Guru Goddess

If your parents or grandparents are considering a reverse mortgage, it pays to do your research in order to know exactly what they are getting into, in order to stay safe, and avoid scams.

Currently there is only one type of reverse mortgage available.  It is called the HECM, or Home Equity Conversion Mortgage. This mortgage is insured by FHA.

You can obtain this type of mortgage from a HUD lender.  Since the credit crunch, there are new rules and regulations these lenders must abide by.  The fees are specific, and set by law.  There are some HUD lenders, however, who may offer some type of discount.

The maximum amount a lender can offer for a reverse mortgage is $417,000.  In addition, the origination fees will be charged as follows: 2% on the first $200,000 and 1% on any amount above $200,000.

What are the fees associated with a reverse mortgage?  As an example, let’s assume a house is valued at $200,000.  The origination fee would amount to $2500; the Mortgage Insurance Cost would be $4,000; the Closing cost is estimated at $2,200; and the Service Fee is approximately $5,345.

The origination fee is charged by the lender to implement the loan.  Again, it is 2% of the first $200,000 and 1% thereafter.

The mortgage insurance cost is a requirement of HUD and is based on 2% of the home’s value up to $417,000. There is an additional .05% of the loan balance attached.

The closing costs encompass services that are performed prior to the reverse mortgage’s finalization, for example, the appropriate surveys, inspections, title searches, taxes, and credit checks.

The service fee is used to cover the costs of any future service fees, and they can range from $20 to $35.

You can compare a reverse mortgage to home equity loans, second mortgages, or a home equity line of credit.  However, while a home equity loan may incur lower interest rates, since it is a variable rate, it is also possible that the monthly payments will be significantly higher.

Considering a reverse mortgage requires a great deal of research.  Before the credit crunch, there were three types of Reverse Mortgage loans: HUD, Fannie Mae, and the Jumbo Reverse Mortgage.  Due to decreases in home values at present, a result of the economic crisis, the only reverse mortgage now available is through HUD.

Do your research, and if you really think a reverse mortgage is right for your family, move forward with caution only through HUD. Avoid scammers or anything that sounds too good to be true. A reverse mortgage can help many seniors, but only if they don’t fall prey to reverse mortgage scammers.

To get you started with saving your money, to help relieve the stress and other issues often associated with debt, you will want to start by outlining all expenses that you must pay for on a monthly basis.

These expenses are ones in which you cannot go without paying, like rent, mortgage, homeowners insurance, auto insurance, auto loan payments,your utility bills, and finally, groceries.  These are the expenses that must be paid, no matter what.  If you have any money left over after all these obligations are met, you are fortunate.

Once you have a detailed list of important expenses, the next items are luxuries you have to decide upon. There is no right or wrong answer. You just need to remember that everything involves a sacrifice. So try to keep your long-term financial goals in mind when deciding on whether or not to spend money on these luxury items.

Such items include internet access or cable television.  If you are just looking to save money, possibly to put into a savings account, you should be able to continue paying these expenses without any problems.

On the other hand, if you are looking to dig yourself out of all of the unpaid debt that you have accumulated, it may be a good idea to go without internet access or cable television, if at all possible, even if it is just for a short period of time, to pay down that debt, so the interest doesn’t keep accumulating. Some credit cards can carry an interest rate as high as 30% and some sort cards, almost 50%.

There is no point in putting money into a savings account at 4-5% if you are paying 30% for debts.

You can also use your budget to determine how much extra money you will have each month.  You can do this if you regularly work the same hours or if your pay is salary-based.

Once you have totaled up all of the aforementioned expenses, you can subtract that from the amount of the money that you bring home each week.  Any extra is money that you may want to consider putting towards your debt or savings.  Once you are free of debt, then you can start to save.

We have other articles at the site on budgeting and on asset management and investing. The important thing to remember is to get out of debt as fast as possible, or never get into it. Then, once you are debt-free, you can start saving towards your long-term financial goals.

A budget is not meant to be a straight-jacket, but it will help serve as your road-map to a more successful financial future.

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Are you a debt-ridden woman?  Even if debt may not be an issue for you now, there is a good chance that it will become one in the future if you don’t keep an eye on your income and expenditures with a workable budget.

Whether you are in debt now, or if you are looking to prevent yourself from falling victim to it, you need to put a sound budget in place as soon as possible to start planning better for your financial future.

Before examining how you can go about creating a budget for yourself, it is important to understand why you need a budget.  As previously stated, budgets are a tool that can be used to make sure that debt does not become or remain an issue for you.

By creating a budget, you can track your spending, and make sure that your make it a priority to ensure that all needed expenses, like your car, insurance, rent or your mortgage, all get paid.

A budget also gives you the opportunity to examine how much extra money you have each month, money that you could put towards paying down your debt, or putting into a savings account to start working toward your long-term financial goals.

When it comes to creating a budget for yourself, you should be able to find a number of budget templates online. There are a couple of suggested ones here at the site as well.

While these free resources are nice, you may only want to use them as starting points.  You can get great ideas from them, but you may want to create your own budget. This is important because not all individuals lead the same lives or have the same expenses to take care of.

For instance, a budget template for those in New York City may not necessarily call for car payments or auto insurance, but if you had a vehicle, you will need these sections displayed on your budget.

It is also advised that you take the time to create a budget for each month of the year.  As previously stated, a budget allows you to account for what you spend on a weekly and monthly basis, but not all months are created equal.

For example,  you may have a ton of family birthdays in August, or have to go see your family for Thanksgiving every year, which will mean budgeting for travel expenses. Christmas is always a very expensive time of year, and can get really out of hand if you don’t budget for it.

Creating individual budgets for each month of the year may seem like a complicated process, but it doesn’t have to be.  It may take a few extra minutes, but those few minutes are more than worth it.

Continues in Finances:  The Importance of Creating a Budget for Yourself Part 2

If you have not diversified yet, pop over to read this article!

My 401 K is melting 

Before you can understand asset management you have to understand what an asset actually is.

Assets include, stocks, bonds, mutual funds and real estate.

Stocks are fractional ownership shares of a company.

Bonds are basically IOU’s that pay an interest rate.

Mutual funds span different classes of investments, between stocks and bonds.

Real estate is usually income generating property, be it privately or commercially owned.

Asset management is basically managing a person’s or corporation’s money by putting it in certain stocks, bonds, or other investments.

Asset management and investing is intended to improve your assets, using some of the money and  maintaining the wealth of the assets as best you can  at the same time.

There are many different strategies used when it comes to asset management and it will all depend on the investment strategies used to try to use the assets to their best advantage.

With many investment portfolios, or types of assets, there can be hidden costs, for example, maintenance, brokerage fees, or different types of insurance.

By being flexible with your asset management strategies, you can add value to your personal portfolio or business, and potentially be able to cut costs in their business.

There are many investment services available now on the internet, so you should research what is available and find three that look right for you. Then you should compare costs, performance, and customer satisfaction.

These aspects are key, because your asset management company will be mainly responsible for your portfolio’s or your  business’s growth and productivity. They will invest your money into many different areas, and will have to keep track of these diversified investments.

Asset management services have a variety of investment objectives, so make sure you know what your own is before you engage their services.

There are many companies that offer similar services, and many which offer different types of investment opportunities; you must make sure you understand that they are before risking any of your money.

Remember, no matter what the strategy, the overall goal of these companies is to produce better investment returns for their clients.

Asset management companies do have risks, but if you look before you leap, the can be the best way to go in order to get rid of all of those expensive individual costs which typically occur within regular business operations to do with investing on your own.

Not only will an asset management company benefit you by reducing the costs of the business, it will also improve the business’s overall profits. Study the companies and the opportunities they offer, and if you choose well, it should be only a short period of time before you will start seeing good  results from using your asset management company in your business.

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