Credit scores still confuse and frustrate many consumers, according to a study by the Consumer Federation of America.  “Despite all the news coverage about credit scores over the past year or so, many consumers still do not understand important facts about these increasingly influential numbers,” said Stephen Brobeck, CFA’s executive director. To provide consumers with basic information about credit scores, CFA and Fair Isaac Corporation (developer of the FICO credit score) have prepared a brochure that is being distributed by the Federal Citizen Information Center.  The brochure contains the most important information about the score most mortgage lenders and other businesses use, including what factors influence its rise and fall and how consumers can get their own scores. To obtain a copy of the brochure, titled “Your Credit Scores,” contact the Federal Citizen Information Center at 1-888-878-3256 or online at: www.pueblo.gsa.gov. Another great source of info is www.mfyfico.com . This site is loaded with consumer information and tools to help you better understand, and improve, your credit scores.  Accessing your personal score and learning how to improve it can put you in a much stronger position to obtain the best possible mortgage.

Title insurance companies ensure that sellers have clear title to the property they are selling. The title insurance company’s agent performs a thorough search of the public records and certifies that the proper parties signed the paper work, paid the taxes and discharged all liens each time the house changed hands. Why then, does a buyer need title insurance if these searches are so meticulous? Public records can be incorrect if a mistake was made when the legal document was recorded. When you buy owner’s title insurance, you are protected against forgeries, misrepresentation and mistakes made at any point during the chain of ownership. Someone may have forged a deed, divorce papers or a death certificate. For a one-time premium, title insurance provides protection against title claims even long after you sell your home. Legal expenses and other costs are paid by the company to defend your title. In Vermont, many title issues arise due to permit problems. One type of owner policy insures against loss arising from failure to have certain kinds of permits. Storm water issues are also making headlines and title problems could arise due to the complicated permitting requirements. Title insurance is like emergency oxygen on an airliner. You may never need it, but if you do, you will be really glad that you have it!

It is always a challenge for homebuyers to select a suitable loan program that comes with a great interest rate. Make sure to work with an experienced mortgage loan professional at an established and reputable company.  Ask other trusted professionals like your accountant, attorney or financial advisor for a referral. Remember, you will be relying on your mortgage banker to explain loan options and recommend a loan plan that you will likely live with for many years. You need to be able to discuss your long-term goals and the details of your personal finances in an atmosphere of trust. Remember, the best loan is not necessarily the one with the lowest interest rate.  A lender might offer you a very attractive note rate, but additional fees can push the total Annual Percentage Rate up significantly. The best-case scenario is to find a loan that combines a low note rate and low (and adequately disclosed) closing fees.

       In today’s sophisticated marketplace it is not uncommon for a prospective buyer to shop around for a mortgage loan. In fact, with so many companies and options available, it is important to shop for the best overall fit. Always begin by making sure you are working with an experienced, professional mortgage officer.  The purchase of a home, one of life’s largest financial transactions, is far too important to place in the hands of someone unfamiliar with the many nuances of modern day lending. Here are a couple of simple questions an experienced lender will be sure to know. What are interest rates based on? Many inexperienced mortgage officers will tell you the 30 or 10 year Treasury note. The correct answer is Mortgage Bonds or Mortgage Backed Securities.  Another question is what effect does the ‘Fed Rate’ have on mortgage rates? Though surprising to the general public, any seasoned mortgage officer will know that mortgage rates, on a short term basis, will often move in the opposite direction of the fed rate change.

Many borrowers wonder, “when is the right time to refinance”? A simple answer to this question is to take the total cost of the refinance and divide it by the monthly savings. For example if the total cost to refinance is $2000 and the monthly savings is $100 the break even is 20 months or nearly two years. In this case, if you are planning on staying in the property (or the loan) for more than two years you should refinance.  But what if rates drop within that two-year break-even period? In many cases it is beneficial to look at a relative newcomer to the refinance arena - the no cost refinance.  If the cost to refinance is zero, as it is with a true no cost refinance program, than go ahead and refinance no matter how long you plan to stay in the property. Furthermore, if rates drop after you close, you can simply refinance again with no closing costs. The only downside of the no cost refinance is that you will pay a slightly higher rate than if you pay closing costs to refinance.  Mortgage rates have risen in recent months and if your rate is 5.75% or higher (or you have an adjustable rate mortgage) now may be a good time to check into the best refinance options for you.

Many people hate their mortgage because they know over the life of the 30 year loan, they will spend more in interest than the house cost in the first place. To save money it becomes very tempting to make a bigger down payment or make extra principal payments. Unfortunately, saving money is not the same as making money. Or, to put it another way, paying off debt is not the same as accumulating assets. By tackling the mortgage pay-off first, and savings goal second, many fail to consider the important role that a mortgage can play in asset accumulation.  

Consider this: Every dollar we give the bank is a dollar we did not invest. While paying off the mortgage saves us interest, it denies us the opportunity to earn interest with that money. It is quite possible to earn more from a conservative investment than a tax favored mortgage loan is costing us. Contact your financial advisor to determine if this strategy would work for you.

The Benefits of Higher Education 

According to the Federal Reserve, the income disparity between college grads and non-grads is growing every year. In 1979, college grads earned 38% more than those with only a high school diploma. But, today, college grads earn 75% more than those without degrees!

 The Cost of Higher Education

 Let’s face it: college is expensive. And with tuition increasing greater than 4% annually, the cost will only rise. Nationally, just one year of tuition, room and board at an average private college runs just over $30,000. A public out-of-state college runs around $20,000 per year. Even a public in-state college is close to $15,000 annually. So, as a parent who wants your child to have the chance to attend college, what can you do? The answer: plan early!

Emily’s parents were prepared. They sat down with their financial advisor when their daughter was born. They learned that to meet their goals they would need to deposit $345 in a college savings account every month for the next 18 years (assuming a 6% return). Looking deeper, they realized that by using the leverage and tax advantage of their mortgage, along with the power of compound interest, they could instead make a $50,000 one time payment to reach the same goal. By funding their savings plan this way they found that their after tax payment would only be $200/mo – 40% less than their original plan! They also realized that by incorporating this cost into their mortgage loan they would be sure to fund the account. In the past, despite their best of intentions to fund savings plans, they had slipped on making planned payments. Emily’s parents were relieved to have such a seemingly impossible goal taken care of so quickly and painlessly. 

Click Here For The World’s Simplest College Cost Calculator