Basic Home Loan Terms Explained
The wonderful world of home buying can sometimes overwhelm the first time home buyer. They are inundated with information riddled with terms of art. ARMS, points, interest rates, good faith estimates, pay-downs, lock-in dates, so on and so forth... Read More
To pay your home loan off quickly is what we all want and I will show you a way where this will allow you still live life to the fullest whilst your home is in the process of getting paid off.
Why would you work the hard way to pay off your home when there are easier way's to do it?
I receive so many emails from clients asking me how is this possible?.
You see most people in Australia paying off their home are making extra payments to get the home loan down as fast as possible, and in the process they restrict themselves and family to the pleasures in life, which is the right thing to do if you want to pay off your home, however…you do have options to get your money working smarter for you.
Let's say you took (for this example) $100 a week and put it into holding an investment property.
What we are doing is leveraging, yes you need to start working smart and not hard, remember that.
You purchase an Investment property. Now if we look at the history of property, it has doubled in value every 7-10 years, right?
And we also know that with inflation, capital growth and rental will also go up, but the loan will always stay the same amount. Right?
With this method you need to make sure you're purchasing in a good capital growth area, or an area with potential for greater capital growth.
This is 1 of the 30 criteria's we use when recommending an Investment Property to our clients. (I can refer you to some ideal investments that have great potential for capital growth, when your in a position to invest).
Secret Revealed At Last You pay your normal repayments on your home and hold the Investment Property until it has doubled in value and then sell it to pay your home off - there you go!
You see we can only work so hard and we are only going to get a certain amount of pay per hour, but with an Investment Property we can leverage ourselves.
Your investment might be worth $300,000. If it experiences capital growth of only 5% there is $15,000 profit and it might only have cost you $5,000 for the year to hold it.
What would you say if the bank or your Superfund announced that, what ever you put into your account this year we will pay you the double figure?
You would be screaming " Where do I put my money, right?"
Well tell me what happens if you experience a great year of capital growth and you make 20% capital gain? That's an extra $60,000! You couldn't save that in a year right?
The reason why this is, is because when you deal in big numbers the profit is also big. Don't be afraid of this because remember, you are not responsible for the loan.
You have the tenant paying for almost half of the loan and the tax man paying another 25% of the loan and they are helping you along the way.
But as I always say, when you start with Investing always look at your “comfort-ability level” and don't exceed that.
Start off with one property and once you are comfortable with debt and owning an Investment Property, you can move on to your second and so on.
If you have been putting off deciding whether Property Investment is for you or not, don't..... as there are too many long-term benefits to gain from when it's done properly.
I hear people say, "We are thinking about doing it, but not just yet". I say, what are you waiting for? When is it ever the right time to do Anything?
The only time you move ahead in life is when you decided to do something about it, that's it.
Five years will pass and you will still regret not doing it...
"3 Diseases That Kill Your Success" Do You Suffer From Any One Of These?
Procrastinator: Always putting things off.
Thinker: Just keeps on thinking what to do, like the guy that waits for everyone else to jump in the water before he does.
Detailitis: Needs to have everything in order before he can do anything, Eg- Makes sure all the items on the shelf are pointing in the right direction.
Remember life is too short to think about it and to waste time- I say do it NOW!
I know that you need guts to do it, but like anything, once you have done it, you will wonder why you were so hesitant and wish you had made the move years ago.
Over the years, you have been a faithful steward of your mortgage. But the time may have come when you need to borrow money now for things you need to purchase. A great way to fund your purchases is to cash out the equity in your home with a home equity loan.
Money You Need Now
A home equity loan uses the built up equity in your home to give you the money you need to buy things like major appliances or electronics, or to build on to your home, adding a room or other addition. You might use it to pay for your next vacation, or to pay for education for yourself or your children. Purchasing an automobile is also a great use for it. Whatever your needs are, your home equity loan can be a great way to find financing.
The way that it works is simple. You will be putting the equity in your home up against the money that you borrow. The lender will place a lien against your home until you have paid the loan in full. It is important to remember, however, that if you default or fail to follow the terms of your loan that the lender can foreclose on your home just as the holder of your mortgage can.
Borrow Amount Equal to Your Equity
The amount that you are eligible to borrow on your home equity loan is typically equal to or less than the amount that you have built up in home equity. For example, if the total that you have paid thus far on your mortgage is $100,000, you can generally borrow up to $100,000. Borrow only what you need, but borrow as much as you need - homeowners usually are approved for just one equity loan over the course of their mortgage.
Huge Tax Savings
Home equity loans are superior to other types of consumer loans because the interest that you pay can be taken as a tax deduction when you file your income taxes each year. This can add up to substantial tax savings over the life of your home equity loan. Remember, however, that if you do not qualify to itemize because you don't have enough deductions (which means that you always take the standard deduction) then you will not realize this savings each tax year.
Further, the tax break limit for claiming home equity loan interest is $100,000. Any amount that you borrow over the $100,000 limit will not be eligible for this credit. The tax savings that you can get on your loan can make the money you borrow end up costing you close to zero percent in interest charges once you have received your deductions!
The best place to get your home equity loan is on the Internet. There are many fine online lenders who can get you the money you need from the convenience of your own home. With user-friendly websites and great customer service, these lenders make it easy to get the money you need.
If you're applying for a home loan, it's important that you find the best possible loan available to you. This can prove to be an intimidating task, even for loan veterans. It's important to make sure that all your goals are met and that you stay within your budget. For this, it's important to properly educate yourself on the finer points of home loans. You can always hire an advisor, visit with a financial consultant, or simply learn on your own. But whatever you choose, it's vital that you know what you're getting yourself into. In general, advice on this subject is in plentiful supply. So as long as you decide you want to learn, it shouldn't be hard to obtain the information.
Among the many things to consider is the topic of rates. For example, you may need to know the different between a fixed rate and a variable rate. This will all depend on the particulars, of course. A fixed rate simply means that even if a reserve bank lifts their interest rates, your specific rate will not change, hence "fixed." Conversely, the opposite is true when your bank lowers the rates. Your fixed rate won't allow you to reap the rewards of your bank's changed ways. On the other hand, variable rates fluctuate with the bank's interest levels, both positively and negatively. So, you will most likely see many variants in a variable rate.
You always want to consider things like having a line of credit in your home loan. This acts more like a personal loan that is secured against property you own. There are two basic types of the line of credit loan. The first: a revolving line of credit. It gets its name from the nature of the "revolving door" type of credit that will allow you to borrow and draw down on the line of credit as it's required. On the flip side, reducing the line of credit has a definite end to the cash regardless of your home equity. Depending on your cash flow requirements, it's important to know what you're getting into for this type of loan. You don't want the well to be dry in times of need.
A home equity mortgage in today's marketplace is more difficult to locate, but still not impossible. Determining when the right time to make such an effort is more complicated. The number of reasons for obtaining such a mortgage is as varied as the people who are looking for mortgages. Although hindsight is always better than foresight, picking the right time to take advantage of the equity in your home by taking out a mortgage is more likely when you understand the factors of the loans and determine whether or not you should take out the loan.
When Rates are Low
When you are looking for the perfect time to obtain a home equity mortgage, it seems like a logical assumption to pick a time for acquiring the mortgage when the rates are at their lowest. Obviously, you are never going to be certain the rate is as low as it will ever be. However, if the rates are not much higher than the best credit loans, it may be a good time to apply for your new equity loan. When rates are low overall, you will certainly pay less than if you were to acquire the same loan when interest rates are higher.
When Housing Prices Dip
Looking for a home equity mortgage when the prices on houses dip is another way to save money on your mortgage. Of course, it is impossible to know when the prices are at their lowest point, but if you are watching the housing market, you will get a feel for small movements in the market. You can take advantage of these dips in order to save a little money on the price of your mortgage. Sometimes there is a steady movement in one direction or the other with housing prices. You will still be able to pick up a better price by watching for the small dips in the market.
When You Outgrow Your Present Home
Getting a home equity mortgage when you are in the situation where you have outgrown your present home makes a lot of sense. The right time to get a new mortgage in this instance is to do so when you are ready to make the move to larger quarters. You may also choose to improve the value of your existing property by renovating the home and replacing dated features. This type of mortgage provides you with the cash value of the equity of your home. Even if the space is just barely adequate, you can always find a balance amount.
When you Move
Finally, a home equity mortgage may be a good idea when you move. Finding a home that has a large amount of equity means you don't have to go to an outside loan for the cash you need. Instead, you take out cash from the equity of your home. The money can be used to get housing improvements made, to add additional living space or to purchase furnishings that are known for credit cleansing.
How to Borrow Money by Cashing Out Home Equity
Over the years, you have been a faithful steward of your mortgage. But the time may have come when you need to borrow money now for things you need to purchase. A great way to fund your purchases is to cash out the equity in your home with a home equity loan. Read More
Home Equity Loan - Advantages and Disadvantages
A loan taken out for the purpose of transforming the equity in your house into cash that can be used for other purposes is known as a home equity loan. A loan taken with the equity in your home as collateral can be structured in many ways. It is actually a second mortgage in many ways... Read More
