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There has been a lot of buzz about reverse mortgages, and quite frankly it is confusing. Some tout a reverse mortgage as great way to pay for retirement and others warn that it could actually cost you and your heirs a lot of money. In reality they're both right. Traditionally reverse mortgage products have been plagued by high costs and complexities but recent changes in this product could potentially save consumers thousands of dollars.
A reverse mortgage allows the homeowner to tap into a portion of their home's equity without taking out an equity loan or selling their home. The homeowner remains in the home and the reverse mortgage provides an income stream to homeowners that they do not have to repay until they either: a) sell the home or b) die. Homeowners must be at least 62 years old to qualify.
Rather than paying monthly mortgage payments that include principal and interest, a reverse mortgage lender will pay the homeowner instead. The borrower has a number of options for receiving the money which include a lump sum payment, line of credit or equal monthly payments. Some borrowers opt for equal monthly payments. With this option, the borrower receives payments for as long as they remain in the home. The sum of the payments can actually stretch beyond the value of the home, causing the lender to book a loss.
Reverse mortgages are classified as rising-debt, falling-equity loans, which simply means that as debt increases, home equity falls. The reverse mortgage lender recoups the debt when the home is sold. The debt can never exceed the value of the home, and any remaining equity returns to the homeowner, the estate or heirs.
Competition in the market has increased due to the growth opportunities presented by retiring baby boomers. The increased competition in the private and government sector will pay off for borrowers with lower origination costs and mortgage insurance premiums.
In October 2006, Ginnie Mae, a federal housing-finance agency, announced that, for the first time, it will begin packaging reverse mortgages for sale on Wall Street. It is generally expected that Ginnie Mae's entry into the market will lower reverse mortgage rates.
Reverse mortgages can be a good solution for the homeowner who has a great deal of equity but very little cash. It provides a way to tap into the equity and stay in the home. Conversely for those seeking a lump sum of cash to finance another investment vehicle, a reverse mortgage is not the best solution as the investment return will not be greater than the cost of the loan.
Currently the cost of a reverse mortgage is very high. Borrowers are charged an origination fee of up to 2% of the home's value, and a mandatory mortgage-insurance premium adds another 2%. There are also closing costs and monthly charges on the loan. The upfront costs on a reverse mortgage can exceed $12,000 for a $250,000 home. The fees are even higher for more expensive homes.

Retirement Calculators

Retirement Calculators By: Rex Truma

A retirement calculator is one of the most useful things you can use when planning your retirement savings. You see most people plan for retirement without any idea of how much they need to save, or how much they want in retirement. A retirement calculator provides the answers.
A retirement calculator shows you how much to need to save to get the income you need when you retire. Or it may be how much you want! That depends how much you are making, and how young you are. Either way do use a retirement calculator.
You can find a retirement calculator on many web sites, so you do not need to get the services or a retirement planner or investment advisor to find the answers. In this way, you use the retirement calculator, calculate the amounts you need, and then visit an investment advisor or retirement planner.
To decide how much you need to save, you need:
1.The income you need to live on at today's prices
2.The rate of inflation per annum between now and the retirement date.
3.The rate at which your fund will grow.
Let's go through these and how they relate to a retirement calculator. First, how much do you need to live on? Remember, that retired people do not normally spend as much as people who work. When you retire, you won't need: special clothes for work the sort of car that keeps you up with the Joneses you will be able to take holidays at off-peak times and you will have time to do things - instead of paying to get them done.
So your costs will be lower. So let's say you are earning $60,000 a year now, you might think that $50,000 would be enough. Next you need to remember that if you are healthy, you expect to live for 15-20 years, and so need to allow for inflation in that period - so actually you need more! This is where a good retirement calculator comes in.
2. The next thing the retirement calculator needs is the rate of inflation, or what you expect it to average until you retire. With the price of oil going up, we know that inflation over the next decade will be higher than it is now. Official figures put inflation at around 2-3%, but the true figure is more like 5%.
This means that you need to allow for at least 5%, and probably 7% and feed that into the retirement calculator. 4.At what rate will your retirement plan grow? A difficult one this. Five years ago, people were talking in terms of 10%, but not now experts suggest a lower figure. The problem is that a retirement fund or retirement plan has to be prudent - you don't want to wake up one morning, a year or before you retire, to find that a crash on Wall Street has cut the value of your fund by 30%. You just won't have the time to get that money back.
So you will be doing well to get 10% return, but could almost guarantee 5-6%. Maybe 7-8% would be a realistic figure to put into the retirement calculator.
The retirement calculator is just some software set up to make a calculation after you enter some figures. As I said earlier, the retirement calculator needs: Required income Inflation Expected return And of course, how long till you retire.
Here are some results from a retirement calculator: Required income: $30,000 per annum Years till retirement: 15 years Annual inflation: 2.5% (unrealistic) Annual yield: 5%
Income needed in 15 years: $43,448 Required value of retirement plan in 15 years: $825,000
Quite a lot of money for a modest retirement income. Here's another one:
Required income: $30,000 per annum Years till retirement: 20 years Annual inflation: 5% Annual yield: 8% Required value of retirement plan in 20 years: $987,573 If you want an income of $45,000 when you retire - equivalent to less than $30,000 today - you will need: $148,000.
When you use a retirement calculator, make sure you use one that does calculate the income you will get at retirement adjusted for inflation - over 20 years, you will need 50% more than think you need today. If you do this, then you will benefit form using a retirement calculator.
You'll find an excellent Retirement Calculator at: Bloomberg.com

Pay Off Your Mortgage Fast And Save Thousands In Interest

How To Pay Off Your Mortgage Fast And Save Thousands In Interest. By Gord Ross

If you put a little thought and planning into your "mortgage strategy" you could save tens of thousands during the course of your loan. Here are three ways to help you get mortgage free faster.
Payment Frequency:
Payment frequency simply refers to how often you will make mortgage payments or the frequency with which you make installments. There are several options when it comes to payment frequency, but one in particular, accelerated bi-weekly payments, will help you pay down your mortgage much faster.
You may have heard of bi-weekly payments, you may even be making bi-weekly payments, but do you have the right kind of bi-weekly payments? Here is an explanation of the right kind of bi-weekly payments and some key differences to be aware of...
Bi-Weekly Payments: (The wrong kind)
This option does not make a huge difference to the life of your mortgage. Assume you have a payment of $1,000. The $1,000 a month payment is multiplied by 12, the number of months in the year, and then divided by 26. This equates to a bi-weekly payment of $461.54 which means that at the end of the year you will have paid exactly $12,000! No different than if you had made 12 equal monthly payments of $1000.
A very small amount of savings are gained due to half of your payment being made early each month. The main reason for choosing this option would be the convenience of matching your payment to your pay days.
Bi-Weekly Accelerated Payments: (The right kind!)
This option does make a huge difference to the life of your mortgage. With the accelerated payments option, payments are exactly half of a monthly payment amount and are collected every two weeks. This means exactly every 14 days, not the 15th and 30th of the month. For example if the monthly payment is $1,000, the bi-weekly accelerated payments will be $500. This will mean that over the course of the year you will pay 26 payments of $500 or $13,000 in total.
How does this make such a big difference?
Payments are made on the same day every 2nd week. For example at the time of writing this article, March of 2007, the payments would come out on say every Friday. This would mean payments on March 2nd, 16th and 30th. That would mean during the month of March you would actually have 3 bi-weekly payments made. This would happen only during 2 months of the year, but does equate to one extra full monthly payment per year.
Stated another way:
If you pay $1,000 per month X 12 months = $12,000 in payments for the year, but if you pay accelerated bi-weekly then it is $500 X 26 = $13,000.
The amount of interest is the same, therefore, the additional payment of $1,000 (or the amount equal to one full monthly payment) will be deducted directly from the balance owing on your mortgage each year. This coupled with the fact that you are making more frequent payments will quickly lower your principle balance and thus the amount of money you are paying interest on.
Additional Payments:
Most lending institutions will allow you to make additional payments. This can mean a one time lump sum payment, or several lump sum payments throughout the year. Often this can be done in conjunction with your regular mortgage payments. You may have heard of "Double up" payments. This simply means doubling the amount of your payment for as long as you wish. ($2,000 per month instead of the usual $1,000).
The total amount you can pay additionally in a year will vary, but can not exceed the pre-payment privilege for that year. The pre-payment amount is always pre-set and ranges typically from 10% to 25% per year.
Shortened Amortization:
At the end of each mortgage term, you have a renewal date. If interest rates at this time are about the same as they were when you first got your mortgage, or even lower, then you should consider decreasing your existing amortization period. A reduction in your amortization means a shortening of the total length of time it takes to pay off your loan.
All the amortization really does is determine your monthly payments. The larger you choose to make your payment amount, effectively the smaller the length of time (amortization) it will take to pay off your total debt. Renewal time is always the best time to consider switching your mortgage to another lending institution. A mortgage broker will be able to obtain a better interest rate than you can negotiate by your self, so it is often best to consult a broker. This should be done approximately 4 months before your renewal date to guarantee the lowest rate at the time of renewal.
About the Author
Gordon Ross is the broker/owner of the Unisource Mortgage Canada Corporation and is a respected expert in Canadian mortgage finance and real estate investment. An accomplished author and lecturer, Gordon has always focused on a "people first" philosophy striving to provide sound financial advise through information and education based solutions.

The 4 Must-Know Fundamentals of Credit Card Debt

The 4 Must-Know Fundamentals of Credit Card Debt By Max Anderson

Credit card debt is not a topic most people like to talk about. Probably because it makes them face just how serious their credit card debt has become. Whether you have five-thousand dollars of credit card debt or five hundred, there are some "rules" to live by that can make your financial life easier.

1. The Credit Card Companies Are Not Your Friends
No matter how nice the customer service department may be, it's important to remember that the credit card companies are not your friends. The more credit card debt you have, the richer your creditors become. Would a friend profit from your debt? My point exactly.
Credit card companies will tempt you into more debt. Six months of free financing (hoping you don't pay the balance off in time) or credit card checks that you can use just like a personal check -- all of these things are designed to lure you into spending more money and adding more of a balance to your credit card.

2. Loyalty Is Not For Credit Cards
While there is a lot to be said for loyalty, high-interest credit cards aren't deserving of it. Yes, it is true that the longer your relationships with your creditors are the better your credit rating is. However, that doesn't mean you have to keep your balance with those high-interest credit cards. You just need to keep the accounts open.
If you're paying high interest on your credit card debt, do yourself a favor and transfer your balances to a low-interest credit card. Not only will you be paying less money in interest, but you should be able to get your credit card debt paid of faster.

3. Your Minimum Monthly Payments Won't Make It Go Away
Many people make the mistake of believing that if they are paying their minimum monthly payments on time, their managing their credit card debt just fine. This couldn't be further from the truth.
Your minimum monthly payments aren't going to make your credit card debt go away any time soon. Instead of paying the minimum towards your credit card debt each month, pay as much as you possibly can and concentrate on getting that debt paid down faster.

4. Just Because Your Friends Jump Off a Bridge...
If you're one of the many people who assume thousands of dollars of credit card debt is okay because "everyone" is doing it, you may want to rethink your perspective. While the world around you may be happy to put themselves in financial ruin, you need to think about what's best for you and your family -- not what's okay for everyone else.
Instead of thinking that it's okay to have thousands of dollars in credit card debt, consider credit card debt your enemy and avoid carrying any balances on your credit cards if at all possible.
Credit card debt is becoming more of a problem for millions of Americans each and every day. Do yourself a favor and keep these four credit card fundamentals in mind each time you use your credit cards and whenever you make your credit card payments. By managing your credit card debt wisely, you'll be able to rid yourself of it sooner rather than later.

How The U.S. Prime Rate Works

How The U.S. Prime Rate Works by American CyberSpace

If you are shopping for a new credit card, education loan, a car loan or a specific type of second mortgage called a home equity line of credit (HELOC) then you need to understand how the U.S. Prime Rate works.
On Wall Street and throughout the worldwide banking community, the U.S. Prime Rate is understood as the interest rate at which banks lend money to their most creditworthy business customers. Most American banks, credit unions and other lending institutions use the U.S. Prime Rate as an index or base rate for numerous loan products; a margin is added to the Prime Rate depending on how risky the lending institution feels the loan is: the riskier the loan, the higher the margin. However, since the Prime Rate is an index and not a law, business owners and consumers can sometimes find loan products that have an interest rate that's below the U.S. Prime Rate.
The U.S. Prime Rate is determined by adding 300 basis points (3.00 percentage points) to the federal funds target rate (also known as the fed funds target rate.) So if the fed funds target rate is 5.25%, then the U.S. Prime rate will be 8.25%.
The federal funds target rate is America's most important short-term interest rate, and it is controlled by a group within the U.S. Federal Reserve system called the Federal Open Market Committee (FOMC). The FOMC convenes a monetary policy meeting eight times every year to decide whether to raise, lower or make no changes to the fed funds target rate. The FOMC may also hold an emergency meeting at any time, if economic conditions warrant.
If the FOMC determines that the pace of inflation within the U.S. economy is too high, then the group is more likely to raise the fed funds target rate, so as to bring inflation under control. Conversely, if the FOMC determines that numerous sectors of the U.S. economy are flagging in a significant way, or if the economy is determined to be in recession, then the group is more likely to lower the fed funds target rate, so as to spur economic growth. If the U.S. economy is growing at a moderate pace and inflation is also rising at a moderate rate, then the FOMC is more likely to make no changes to the fed funds target rate.
When it comes to borrowing money, timing is very crucial, so it's important for consumers and business owners to stay informed about what the FOMC is likely to do with the fed funds target rate at the FOMC's next monetary policy meeting. If the U.S. economy is showing clear signs of contraction, then holding off on a fixed-rate loan may be a good idea, since in such an economic environment, short-term interest rates, like the Prime Rate, may be on their way down. On the other hand, if the U.S. economy is growing at a very strong pace and the rate of inflation is relatively high, then borrowing via a fixed-rate loan sooner rather than later may be the smarter option, because in such an economic environment, short-term interest rates may be on their way up.

5 Steps To Healthy Spending Habits

5 Steps To Healthy Spending Habits by: Barbara Gibson

Next to our physical health most of us are primarily concerned with our financial health, and with good reason. Although our intentions are usually great our follow-through and discipline generally isn’t. Mere mention of the word budget or cutback sends us into fits.
Healthy spending habits need not be synonymous with deprivation – a bad word in our “you deserve it/you’ve earned it culture.” Those interested in cultivating more healthy spending habits will be happy to know that rehabilitation is painless.
Step 1.
Start with a spending log. Yes, you have heard this advice before. This exercise is eye-opening if you do it diligently. If you have been unable to keep such a log because it is tedious or difficult to remember, consider using your debit card for every purchase. You can find the Visa/MasterCard logo nearly everywhere you shop or buy, including many fast food spots. With online banking you will have access to a visual record of all your spending. This is a great way to begin to spot patterns and decide where you can cut back.
Step 2.
Analyze your online account statement (four weeks is ideal) to help you determine where your money is going. Most credit unions offer to the minute transaction information. Review your log without judgment. What you have done, in terms of your spending, does not matter – at least not yet. What does matter is that you get a firm hold on your expenses. For example, how much money do you spend on coffee each week? Dry cleaning? Take out? Movies? You get the idea.
Step 3.
Next, write down all sources of income. With a list of your income and expenses in hand determine your priorities. Begin your budgeting process here. Obviously housing and other fixed costs will figure prominently on your priority list. Now, take a look at the conveniences that represent variable expenses. This is likely where you will find room to make changes. For example, if you subscribe to a video service can you get the two DVD plan instead of the three or eight DVD plan. If you buy coffee each day, can you bring it from home a time or two each week? Or would you be willing to purchase a smaller or otherwise less expensive cup? Can you clip coupons or eat out a little less?
Step 4.
Write a budget in pencil. Writing in pencil will help you remember that your budget is a fluid document. As you live with it you will probably need to make changes. That’s okay. You may even want to include a little mad money each month. It is far better to blow a budgeted $20.00 than it is to impulsively fritter away $200.00.
Step 5
Set a savings goal and make it something specific and important. A meaningful savings goal keeps feelings of deprivation away while providing the motivation you will need to stay on track. Be patient with yourself if you do get off track. If it helps, try writing your goals down and posting them or maybe even carrying a picture that represents your goal. Refer to these as often as you need.
It may also be useful to try to determine what emotional need your spending fills for you and look for another way to get your needs met. Remember, developing a new habit takes practice. In time you may even learn to love your new healthy spending habits. It is liberating to be in control of your finances. So, go ahead, clip those coupons. Write your budget and honor your savings goal. That (insert your goal here) can be in your future if you decide to make it happen

Using Your Computer To Track Your Money

Using Your Computer To Track Your Money by: Sol Geldstein

If you want to keep track of your money using your computer, there are several options out there for you. Computer software such a Microsoft Money, Quicken, and Gnu Cash can help you track your finances, do your taxes, or plan for a big purchase such as a car or home. Whether you just want to keep a simple household budget, or run the accounting for a small business, modern day financial software is the answer to a lot of the tedious chores involved with finances and accounting.
The two most popular suites of tools for Microsoft Windows based computers are Microsoft Money and Intuit Quicken. Both of these packages have their plusses and minuses, but are both robust solutions that will most of the most common financial tasks with ease. If you are in the market for a new desktop or laptop computer, you should factor in the inclusion of financial software into the purchase price. The majority of vendors will include one of these two products in the purchase price of a new machine, so if you are shopping for a new computer and have a preference between these two applications, be sure to read the fine print when you are shopping.
Macintosh and Linux users are not left out in the cold when it comes to financial software as well. For the Mac there are several to choose from, including Intuit's Quicken Mac and Money Dance. Both of these packages have been around for several years. Quicken is more common, and due to the fact that they cater to both PC and Mac machines, they have a larger market share and installed user base. Money Dance is a bit newer, but has its share of fans in the Mac world.
For those of you out there into the open source thing who are most likely running the free and open source operating system, Linux, there is an open source solution out there for you as well. Gnu Cash is an excellent, robust personal finance application for *NIX based machines. Not only is it intuitive and easy to use, but it is freely available with source code! That's a deal that can't be beat!
No matter what kind of computer you use at home, if you want to organize your finances and simplify your accounting, be sure to look into the different software packages that are out there for the various operating systems that can help make you more productive, organized, and most importantly, profitable.
About the author: Sol Geldstein is a money enthusiast and owns FNA Money, the place to go when you need to find out anything about money.

Credit Score: The Brightest Feather In Your Financial Cap

Credit Score: The Brightest Feather In Your Financial Cap by: Janet Williams

Credit scores are the most important aspect that determines your financial future. Carrying a good credit score is an asset and can pave your future towards greener pastures.
On the other hand a negative marking on your credit report can be ruinous for your future dreams. However, "There Isn’t Much anyone can do for those who will not Do Something for themselves." The same is applicable for credit scores. Your prime aim is to maintain a good credit score and lead a planned life.
To have a clear knowledge about your credit score, it is a good idea to get your credit report from the credit bureaus once a year. This will ensure your credit is being reported correctly. Usually the credit scores are within 400 to 850. If your credit scores are higher, your eligibility to get approved in a loan also gets higher in priority.
Credit scores consider 5 main categories for scoring consideration and are rated according to importance:
Payment History -35%;
Length of History -15%;
Amounts Owed -30%;
New Credit -10%;
Types of Credit -10%.
Correlation between the Credit Score and Defaulters:
Most lenders consider people having credit score above 650 to be prime borrowers. This means they will most likely be approved at favorable interest rates.
According to credit report from Equifax, 71% of the people with a credit score from 500-550 will default on their credit.
Another 51% of buyers with a credit score from 550-600 will also default on their credit. Those individuals having credit scores of 650 or more is considered to have a decent credit score.
More than 2 million credit reports are issued each business day in the United States, allowing millions of consumers to purchase homes, cars and other durable goods and services on credit.
In the only statistically valid study conducted to date, Arthur Andersen concluded that in only two-tenths of one percent of the over 15,000 cases studied, where consumers denied a benefit based on an error in their credit report.
•Experian’s credit files contain records on approximately 205 million credit-active consumers.
•Each month, there are more than 4.5 billion updates to credit report information throughout the U.S.
•The American credit databases are the most accurate and secure in the world.
•There are over one billion credit reports issued annually.
•Credit reporting saves the average person from 200 basis points on their mortgage loan.
In any part if the world it is very easy to stack up a large debt. Private debts on homes, cars and credits have ballooned through the sky. At such a juncture when people are undergoing the syndrome of easy to pile up and difficult to clear like dirty linens, one should be overtly conscious of their credit score.
For better insight on the effect of credit scores visit: www.debtconsolidationcare.com

Baby Boomer Financial Advice

Is A Reverse Mortgage Right For You?

Is A Reverse Mortgage Right For You?

Is A Reverse Mortgage Right For You?

Retirement Calculators

Is A Reverse Mortgage Right For You?

Is A Reverse Mortgage Right For You?

How To Pay Off Your Mortgage Fast

Is A Reverse Mortgage Right For You?

Using Your Computer To Track Your Money

Using Your Computer To Track Your Money

Using Your Computer To Track Your Money

Using Your Computer To Track Your Money

How The U.S. Prime Rate Works

Using Your Computer To Track Your Money

5 Steps To Healthy Spending Habits

5 Steps To Healthy Spending Habits

Using Your Computer To Track Your Money

5 Steps To Healthy Spending Habits

The 4 Must-Know Fundamentals of Credit Card Debt

Credit Score: The Brightest Feather In Your Financial Cap

Credit Score: The Brightest Feather In Your Financial Cap

Credit Score: The Brightest Feather In Your Financial Cap

Credit Score: The Brightest Feather In Your Financial Cap

Credit Score: The Brightest Feather In Your Financial Cap

Is A Reverse Mortgage Right For You?

Is A Reverse Mortgage Right For You? By: Matt Schaub

Shop For Tailored Styles From Bebe

Retirement Calculators

Retirement Calculators By: Rex Truma

Pay Off Your Mortgage Fast And Save Thousands In Interest

How To Pay Off Your Mortgage Fast And Save Thousands In Interest. By Gord Ross

BROOKSTONE - they have stuff you never knew you needed

The 4 Must-Know Fundamentals of Credit Card Debt

The 4 Must-Know Fundamentals of Credit Card Debt By Max Anderson

How The U.S. Prime Rate Works

How The U.S. Prime Rate Works by American CyberSpace

5 Steps To Healthy Spending Habits

5 Steps To Healthy Spending Habits by: Barbara Gibson

Using Your Computer To Track Your Money

Using Your Computer To Track Your Money by: Sol Geldstein

Credit Score: The Brightest Feather In Your Financial Cap

Credit Score: The Brightest Feather In Your Financial Cap by: Janet Williams

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