mortgage Archives | Incredible Planet

Taking on a debt of any kind and size needs proper research, care and concern so that you do not end up in a bowl of hot soup! You will need to exercise a lot of caution while refinancing your high interest debts with a low cost mortgage borrowing even if it seems like a no-brainer to you. This is because the basic principles and implications of debt. No matter whatever the case and your financial situations are, you must remember that you still have to pay off the debt.

You are legally bound to the creditor or the creditors if you have multiple loans, whether you take it out from any traditional lending sources such as a bank or any alternative online money lending sources such as Libertylending or any other for that matter. Your legal obligation will be as per the loan agreement that you signed while taking out the loan, and just like others, without going through the clauses of it precisely.

It is applicable to a debt consolidation loan as well.

This specific type of loan is designed to make your repayments of multiple debts that you may be finding difficult currently into a more manageable and convenient process.
It certainly does not eliminate your debt nor does it reduce the actual amount of debt that you owe to your creditor or creditors.

It simply reduces the number of your debts into one lower and longer repayment. It is a simple restructuring of your debt repayment plan.

In short, you must remember that you should not use your home equity unless and until you know that you can lead a very simple and disciplined and are very organized with your personal finance, debt management and household budget.

Get debt under control

It is not easy to get your debts under control. It will reach to unmanageable heights quickly even at the slightest lapses or overlooking of the smallest of facts. Ideally, debts acquired through financial mismanagement will never help you in the long run. It will only put you into further debt making it almost impossible to come out of it even after your best of efforts and highest support from the best credit advisors, debt management, and settlement or consolidation companies.

If you plan to use your home equity to consolidate debt, there are three ways in which you can do it:

Considering a cash-out refinance
Taking out a fixed rate second mortgage or
Choose to take out a Home Equity Line Of Credit, HELOC.

All these three options have its own pros and cons and therefore you are advised to evaluate all these options before you make your final decision.

Do it right

However, considering debt consolidation mortgage currently is the best option to refinance your home so that you can pay off all of your other accounts. It will depend on the equity of your home to determine the amount you will get. This amount will help you to say goodbye to several of your loans such as:

Your credit card balances
Car loan outstanding and even
Student debt.

However, you will have to make it right so that your monthly cost does not fall significantly. For this you will need to make sure that you do some checks first.

Verify the new rate of home equity nationwide by comparing and researching the Federal Reserve reports. According to this report published it is found that:

Homeowners typically accumulated real estate equity that is worth $13.9 trillion. This is a lot more than it was used to be. This is because home values have been increasing in most of the areas.
According to another research by the National Association of Realtors it was found that the home prices existing all over the nation has risen for the 68th straight month considering the gains year over year.

In addition to that, you must consider the advantage of debt consolidation mortgage. A closer look at it will show that:

The homeowners have generally gained a large amount of equity
They now also have an increased access to that money.

This is because the mortgage rates of today are around 4%, which is a rate that is found to be much lower than the cost of financing a car or availing a student and especially credit cards financing.

Next up, you should consider the factors that will influence your choice between home equity loan or cash-out refinance. When you do so you will really be surprised at your findings. This is because when you repay a mortgage at 4% and on the other hand a credit card at 16%, the difference in the rate is pretty obvious.

Lastly, you must consider the pitfalls of it. Ideally, the lower rate should not be your only consideration as that is not the only thing that you want. The following examples will make things clear to you:

If you carry a debt of $1,000 and think to repay it over five years at 16%, the total amount of interest will be $459.20 indicating a monthly payment of $24.32.
Alternatively, if you have the same amount of debt paid at 4% over a period of 30 years, the monthly payment will come down to as low as just $4.77. However, if you consider the total interest cost over these 30 years, it will come up to $717.20.

See the difference? That is why it is necessary that you are careful out there. Your ultimate aim should not only center on looking for a lower rate but also for a loan that will be specifically structured to your advantage.

In addition to that you must also consider the elephant that is still in the room: you still owe the money to your creditors. Typically, refinancing the non-housing debts with a mortgage does not necessarily mean your debts are eliminated and have been wiped out. It still exists. The real goal for you will be to be debt free with proper restructuring of the debts to make it more manageable.

You may think that the life of a landlord is easy, but there is much more than collecting rent checks each month. If you want to be a landlord, you need to know all the highs and lows inherent to this position as well as some tips on how to become a successful landlord.

The Pros of Becoming a Landlord

Without a doubt, income is the main motivator for becoming a landlord. You will receive a decent amount of money every month that should be enough to cover your property’s outstanding mortgage. This means you can hang on to the property while it gains more value with time. If you already own the property, those big rent checks can be a lot more tempting.

Not only do landlords enjoy long-term securities, but they also have the flexibility of being the boss. You essentially manage your own business, which can be a highly rewarding experience. As the boss, you get to make all the decisions on contracts, costs and when you decide to sell your asset.

The Cons of Becoming a Landlord

Being a landlord is time-consuming. You need to screen prospective tenants, sort contracts, handle tenant disputes, undertake home maintenance projects and deal with taxes. Although there are some tax breaks for landlords, you will have to pay tax on any rental income. Also, you need to be well versed on the latest property law and legislation affecting landlords in order to protect yourself.

Tips on How to Become a Successful Landlord

Know the Landlord-Tenant Law Like the Back of Your Hand

There are specific state laws in place that cover issues like level of access to the property, security deposits and how much notice you need to give your tenants if you want them to leave. You will also need to be aware of federal laws, such as anti-discrimination laws, to avoid falling into any liability traps.

Don’t Rush the Tenant Screening Process

Even if it’s troublesome, you need to do a background and credit check on all your potential tenants. There are a number of ways you can screen potential tenants, but I suggest you look online for a convenient landlord tenant verification service.

It’s important to note that a credit score shouldn’t be the sole reason you deny or accept a tenant. For example, if you have a recent college graduate, their credit will most likely be poor but they may still be a perfect rental candidate. That is why you should always conduct an interview to make sure you are comfortable with them living in your property.

Enforce Timely Rent Payment

This should seem obvious, but trust me, if you are too relaxed with your tenants and let them slide on timely payments, you can find yourself in a frustrating situation and six months behind on your paychecks.

If you don’t receive your rent payments on time, you will not be able to make your mortgage payments, so you need to be strict. This doesn’t mean you need to be disrespectful with your tenants if they run into financial problems. A good relationship with your tenants goes a long way and allows you to have honest communication and ensures that your rent payments will be made on time.

Live Close to Your Property (If Possible)

If you live close to your property, you can conduct periodic inspections, take care of simple repairs and show the property to new tenants. Of course, you will need to provide proper notice before you can just drop by, but living close allows you to handle issues yourself instead of having to hire someone else.

Be Aware of Your Financial Responsibilities as a Landlord

As you now know, being a landlord is not about collecting lots of cash every month. You need to be smart with your payments and be able to cover other landlord responsibilities. These include readying the property for new tenants, buying landlord insurance, paying property taxes, and maintaining the property’s health.

Now that you know the basics of what it means to be a landlord, it’s up to you to decide if becoming a landlord is the right path for you!