3 Mortgage Strategies to Manage a Simple Home Loan

by Justin Weinger on November 27, 2014

Love your home but not the additional paperwork? Do your eyes glaze over when you have to crunch some numbers? Wondering if it’s possible to love a mortgage? Ok, that last one might be a bit ambitious, but there are certainly ways you can get close to it with these 3 simple strategies.

1. Ensure your current financial provider is the best for you

We all understand that the market changes over time and there’s nothing we can really do about it, right? Well, not really. It’s a competitive market for lenders right now, and there are some simple and effective steps you can take to make sure your current home loan meets your individual needs.

Take some time to think over a few pertinent questions relating to your financial position now and in the future. For example, you may ask yourself:
• What is my current mortgage balance?
• What interest rate am I paying?
• How soon can I pay off my mortgage at this rate?
• Are there any monthly account fees I’m paying?
• Are there any additional home loan features I can benefit from?

If you’re not really feeling the love from your current financial provider, it might be time to figure out what will make you happier. Things like:
• A better interest rate
• The ability to switch to a fixed/variable rate
• More flexible repayments
• The capacity to consolidate your loans
• A better level of service than what you’re currently receiving

Sounding about right? It may be time to move on from your current financial provider and refinance your home loan. Talk with your bank to see if they can better meet any or all of your needs with your current loan. Your lender may be able to provide you with better service and more options, without you needing to switch your loan.

2. Choosing the right bank

The right bank and home loan can put you ahead financially. If you’re thinking of refinancing your home loan, bear in mind of any costs that you may incur from switching banks. These can range from transfer fees to exit and valuation costs.

To get the most out of your switch, weigh the number of features a bank offers to your individual needs. Although additional benefits may seem appealing, they often come at a higher rate. Unless you are taking full advantage of these features, the added cost can really stack up over time and it may be cheaper to choose a more basic loan. 0.05% may not seem like much now, but over 20 years it could mean hundreds, if not thousands of dollars.

Some features you may consider include:
• Flexible repayments
• A mortgage offset
• Redraw features
• A competitive rate

As a general guide, if you can trim 0.5% from your home loan rate, refinancing can be beneficial to your financial situation.

BOQ’s Clear Path Variable Rate Home Loan offers you all these features, and more. Contact your local BOQ branch to find out how this home loan may benefit your refinancing needs.

3. Managing your home loan

If the thought of crunching the numbers gives you a headache, it may be worth considering using a mortgage broker. Mortgage brokers can help reduce the time, stress and effort required in managing a home loan. Brokers also have access to a vast number of lenders and loans, giving you exposure to valuable information and support.

You can also take advantage of your bank’s services and talk to your loan manager. Sometimes just having a chat can give you a clearer idea of what you need from your home loan.

Some areas to consider when managing your home loan:
• Fortnightly or monthly repayments
• Extra and lump sum repayment options
• Saving costs by bundling loans and costs
• Late payment fees
• Mortgage offset accounts



Common Money Mistakes

by Justin Weinger on October 12, 2014

We’ve talked about money mistakes here on our blog many times in the past but they’re so important that they bear repeating. The fact is, if you’re not keen on throwing your money away, the mistakes below should definitely be avoided. Enjoy.

The first is to delay saving money. Let’s take a look at a great example. Let’s say that you work for 40 years (which is about average) and you save $250 a month and get a 5% pretax annual return. Let’s also say that you lose 25% year to income taxes. At the end of those 40 years you will have approximately $280,000 to spend during retirement. If you start saving 10 years later and only have 30 years however, you’ll only put aside about $170,000 or approximately 40% less.

One of the best ways to put aside money is with individual retirement accounts or IRAs but many people, even though they are available through their work, don’t get them. You can also get a number of different types of IRAs even if your company doesn’t offer them. If you use the same example above but put that money into a Roth IRA, which can deliver tax-free growth, you’d have approximately $385,000 after 40 years and not owe any taxes on it at all.

Speaking of your employer, many people leave all sorts of money on the table because they don’t bother to  get the 401(k) their employer is offering and, even worse, don’t take advantage of employer matching contributions. If you saved the same $250 a month as our first example and collected the matching savings from your employer, at retirement you’d have over $500,000 even after paying taxes.

Getting away from retirement accounts for a minute, many people make the mistake of carrying a credit card balance and paying the interest on it every month for years. In the second quarter of 2014 the average consumer credit card debt totaled almost $5300. If a person left their balance at that level for 40 years and incurred the approximately 20% in total annual interest costs, they would spend (i.e. lose) an extra $42,000 approximately.

Another big mistake that many people make is getting a new car every three years. Let’s take a look at the numbers, shall we. If you purchased a $30,000 car and, after three years, got back 56% of its cost, you would have to spend another $13,200 to buy another $30,000 new car. On the other hand, if you kept that same car for six years and got back 34% of its value, while you would need to come up with approximately $19,800 to purchase your next $30,000 new car, you’d actually spend $6600 less. Over 40 years that’s a savings of almost $50,000.

Finally, many people make the mistake of pouring thousands of dollars into remodeling their home. Remodeling magazine recently conducted a survey and found that the average major kitchen remodeling cost just under $55,000 but only adds about $41,000 to the resale value of the average home. Their survey also found out that many other home improvement projects lost money rather than gained it. Even worse is that if you don’t sell your house right away, those new renovations will begin to look old as well and the likelihood of being able to recoup your costs will go even lower.

Of course if you’re remodeling your home with plans to stay in it for a long time and are just doing it so that you are more comfortable and happier, go for it.

So there you have it, some of the biggest money mistakes that people make and that, now that you know about them, you can avoid.



Buying your First Home? Don’t make these Common Mistakes

by Justin Weinger on October 5, 2014

There are few things in an adult’s life that are as exciting as purchasing a home for the first time. The problem is that, in the midst of all that excitement and running around, it’s extremely easy to become blinded by a beautiful kitchen, a living room with high ceilings or a wonderful backyard with a built in pool. In many cases these beautiful  luxuries can compel someone to purchase a much larger home than they can’t afford, and make many other mistakes that end up costing them a lot more money in the future.

If you don’t want that to happen to you, keep reading below to learn about common mistakes that first time home buyers make and how to avoid them. Enjoy.

The first, as we already mentioned, is Overspending. The fact is, before you even begin to look at homes you need to know exactly the amount of money can afford for your mortgage and home insurance payments. If you look online there are plenty of websites that have calculators that you can use to do this, but looking at your current expenses and using them as a base for your spending is a good idea as well.  If you’re already struggling to pay the rent at $800.00 a month, there’s a good chance that spending $1200.00 a month on a mortgage payment is going to be difficult.

Your best bet is to meet with lender first and find out exactly what amount of money they will pre-approve you for. Then, lean towards a lower amount rather than a higher one because, frankly, you don’t have to use the entire amount that you might be preapproved for. Once that’s done, it’s time to start searching for the home of your dreams.

Another big mistake that many first-time homebuyers make is forgetting to account for things like property taxes, homeowners association fees, closing costs and homeowners insurance. If you think about it, when you pay rent on an apartment the only thing you usually pay is rent and, in some cases, renters insurance. When you buy a home the monthly mortgage payment you have to make is only the beginning of a wide array of different costs that will be coming due monthly. If you fail to take those costs and payments into consideration, you might find yourself with monthly bills that are higher than you can afford.

Many also mistakenly figure out how much mortgage they can afford to pay based on the income that they believe that they will be earning in the future. For example, students graduating from law school will sometimes purchase a huge home believing that they will land a great paying job at an attorney’s office and, when that doesn’t happen, they face huge financial difficulties. The same thing can happen if you count on your husband to get a big promotion that never happens. The simple fact is that no one can predict the future and, even if your ship does come in in a year or two, you shouldn’t count on it pulling into port.

Finally, one big mistake that many people make is that they don’t protect themselves with home inspections and contingency clauses. As the old saying about “let the buyer beware” is very acutely true when purchasing a home. Many of them look fantastic on the outside but, under the surface, are a huge mess that will quickly drain your money in repair bills, replacement costs and so forth once you’ve made your purchase. Home inspections protect you from many of these things but getting a contingency clause is actually a better form of protection.

Justin Lopatin, a mortgage planner with American Street Mortgage Company Co, says that  ”A mortgage financing contingency clause protects you if, say, you lose your job and the loan falls through or the appraisal price comes in over the purchase price. Should one of these events occur, the buyer gets back the money he [or she] used to secure the property. Without the clause, he [or she] can lose that money and still be obligated to buy the house.”

Now that you know about these mistakes you are much better prepared to go out and purchase your first new home. Best of luck!



Want to save Money? Use your Smart Phone

by Justin Weinger on September 29, 2014

Saving money is something that all consumers like to do but, with busy lives and busy schedules, sometimes we still end up overspending. The good news is that the vast majority of American consumers now have a tool right in their pocket or purse that they can use every day to quickly and easily save money.

It’s called a smartphone, and below are 4 ways that you can use yours to save quite a bit of money all the time. Enjoy.

One of the best ways to save money with your smartphone is to use it when it’s time to buy gasoline for your car or truck. As a matter of fact, some studies have shown that the average consumer could save upwards of $500 a year using a smartphone app that tells them where the cheapest gas prices in their town happen to be. One of the best is called GasBuddy, and app that will tell you the prices, updated in real time throughout the day, of all of the local gas stations in your area.

Depending on where you live, you can also use your smartphone to find the cheapest parking spaces  in the city of your choice. One app that’s great for doing this is called SpotHero which, as you might have already guessed, will help you to find the cheapest parking spot in Chicago, New York, Los Angeles or any other city you might happen to be living in or visiting.

Smart phones have also made it much easier for retailers to reward their loyal customers. In the past most would give out loyalty cards that either needed to be marked, punched or otherwise indicated so that the retailer would know how many times you’ve been to visit, how much you’ve purchased and what your loyalty reward should be. Using your smartphone that’s no longer necessary as we were information can easily be kept for a multitude of retailers right on your phone. In fact, most retailers are coming out with their own smartphone apps that, among other things, consolidate your coupons and make shopping much quicker and easier, including Cartwheel from retailer Target.

Using your smart phone to check social media throughout the day can also help you to find discounts and promotions at your favorite stores and on your favorite brands. A lot of companies these days actually host special coupons on their social media sites to give special deals to their followers, members and “friends”.

Finally, one of the best ways to save money using your smart phone is to use it to compare prices. For example, the RedLaser app will actually let you use your smartphone to scan the barcode on any item and find out if it’s being offered by another retailer for less money. It’s easy, quick and, in many cases, will save you quite a bit of money and time.

The fact is, while smartphones have made our lives significantly easier, many people don’t realize how much they can use them to save money. You do however, because we told you about it here in this blog today, so go out there and get the best prices and deals on everything!