How to use Your Home Equity More Effectively

How to use Your Home Equity More Effectively
The equity in one's home is probably one of the most
misunderstood assets we all have. Yet when I sit down with
a middle income family it is almost always their largest
asset by far. A close second is usually their retirement
fund from their current or past employer but their largest
asset is almost always their equity in their home.

While this is true for most middle income families is this
really a good idea? After all if it is your largest asset
shouldn't you at least understand how it works?

For example what is the rate of return on your home equity?
It never ceases to amaze me that families come into my
office and they know exactly what the rate of return is on
the CD they own down at the local bank that's worth maybe
$5,000 yet they have no idea what to say when I ask them
the rate of return on the $20,000 or more that is sitting
in their home. Do you know what the rate of return is on
your home equity?

Well to fully understand home equity consider this
question. If you build up equity in your home is it going
to help your home appreciate (or go up) in value? In fact,
isn't your home going to go up in value the same amount
whether you have equity in it or not?

If you're not sure the answer is yes. Think about it, if
you own a home that is paid off it is not going to rise in
value any faster than if you own that home fully mortgaged
right? The property appreciates not based on how much money
you have invested in it but on how desirable a home in that
neighborhood is.

So if Equity in your home isn't helping it to appreciate in
value then what is your equity actually doing? The answer
is nothing! That's right the rate of return on equity in
your home is always zero.

Now from a business perspective or an investment
perspective does it really make sense to keep your largest
asset sitting idle earning a zero percent return? If you
said absolutely not than I would have to agree with you.
But, you may be saying to yourself what about the cost of
that money?

The problem is most people are under the impression that in
order to access the money already in their home they will
have to pay so much in interest that it just isn't worth
it. After all if you have to pay 6% or more to borrow that
money out from your home wouldn't you need to make 9% or
better on anything you might invest in just to make a
profit? And if you invest your home equity to make 9%
doesn't that mean you have to take significant risks with
that money just to get ahead?

What if I told you that this is not the way it works at
all? And that in fact you could borrow out that idle money
at 6% cost and invest it conservatively at 6% returns and
still make a hefty profit over time. I know this seems
impossible but if I could prove it to you would you be
interested to learn more? Well check this out... Let's say
that you have $10,000 in home equity and you borrow it out
at a cost of 6% per year as stated above. How much would
that cost you over 30 years? Let's do the math. $10,000 x
6%= $600.00 per year. So over a 30 year time frame it cost
you 30Years x $600= $18,000. Now most people stop right
here and say, see I told you it would cost too much money,
I am better off leaving my money in my house. Who would
want to pay $18,000 just to borrow $10,000? Well isn't that
just one side of the equation? Let's now take that $10,000
and invest it at a conservative 6% rate of return over the
same 30 years. $10,000 invested at 6% over 30 years grows
to $57,434! So the question is would you be willing to pay
an additional $18,000 in interest to end up with an
additional $57,434 in assets?

I bet you didn't think you could borrow money at 6% and
only earn 6% and still make money did you? The reason this
works is not magic its just mathematics. The money you
borrowed you paid simple interest on and the money you
invested earned compound interest. That is why you come out
so far ahead.

Now imagine you could write off the interest on that loan
as a tax deduction. (And in most cases you can) How much
did the loan actually cost you if you could write it off?
Even less right? But even if you can not write it off it
still works out pretty good for most folks. Also you might
want to keep this in mind. What if you could earn more than
a meager 6% on your money? How much better off could you be?

The point is the above example mathematically proves that
there are much better things you could do with your money
than just leave it sitting idle in your home. And more
importantly the only thing we have discussed so far is the
mathematics of investing your home equity but in reality
there are many other issues to consider. Such as, is your
home equity really safe or could it lose value over night?
Can you access your home equity when you really need it?
And so on.

If you have equity trapped in the bricks and mortar of your
home perhaps you should reconsider how you invest the
largest asset you have. Can you really afford to let your
money sit idle or should ALL of your money be working for
you? My advice is to talk to a trained professional about
how to use all of your assets (even your idle ones) to your
best advantage.

----------------------------------------------------
Antonio Filippone is a respected speaker on a wide range of
subjects. He has been published in the official journal of
the IARFC as well as interviewed on the Radio about his out
side the box financial strategies.Readers who are
interested in gaining more information on how to live debt
free and truly wealthy can request a complimentary copy of
Mr. Filippone's booklet by visiting his website at
http://www.tonyfilippone.com

Flipping Houses is Legal, Easy, and Profitable Done Right

Flipping Houses is Legal, Easy, and Profitable Done Right
Is home-flipping legal or not? At seminars, I'm often
confronted by people who insist "Flipping" is illegal.

What they don't understand is that the part that's
"illegal" isn't the transaction, it's the mortgage fraud
that some unscrupulous people commit in order to get the
deal funded.

When you use an "Option to Purchase" to control a house and
sell it, the end buyer is responsible for their own
financing. That means no "fudging" on your part, and no
possibility of fraud.

The Buyer agrees to pay a certain amount, and has a down
payment and credit to match, and knows the deal. They
haven't been misled, and you haven't helped anyone commit
fraud.

The problem comes in when the seller and the Buyer are
working together to get an unqualified Buyer a loan they
really shouldn't get. As an example, here's what some
people consider "flipping":

They'll buy a house, or even just contract it, and then
turn around and sell it to an unsuspecting homebuyer or
Investor, often from out of town or with no Real estate
experience, and usually with no money down or for very
little down.

Next, they'll bribe an appraiser to give a fictitious
appraisal, much higher than the true Comparable sales.
They'll work with a mortgage broker who will show the
borrower how to submit false documents to the mortgage
lender to qualify for a loan they often can't afford.

Then last but not least, they'll forge the closing
statements from the Title Company to show a down payment
and/or closing costs coming from the borrower, in order to
get the bank to fund the deal.

Is this what you consider "Flipping"? Bribing appraisers
and falsifying loan documents and paperwork? If so, then
you're right, it is illegal.

But when you "Flip" a house by selling it for retail price
to a retail buyer, who works with a legitimate appraiser
and Mortgage Broker and gets their own financing, with no
"funny stuff," there's nothing even slightly illegal or
grey about it. It's simple and easy, with no B.S.

Some people are just simply SOOO lazy that can't be
bothered to buy houses at a discount- instead, they falsely
jack up the price, bribe an appraiser to confirm it, and
try to pass them off onto an investor or homebuyer who
commits mortgage fraud to get them funded. THAT is illegal.

Don't get me wrong, I don't have a whole lot of pity for
the Buyers in those fraudulent transactions. They are the
ones buying houses without enough common sense to even
check the value first!

Here's something else you should learn from this: These
supposed "victims" (who all volunteer to commit mortgage
fraud and know what they are doing, by the way) buy these
properties at grossly inflated values based on appraisals
someone else ordered for them. (I know, it's hard to
imagine they were taken advantage of, huh?)

NEVER believe what someone tells you about a property
without verifying it for yourself. That means you have to
do your Due Diligence- check every assumption- about the
property BEFORE you buy it, not after.

While house flipping has gotten a bad reputation in the
last few years due to a few bad apples, it is still a great
way to get into Real Estate Investing if you know what to
watch out for. Done properly, house flipping is legal,
moral and ethical, and is a great way to invest in real
estate without tenants, rehabs, or risk.

----------------------------------------------------
About the Author (text)
Jason Loucks has mastered the art and science of retailing
properties for Cash NOW through his "7 Day Sale" system. To
get your Free "Secrets of the 7 Day Sale" Audio CD, that
explains how you can sell houses in just 7 Days, just
visit: http://www.7daysaleguy.com

Visa Debit Cards

Visa Debit Cards
With a visa debit card you can have direct access to the
funds lying in the savings account in your bank. Thus
instead of a regular credit card that operates on the buy
now pay later principle a debit card of the Visa variety
enables you to have the option of paying immediately. This
way with a visa debit card you get to ensure that no
liabilities get accumulated.

Purchases or cash withdrawals

A visa debit card has two utilities. The first is the
ability to purchase goods as per choice from select retail
outlets. Usually you will find a signage in the store that
says that they accept Visa debit cards. The other utility
is to be able to withdraw cash. There are designated ATMs
or Automated Teller Machines in which you swipe the card
and get to receive instant cash from your own savings
account. However whether you choose to purchase goods or
withdraw cash with the help of the visa debit card you need
to verify your identity by typing in the PIN (personal
identification number) into the machine.

Visa debit

This is the first type of the product suite of a visa debit
card. These visa debit types are usually embossed and bear
the acceptance mark which enables the user to leverage the
card across diverse locations in the world. The hallmark of
such a card is the Visa signage or the flag symbol which
appears on the front right side of the card and can be
below or above the hologram.

Unembossed Visa

In such a visa debit card the appearance is just like a
regular Visa card. However the difference lies in several
aspects. The account number of 16 digits is printed instead
of being embossed on the card. The same goes for expiration
date and card holder's name. The 'electronic use only'
legend is located on the front of the card. There is no 'V'
symbol embossed on the card. Since this is an unembossed
card it cannot be used in a zip zap machine and can only be
swiped at the terminal in the store.

Authorization Preferred

In such a visa debit card authorization from the user is
mandatory at the terminal. Therefore usually in such a card
inside the magnetic strip there is a code located which
prompts the terminal to ask for authorization.

Visa Electron

The typical signage of the Visa electron represented by a
flying comet provides a wide degree of utility across over
13 million locations across the globe! You can use this
visa debit card at more than a million ATMs across the
world. The signage is always printed on the front part of
the card. The account number can be present in part or in
full. If present in part the last 4 digits only will be
displayed on the card. The card will also mention the
expiration date of the visa debit card. In addition the
'for electronic use only' legend is present on the front.
The BIN is printed below the account number on the front
side. The CVV2 number is located on the back of the card
only in cases where the full account number has been used.

----------------------------------------------------
Richard Greenwood is founder of the credit & debit card
comparison website http://www.click4credit.com.au and
writes on a variety of financial topics.

Avoid Business Opportunity Investment Financing Mistakes

Avoid Business Opportunity Investment Financing Mistakes
Commercial borrowers should be able to obtain improved
business opportunity investment loan terms and avoid
potentially devastating business finance problems by taking
some precautions as noted in this article. Avoiding
critical business loan mistakes is an especially essential
requirement in securing appropriate business financing
terms when real estate is not involved.

A key factor that distinguishes business opportunity
financing from other forms of business financing is the
lack of commercial property ownership. Although the
transaction will usually involve a long-term lease
agreement, the buyer is acquiring a business that does not
include real estate in the purchase price.

In our experience, the potential difficulties involving
factors discussed below are more serious and common than
most business owners expect. While we will not be
addressing all possible business opportunity financing
problems in this article, we will include two of the most
severe issues to anticipate and avoid.

Length of Business Financing -

A common mistake when acquiring a business opportunity is
to finance the acquisition with business financing that
expires within two to five years. One reason for this
occurring is the failure to negotiate a longer-term lease,
since it is typical for financing terms to expire with the
lease.

A viable solution is to insist on a lease that is at least
ten years long. This will facilitate business finance terms
that can typically be for a ten-year period. It should be
noted that the lack of real estate as collateral is a
primary reason for most business opportunity financing
being limited to a maximum of ten years.

Use of Excessive Seller Financing -

Although nominal seller financing (such as 10-20%) can be
helpful to a business financing transaction, attempts to
finance either entirely or primarily with seller financing
are generally inadvisable. There are several different
issues which can result in this being a serious mistake.

If a seller is providing most or all of the business
acquisition financing, a formal appraisal might not be
obtained. While this appears to offer the advantage of
saving the cost of such an appraisal, it also eliminates an
important method of determining if the purchase price is
appropriate. Alternatively the seller might have previously
obtained an appraisal which is used as the basis for
determining a purchase price. The problem with a
seller-financed appraisal is that it might not be a truly
independent and fair estimate of current business value.

Another limitation of substantial seller financing is that
it might only be for a very short period of time (perhaps
one to three years). This will necessitate refinancing
within a period that is not always practical to do so. For
example, many commercial lending candidates for refinancing
a business opportunity loan will require a loan history of
24 to 48 months.

Solutions and Strategies for Avoiding Business Opportunity
Investment Loan Mistakes -

Business borrowers should thoroughly discuss options with a
business financing expert before proceeding with investing
and financing programs. These efforts will be worthwhile
since the potential business finance mistakes described
above can be overcome successfully. Business owners should
especially look for advisors and resources which will
provide relevant strategies and solutions for a business
owner to acquire an adequate understanding of complex
business opportunity loan issues.

----------------------------------------------------
Steve Bush is a commercial real estate investment loan
expert - learn how to avoid business finance mistakes and
find out about business opportunity loan strategies at AEX
Commercial Financing Group =>
http://www.real-estate-investment-property.com

The Different Types Of Remortgage Loans

The Different Types Of Remortgage Loans
With fluctuations in mortgage interest rates leading to an
all time low, remortgaging property is becoming an
increasingly popular option among borrowers. Remortgaging
helps to lower interest rates and allow using the increased
value of the home for needs requiring urgent cash or for
alternative investment options. The variety of available
remortgage products fall under any one of the following
categories.

Standard Variable rate remortgage (SVR)- This mortgage is
based on the Bank of England's base lending rate. Usually
all mainstream lenders like banks and other financial
institutional set their standard variable rate or SVR at 2%
above the Bank of England's base lending rate. This means
if the base rate is 5.25% the lender's SVR would be 7.25%.
The SVR follows the base rate as it fluctuates up and down.
However by shop around a borrower with a good credit rating
is sure to get a better rate for his remortgage.

Discounted variable rate remortgage- In such a mortgage a
lender, to lure a borrower, provides a discount on the SVR
for a specific period, usually between 2 to 5 years, after
which the rate bounces back to the SVR. For example if the
SVR is 2 % above the base rate, the discounted rate may be
just 1.5 % or 1.25% for the discount period. The rate would
fluctuate with the base rate but borrower will be paying
less than the SVR during the set period.

Fixed Rate remortgage- This is a type of mortgage where the
interest rate remains fixed for an agreed period before
reverting to the SVR. This period generally ranges between
1 to 5 years but could be longer depending on the
particular mortgage deal chosen. The advantage of this type
is that the borrower knows exactly what he has to pay as
repayment every month with no surprises in store as in the
case of other mortgage types. On the downside, it could
result in a higher interest rate if market rates go down,
as the rate agreed to remains fixed. Additionally, early
redemption of the mortgage may invite a significantly
higher penalty.

Capped rate remortgage- Capped rate remortgages are
supposed to give the best of variable and fixed rate deals
with two drawbacks. One, they carry a relatively higher
rate of interest and two, they are saddled with a one-time
administration fee. This is because they give the borrower
a better cushion against rising interest rates. Capping the
upper limit ensures that the borrower does not pay more
than the capped rate even if the rates cross the capped
level also allowing him the benefit of lower interest rates
in case interest rates drop.

Flexible remortgage- These allow the borrower to adjust the
repayments to suit his circumstances. The borrower can pay
more for early clearance of the mortgage if he has extra
cash and save money. Or, if there is a paucity of funds,

----------------------------------------------------
Graham Bradlington is the marketing manager for Quickly
Finance Limited, a company which specialise in Fast track
Secured Loan & Remortgage applications for homeowners.
Quickly Finance is 100% independent & can search the whole
market for the best deals... quickly! For more info:
http://www.quicklyfinance.com

Why the Lottery is a Better Investment than Mutual Funds

Why the Lottery is a Better Investment than Mutual Funds
Even though I am not an investment advisor and never hold
myself out as one, clients continue to ask me what to do to
prepare for retirement. Should I max out my 401(k)
contribution? Should I do an IRA? Should I put more in my
profit sharing plan or pension plan?

Contrary to popular belief, none of these are wise
investments. Why? Among other reasons, they all involve
putting money into an investment vehicle over which they
have little control as to investment and timing and most
people end up choosing Mutual Funds as their investment
within these plans. In fact, putting your money into the
Lottery would be a better investment.

Really? The Lottery as an investment vehicle? Sound crazy?
Gamble my retirement funds away in a government-sponsored
game of chance where I have little chance of winning? Where
millions of other people are putting in money in hopes of
winning the big one? Where most of the money goes to
someone else and the chances are strong that I will lose
part or all of my money?

Wait a minute - are we talking now about the Lottery or
about Mutual Funds? Hmm, a government sponsored program
where I have little chance of winning. Sounds like a lot
like Mutual Fund investment in a 401(k) or IRA. After all,
what are my chances of retiring on Mutual Fund investments?
Not very high, actually.

A couple of years ago, I was listening to a financial
program on the radio on my way into work. The interviewer
was asking the representative of a large Mutual Fund about
the performance of the Fund. The Rep responded that the
Mutual Fund had risen in value by an average of 20% per
year for the prior two years. But when the interviewer
asked about the average return to the average investor in
the Fund, the Rep responded that the average investor had
actually lost 2% per year. Why? Because of the timing of
going in and out of the market. Compare this to the
Lottery, where everyone knows the exact chances of winning
and the exact amount that could be won!

But what about the great tax advantages of putting my money
into a 401(k) or an IRA? Yeah, right! Get a tax deduction
when you are young and in a relatively low tax bracket so
you can pay taxes on the money you take out when you are
retired and in a higher tax bracket? Yeah, that's a good
deal. Or, consider the difference in tax rates on capital
gains and dividends if you are not in a 401(k) or IRA
versus the ordinary income tax rates on the earnings when
you pull them out of your 401(k) or IRA.

So now you are thinking that you should just invest in
Mutual Funds outside your 401(k) or IRA? Wrong again.
Mutual Funds result in capital gains taxes when the Fund
Managers trade them even though you don't see the money!
You have to pay taxes even though the Fund may actually
have gone down in value! And what about the lost
opportunity cost of that money that you are now paying in
taxes that you could have put into other investments? At
least with the Lottery, you know the exact amount of taxes
you can expect to pay if you win and you only have to pay
taxes if you do win.

Yes, you say, but the Lottery is gambling and I have no
control over whether I win or lose. You are right. The
Lottery is gambling. But so is a Mutual Fund. You have no
control over the stock market and neither does the Fund
Manager. The market goes down, so does your Fund. At least
you recognize that you are gambling when you play the
Lottery. You don't have the government, financial
institutions and your employer telling you that the Lottery
is a good investment. And your employer doesn't go so far
as to match the amount you put into the Lottery like it
might with your 401(k). Nobody is lying to you about the
Lottery being gambling, but those in positions of authority
are lying to you about the chances of success in a Mutual
Fund!

But surely, you say, there is a better chance of making
money in a Mutual Fund than there is in the Lottery?
Hardly. There may be less of a chance of losing all of the
money you put into a Mutual Fund than there is losing all
of the money you put into the Lottery. But you are never
going to win big in a Mutual Fund. In fact, Mutual Funds
are designed to minimize your returns by creating a
"balanced portfolio." If they could minimize your risk of
the market itself, this might be okay. But the problem is
that nobody can minimize the risk of the market without
sophisticated hedge strategies that are not typically used
in Mutual Funds. At least with the Lottery, you have a
chance of winning big. And you can sleep at night, because
you aren't wondering if the chances of winning are going
down overnight because of something that happens in Tokyo.

You say you don't like the idea that most of your Lottery
gamblings are going to support government programs? Where
do you think most of the earnings from your Mutual Fund are
going? No, not to support government programs, but rather
to support your investment advisor's and the Mutual Fund
manager's retirement? You take all of the risk, you put in
all of the capital, but most of the earnings from the
Mutual Fund go to the Fund manager and your investment
advisor. At least with the Lottery, the funds are going to
worthy causes, such as the Arts.

Of course, I would never advise a client to rely on the
Lottery for their retirement. But neither would I advise
them to rely on Mutual Fund investments. For my dollar, the
Lottery is a lot more fun and at least I know I'm gambling.
But if you want to retire, look at other investments and
work with someone who is willing to put in the time to help
you retire soon and retire rich. Financial freedom is
available to those who are willing to work and learn about
it, but not likely for those who want to rely on such risky
investment strategies as Mutual Funds.

Warmest Regards,

Tom

----------------------------------------------------
http://www.tomwheelwright.com

Borrowing Levels 'Are High'

Borrowing Levels 'Are High'
Britons are borrowing an increasing amount of money, new
research shows.

In the latest Savings Brake study carried out by Unbiased,
lending through the likes of credit cards, loans and
overdrafts accounted for some 11.7 billion pounds between
July and September, a figure about double of that recorded
during the preceding quarter. Meanwhile, findings from the
firm also indicated that savings decreased by more than 11
billion pounds over the course of the third quarter of
2007. Overall, for every pound the typical Briton saved
during the third quarter of the year, some 35 pence was
borrowed. According to the company this represents a
"significant increase" from the 13 pence per pound borrowed
during the previous three-month period.

According to the company, the recent climate of high
interest rates has seen many Britons dip into their savings
accounts or take out a loan in an attempt to help cope with
various financial constraints over the summer, including
holidays. In addition, the credit crunch and its subsequent
impact on the availability of cheap UK loans was also
reported to have had an impact on consumers' capacity to
handle their money.

Commenting on the figures, David Elms, chief executive of
Unbiased, said: "We have seen a lot of activity in the
financial markets in the third quarter of 2007, which
marked the beginning of the Northern Rock crisis. Interest
rates over the summer were still at a high level of 5.75
per cent and many people will have felt the impact of the
credit crunch starting to bite their disposable income.

"While the high level of borrowing and a drop in savings
for this quarter may come as no surprise, it is a worrying
development. And with the cost of Christmas about to hit
the nation's pockets over the next couple of months it is
unlikely that we will see a significant improvement in the
Savings Brake ratio."

As a result, Mr Elms advised it is crucial that consumers
take the time to take steps to take control of their
financial situation. And that their level of savings and
borrowing, whether this is through loans, plastic cards or
other means, remains at "a healthy level".

For those concerned about either their ability to save
adequately for later life or about the level of money owed
in personal loans, overdrafts, store cards and other forms
of borrowing, taking out a loan for debt consolidation
purposes may prove to be useful. And applying for such a
loan may be useful for a rising number of people. A recent
study carried out by Alliance & Leicester showed that
following the series of interest rate increases since
August 2006, households are feeling "less comfortable" in
managing various areas of their finances, as the subsequent
rise in mortgage costs impinges upon their ability to pay
back loans and other monetary demands.

The study also indicated consumers put just 2.1 per cent of
their salary into a savings scheme during the first quarter
of this year, a record low. Although this proportion
increased to 3.1 per cent between April and June, the
financial services firm stated that is still below the
decade-average of six per cent. As a result, applying for a
cheap consolidation loan could help consumers drastically
reduce their borrowing and free up more money to invest
into savings accounts.

----------------------------------------------------
Abbi Rouse writes for All About Loans where visitors can
apply online for cheap UK loans. We also specialise in
poor credit loans, and cheap consolidation loans. Visit
today http://www.allaboutloans.co.uk/