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Shop For a Mortgage to Gain Your Desired Home

Each of us wants to have our own home. There are some who do their best to make that dream come true.

Online banking security: phishers, trojans and viruses and other nasties

Further to my post a few days ago on the benefits of Internet banking…

Are there security risks if I bank online? Well yes, and no.

New Zealand banks have recently admitted that they are open to attacks from the latest trojan technology - capable of getting past even the best two-factor authentication (a method that uses two forms of verification to confirm a customer’s identity). Some of the threats to you when you bank online are:

• Phishers: Fraudsters who obtain your personal details through a variety of means, such as sending you an email that appears to be from your bank and provides a link to a fake banking site.
• Trojans: Software programs which disguise themselves to look like an application on your computer.
• Viruses: Software programs which replicate themselves and can destroy valuable information on your hard drive.
• Worms: Self-replicating programs which spread from your computer to others connected to it.
• Scams: Job scams or other fraudulent means of convincing you to receive or send money via their bank account.

In defense of banks, they do put a lot of time and energy into ensuring your privacy and security is maintained. Your banking information is encrypted so that third parties cannot view your activity or access your information, and there are other online safety nets in place too.

You can help ensure your own Internet banking security:

• Take care when banking online in a public place: Make sure there is a padlock symbol in the lower right corner of your browser, never save your login details, and be sure to log out when you are finished. Also watch for shady characters lurking nearby.

• Protect your computer: Use virus protection software and install a firewall on your PC. Remember to download updates regularly too!

• Use a hard-to-guess password: Make sure you are the only one who knows your password and don’t disclose it to anyone! Banks will never ask for your password by phone or email, so ignore emails claiming to be from your bank asking for login confirmation.

• Beware of hoax emails: If you receive an email that appears to be from your bank or another financial institution, delete it immediately. Do not open any attachments and do not offer your personal information.

• Keep in touch with your bank: Notify your bank straight away if you notice unusual activity in your bank account or suspect someone else has used your password

Mortgage Equity Withdrawal and Economic Growth

Readers Question: Does mortgage equity withdrawal enhance economic growth?

There is good evidence that mortgage equity withdrawal can lead to higher levels of consumer spending and economic growth

Definition of Mortgage equity withdrawal - Mortgage equity withdrawal occurs when homeowners remortgage taking out bigger loans to take advantage of rising property values.

• Suppose you bought a house for £100,000 with a £95,000 mortgage. (+ £5,000 cash deposit)
• 10 years later the house might be worth £160,000. Yet, you only owe the remainder of your £95,000 mortgage. If the bank is still willing to lend 95% of the value of your house. You could remortgage for say £150,000. This means you will have a bigger mortgage and will have to pay extra monthly mortgage payments, but you can now spend the extra £50,000 on holidays and cars. Remortgaging is a way for consumers to increase spending. It has become quite common in the UK.

·         Mortgage Equity Withdrawal in the UK

According to the Council of Mortgage Lenders equity withdrawal increased from £10 billion in 1984 to £23 billion in 1988. http://www.cml.org.uk/cml/filegrab/pdf_pub_resreps_35full.pdf.pdf?ref=3854

After the recession (and fall in house prices) of 1992 equity withdrawal fell to £12.5 billion.

By 2000, equity withdrawal had increased to £30 billion. During this period there was a steady rate of economic growth.

The Bank of England report that mortgage equity withdrawal has continued to rise since 2000, reaching a peak in the 3rd quarter of 2003 of nearly £9 billion. This was also equal to nearly 10% of post tax income. A considerable determinant of consumer spending in the UK. Bank of England MEW

Mortgage Equity Withdrawal does increase Aggregate Demand and can finance higher economic growth. However, we should make some qualifying remarks.

Problems of Mortgage Equity Withdrawal

• MEW increases AD, but it does not increase the productive capacity of the economy.
• MEW increases the debt burden of consumers. If interest rates had to rise, it would mean many consumers are susceptible to falling disposable incomes.
• Now that house prices are falling, an increased number of homeowners may face the problem of negative equity. Therefore, although MEW helped growth in the past, it could also contribute to a recession in the future.

Home equity loans

Home equity loans have helped millions of homeowners to get cash from their homes. By applying for equity loans, homeowners have the ability to see the equity in their home become the money that they need. The equity in a home is simply the amount that the home is appraised for minus any outstanding mortgage costs. By applying for these offered home loans, homeowners have been able to receive money needed for home improvements, vacations and even college tuition for their children.

Sites such as Loanguru.org offer much information about the home equity loan process, as well as tips and resources to help homeowners get the cash that they need from their home’s equity. For those needing a lot of cash in a little time, home equity loans seem to be the most popular choice. The money from a home equity loan is the homeowner’s to do with as they please; so many people have opted for an equity loan as opposed to a standard loan.

The Best Credit Card

few weeks ago, in response to a reporter’s query, I suggested that the best credit card for Indie Business owners was no credit card. I explained why. I never heard from her again.

Presumably, her story ran without my input, but that’s OK becuase I have a blog so I can tell you what I think myself. I think that the best credit card is one that has a pair of scissors going through the middle of it.

Cash Is King

Cash is King, and if you don’t have it, you shouldn’t be able to spend it. Sound logical? One would think so, but the credit card issuers have turned this logic on its head. Ever wonder how they can afford those lavish offices, huge executive salaries and flashy advertisements? It’s not because we pay the balance off every month. Cash is king, and they want all of ours. I say, “Don’t let them have it.”

It’s Not The Economy, Stupid. It’s Us!

They say that the economy is bad. Oh yeah? It’s not the economy. It’s us.

According to an article at a website with the romantic mission of “bringing consumers and card issuers together,” consumer revolving debt was $904 billion as of June 2007, up from $879 billion just 6 months before that. Most families have credit card balances that equal 5% of their annual income, and that doesn’t count the compounding interest and late fees.

It’s not the economy’s fault. It’s not even the credit card issuer’s fault. It’s ours.

We can barely afford to put our kids through college for a year, yet we line up like cattle to beg banking institutions to help us live beyond our means so we can have a 64 inch high definition flat screen TV in time for the Big Game this weekend.

Have You Seen The Commercial?

A few days ago, I saw a commercial. It stared with a man watching a sporting event on a tiny TV. His wife finally gives him permission to get a big screen and he goes running off to the electronics store, with credit card in hand. The American instant gratification theme song of “I want it all and I want it now!” plays mindlessly in the background.

I’m thinking it’s a big screen TV commercial. But wait! I discover that it’s a commercial for Citigroup when the announcer says, “Check your credit card balance whenever you want with the touch of a button.”

Meanwhile, at the home of Citigroup’s former CEO Charles Prince III (who retired in November 2007 after the company wrote down millions and millions in debt), they’re living on $1,000,000 a year, plus $13,200,000 in bonuses and $258,338 in other perks and miscellaneous goodies, not including the $20 million “severance” that accompanied him out the door. Does he do that because we pay our credit card bills on time? Of course not. He does it because we promise ourselves that we’ll pay our bills on time, and then we don’t.

Reality TV

The lucky guy at the electronics store is not just a consumer. He’s being consumed. The reality is that he can’t afford the big screen TV. If he could, the commercial wouldn’t have started with him watching TV on a little screen — the screen he could afford.

Soon, reality will set in and the luster of the TV will wear off. Even if his team wins, if he’s even a minute late on a payment, he’ll get socked with a late fee. If he pays only the minimum balance each month (which the card issuer will encourage him to do by putting “minimum payment due” on the bill) he’ll get socked with interest. The result is real Reality TV.

What’s Indie Got To Do With It?

Everything. Get out of debt. Don’t go into debt. Hate debt. Yes, hate it. How can you build an Indie Business empire when you have to worry all the time about whether you can keep up with your own personal bills? If you need a card to conduct business, pay off the balance every month and keep close tabs on every due date and every fee. Better yet, use a debit card so when you buy something, you buy it with money you already have in the bank.

Freedom does not mean having a lot of money. Freedom is being debt free so you can do a lot with the money you have, even if it’s not a lot of money. Yes, cash is king. When you get it, keep it or spend it wisely. Don’t give it to the credit card issuers. They already have enough.

Post Script

Oh, and the reporter who asked for my opinion. She must have ran her story without me because I never heard from her again. It’s not a popular train of thought, I know.

What Do You Think?

Am wrong? Too much ranting? I’m just fed up, can you tell? And I don’t want to leave my children stranded and helpless in the middle of a bunch of commercials telling them how easy it is to live beyond their means. What are your thoughts? Is it unrealisit to live without credit cards? I cut all mine up so I know it’s possible.

Do I have a big screen TV? No. A bunch of fancy furniture? No. But I do have college savings plans for my kids and just about everything else I want and need for daily living. And I sleep at night because I don’t have to worry about whether there’s some computer out there at 1:00am charging me a $35 late fee because I either forgot to pay, or couldn’t pay, my credit card bill on time.

Applying for Auto Loan

Not everyone has loads of cash in the bank nowadays. If you are not one of the blessed people out there that has loads of cash in the bank then you might want to take out an auto loan for your vehicle purchase. Getting an auto loan should not be so complicated. Here are some simple tips to get you started on your vehicle purchase.

One of the things that you have to keep in mind when buying a vehicle is the amortization. Amortization is basically the monthly amount that you will pay for your vehicle when you take out a loan. When you know the monthly amortization of your vehicle, you will more or less know what you can afford. Can your salary cover the monthly amortization? If the monthly amortization is seventy five percent of your monthly income then it may not be wise to take out such loan. You do not want to be spending most of your money on your vehicle. You want to be spreading out your income with savings, food, and shelter. You have to be wise when considering taking out an auto loan because it might just eat up all your money. You do not want this to happen. Understand the amortization model of your loan and then decide whether you should get a more economical car or if you should consider earning more money.

Another important thing that you have to understand about an auto loan is the down payment. The down payment is basically an initial amount that you have to pay the dealer. Usually this can range from ten to twenty percent of the value of the vehicle. If you are planning to take out an auto loan then you will have to make a down payment. If you are going to spend all your life savings on the down payment then maybe you have to think about buying the car all over again. Do you really need a car that expensive or should you opt for the more economical models. Remember, you are taking out a loan so the initial assumption is that you are not as financially liquid.

One of the questions that will be asked of you during the loan application process is your credit standing. Do you have a good credit standing? Have you been defaulting on your loans? Do you even have a credit line in the first place? If you have a good credit standing then you are likely to be given the loan. Otherwise, if your credit standing is not as sparkling as expected then you may have to choose another car or you may even have to go to another dealer. The basic rule of thumb when applying for loans is that if you borrow money then you have to be able to pay for it. If you are going to borrow money and you have no idea how to pay it back then do not borrow at all. If you are going to take out an auto loan and you have no idea how you will be paying for it then you should forget about getting an auto loan in the first place.

Negative nellies unite!

Even with rates moving up this week, this is still a good refinancing opportunity for people who bought houses in 2006 and 2007.

FDIC chief floats “short refis”

Mortgage servicers should streamline a way to offer refinances that include debt forgiveness, FDIC Chairman Sheila Bair told the Senate Banking Committee today.

Second Mortgages

Opting for a second mortgage is a popular method for homeowners to raise additional finance. The homeowner can leverage additional equity against the property value of his or her house. Until recently, second mortgages were often frowned upon.

Are Mortgages Liens?

In the housing world usually most houses have mortgages. A Mortgage or A Deed of Trust with a Note is a lien against that property. However legitimate mortgages are not a problem. They technically are clouds, but they are so common that it's just expected for them to exist. And they are easy to remove; they just need to be paid off before property ownership transfer.