult to prove deception on the part of a lender employing such underhanded tactics.

Remember, just because you may have signed a loan agreement it isn’t legally binding for three days. If you discover something unfavorable in your loan agreement within that time frame you can legally back out of the agreement without penalty.

Do your homework and know your rights and you’ll be able to get the best home equity loan for your own particular situation.

© cashbuzz.com

John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.

If you’re currently having state and local income tax deducted from each paycheck, the refund you’ll receive next year may be a nice financial boost. If you’re married or own property, your refund may also triple or quadruple in size.

If you really need the extra rebate funds as soon as possible, many tax preparing services offer “instant” refunds or tax refund anticipation loans. Unfortunately for consumers, these are typically glorified cash advances. Both the states and the federal government need time to process your completed tax returns and may send you your final rebate check weeks or sometimes months after you file your return. Tax preparers offering instant refunds are actually offering a short-term high interest rate loan based off of the expected refund amount. These loans create another revenue stream for tax preparers and cost consumers a portion of their rebate checks.

Making matters worse, if your final refund is smaller than anticipated or never arrives you’re still responsible for paying off the loan. You may end up responsible for paying hundreds or even thousands of dollars out of pocket to pay off your tax preparer. Fail to repay the loan and your credit score could be lowered, you could end up having your wages garnished by a collection agency. Any financial gains you may have otherwise experienced from your income tax rebate could quickly vanish.

For preparers, tax refund anticipation loans offer a win-win situation because they’re receiving payment for both preparing your taxes and providing you with a loan based upon the anticipated amount of refund dollars you’ll receive. If you receive the assistance of a tax preparer when filing this year’s taxes and they offer you an instant refund you should ask the following:

• When does the loan have to be repaid?
• What is the annual percentage rate (APR) on the loan?
• What are the fees I’ll be responsible for paying?
• Will any fees be refunded if the actual return is smaller than anticipated?
• Can the repayment period be extended if my return is delayed?

If you need your tax refund as soon as possible you do have alternatives to obtaining a tax refund anticipation loan. If your return is processed electronically, you can choose to have it deposited directly into your checking account, if you have one. This may take about 10 days to process but will get you funds possible weeks earlier than having a check mailed to you. If you really need the cash now, you may be able to get a smaller loan amount to cover your immediate needs, which will ultimately cost you less. If you decide to obtain an instant refund you should shop around between preparers for the best loan rates and terms.

As a consumer you have many choices available to you if you decide to get a loan as an advance on your income tax refund. Make the best choice for your own particular situation and you’ll be happier and better off for it in the long run.

© cashbuzz.com

John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.

Beginning credit users rarely have access to a large line of credit. Many credit card companies typically offer anywhere from $500 - $2,500 credit lines for consumers without extensive credit histories.

If you’re just beginning to build a credit history, chances are your credit score will be low. Without an established payment history, creditors won’t be able to determine the likelihood of you paying off your debts in a reasonable manner. Because of this, your first lines of credit may be very small.

Let’s say, for example, you’re given only a $500 line of credit for starters. It may be tempting for you to max out the card very quickly. This isn’t a good idea. Even if you don’t have much credit you should use no more than 30 percent of your available credit. For $500, that’s $150. Using no more than 30 percent of your available credit and making all your minimum required credit card payments on time will be very beneficial to your credit score. As you build a respectable credit history your credit score will increase as a result.

Your creditors like to stay posted as to your credit standing. They will often check your credit to see how well you’re managing your various debts. Once your credit score reaches a certain threshold, many creditors will automatically increase your credit limit. Over time a credit card that originally had a $500 limit could experience credit limit increases that bring your total available credit well above $10,000. Don’t expect to gain such a high credit limit overnight, however. It may take up to 10 years to experience such gains, and then only if your credit history is excellent.

Your creditors having access to your credit reports isn’t always a good thing. Beware of credit card companies that sneak a “universal default clause” into your cardholder agreement. If you have no problems making payments on your debt you’ll have nothing to worry about. Miss any payment to any creditor, however, and a credit card company you do business with that employs universal default will use it against you. With universal default, a credit card company can use any late or missed payment to any creditor as justification for increasing your interest rate to the default maximum allowable rate by law. This can be as high as 30 percent.

Be aware, as your credit limit grows, so too will the amount of interest you pay if you begin to use your line of credit more often. Even if you have an excellent interest rate and don’t have to worry about universal default, it costs money to borrow money. And that’s exactly what you’re doing with a credit card. If you owe $5,000, for example, you could be spending hundreds of dollars a year in interest payments alone. If your interest rate wasn’t exactly the greatest to begin with, you could actually end up spending thousands of dollars in interest, depending on how high your debt has risen.

If you’ve managed your credit wisely and are rewarded with larger lines of credit, it’s even more important to continue managing your credit like a pro. Otherwise, the cost of your credit may rise out of control.

© cashbuzz.com
John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.

Speculation is rampant that the so-called “housing bubble” has popped. Despite the dot-com bust in the ’90s, severe trade deficits, a falling dollar, 9/11 and the costly War on Terror, the prices of homes and real estate increased at unheard of levels in the first half of this decade.

The explosion in real estate prices created the ideal conditions for a financial bubble. To stimulate buying as prices rose beyond what many consumers were willing or able to pay for housing, lenders have offered many creative mortgage options to generate sales. Adjustable rate mortgages (ARMs), interest only mortgages, 1 or 2 percent mortgages and option ARMs are some of the most common alternatives to traditional 15-year or 30-year fixed rate mortgages offered today. As first time homeowners, speculators, and investors flocked to get these non-traditional mortgage loans, home prices have continued to surge. The only problem is that, with the economy lagging, interest rates will likely reset at higher rates than many consumers are prepared to pay.

As more and more homeowners realize they can’t afford to make their new payments they often end up with two choices - sell the home immediately or risk foreclosure. With a lot more real estate on the market at unrealistically inflated prices, sellers may have no choice but to dump their homes at bargain prices. Even with a wider availability of homes at lower prices, stagnating wages and skyrocketing gas prices are causing many potential homeowners to take a pause. Seeing ARM rates skyrocket for many consumers may also scare off a lot of potential buyers from purchasing a larger home than they can realistically afford. Thus, the housing bubble may be popping.

All is not doom-and-gloom in regards to housing. For the savvy buyer, a popping housing bubble can create new opportunities. With prices going down, consumers looking to settle down in a new home for no less than 5 - 10 years may do very well. Even if housing prices continue to fall after you purchase a new home, if you plan to live in the home for the long term you may be able to ride out any lowering of prices.

Housing markets are unpredictable. Prices could potentially go down for several years before an economic recovery. As history has shown, prices will eventually stabilize and homeowners will be able to build equity in their homes once again. Unfortunately, now may not be the time that homeowners will build a lot of equity in their homes. At the very least, housing may not make as lucrative of a short-term investment as it once was. How far prices could actually be lowered still remains to be seen.

Given the current state of the housing market, you would be wise to stick with a traditional 15- or 30-year mortgage if you can afford it. In the short term, your payments will be higher than those of an ARM, interest only or 1 or 2 percent mortgage. Lower monthly payments may seem very enticing but you really need to know what you’re getting into with these alternative mortgage loans. Get in over your head and your home may cost you a lot more money in the long run if you can even afford to stay in your home once the interest rates inevitably increase.

With a traditional 15- or 30-year fixed rate mortgage you’ll have peace-of-mind knowing that your interest rate won’t increase. You’ll also build a lot more equity in your home. When you’re finally ready to sell, you’ll be happy to have all the equity you can get. Do a lot of research, buy the home that’s right for your financial situation and get a mortgage that fits your long-term needs and you should be able to ride out any potential popping of the housing bubble.

© cashbuzz.com
John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.

Never trade-in an automobile you still owe money on if an auto dealership agrees to pay off what you owe but won’t put the agreement in writing. Otherwise, the dealership won’t be under any legal obligation to pay off your trade-in.

That’s right. You’ll still be held fully responsible for making all remaining payments on the vehicle you just traded in unless you have a signed agreement stating that the dealership will pay off what you owe. Even a signed agreement is no guarantee that the dealership will pay off your old loan in a timely manner. You may also be responsible for any late payment penalties if the dealership takes its sweet time in paying off your loan. To avoid this you should also get the dealership to agree, in writing, that your loan will be paid off in no more than 7 - 10 days.

Without a signed trade-in payoff agreement, you’ll have no recourse in a court of law if an auto dealership fails to uphold their part of the bargain. You’ll end up with late payments on your old auto loan, your credit score will be reduced and you could end up being responsible for two car payments.

Don’t allow yourself to be scammed by an unscrupulous auto dealership. Get every agreement in writing and don’t do business with any dealership that won’t put their agreements in writing. A wink and a handshake just won’t do.

© cashbuzz.com
John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.

If you owe thousands more than your current vehicle is worth at resale, trading it in today may not be in your best interest. Your primary goal should be to minimize the amount of cash you’re upside down in your current auto loan before getting into another one.

Since you probably won’t get the full trade-in value of your vehicle from a dealership you may want to get a new vehicle from, you should consider a few alternatives. Perhaps the smartest thing to do is just wait to trade-in your vehicle until you can at least get what you owe on it in trade. If you’re paying a high interest rate on your current auto loan you may want to look into refinancing the loan. As long as you don’t stretch out the term of your next loan beyond the amount of time remaining on your current loan term, you’ll be able to get out of being upside down faster than you will currently.

Of course, a refi may not be possible depending on your current credit score and if you’ve moved or switched jobs within the last 6 months. If your auto warranty is expired, your current vehicle tends to require many costly repairs or has crappy gas mileage; you may want to get rid of the vehicle as soon as possible. Before trading it in, you might want to try selling your vehicle on your own. The amount of cash you could generate from selling your vehicle independently may be more than you would get in trade-in and reduce the amount of money you’re upside down for. The better the condition and lower the mileage on your current vehicle, the more money you’ll likely generate selling it on your own.

Always keep in mind that the more you’re upside down in your current auto loan, the longer you’ll be upside down in your next auto loan. Being upside down in any loan will make it more difficult for you to get out of debt in the long run.

© cashbuzz.com
John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.

No automobile lasts forever. At some point you’re probably going to want to get rid of your current vehicle and trade it in for another one. If you owe more than your own vehicle is worth when you’re ready to trade it in you may want to reconsider your decision.

There are many valid reasons for wanting to trade in your current vehicle. Maybe your vehicle is an unreliable lemon. Your warranty may be at an end and you’re facing the prospect of costly repairs if your vehicle breaks down. You may also want a vehicle with better gas mileage as gas prices continue to skyrocket.

The problem with trading in a vehicle you’re upside down on is that you’re going to be fully responsible for paying off your old vehicle when it’s traded in. If you’re applying for another auto loan your remaining balance on your old loan will probably have to be rolled over into your new loan. If your current loan has any prepayment penalties you’ll also be responsible for paying up to several months of additional interest payments, which will be added to your debt load. Making matters worse, you’re already going to be upside down in your new loan when you drive your new vehicle off the lot as it will immediately depreciate in value. In this scenario, the amount of money you’re upside down for may be doubled.

You may also need to extend the length of your loan to account for the extra amount being financed. Otherwise your new loan payments may be too high to afford. This will keep you upside down in your next loan for a longer period of time. In a worst case scenario you’ll always end up owing more than any of your vehicles is worth and you’ll never fully pay them off. Unless you can afford to start making larger payments on your vehicles at some point, you could be trapped in perpetual auto financing debt.

You need to carefully consider the potential long-term impact on your finances any time you consider rolling over an upside down auto loan into a new auto loan.

© cashbuzz.com
John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.