By Lew Corcoran Whether you're renting a house, apartment, condominium, townhouse or even a mobile home, other than affording you shelter, your rent payment is like throwing money out the window every month. There are many reasons owning your own home is significantly more beneficial than renting, though you will seldom hear about or see the concepts presented in this report. Aside from the obvious benefits of owning a piece of the American Dream, you: 1) get a place of your own to do with as you wish; 2) achieve equity in real estate with the eventual goal to own it free and clear; and 3) never have a landlord deciding when you need to vacate the premises. Also, owning a home can have tremendous financial advantages that renting can never accomplish. Real estate is the single best route to getting rich in this country. And, owning a home is the first step to becoming a millionaire. Your home mortgage is a marvelous tool to assist in creating wealth for yourself, and the right mortgage strategy is as important as anything. Let's take a quick look at some financial benefits of owning a home before we delve into a more complicated - but effective - strategy of using a mortgage as a key financial tool in your wealth building strategy. Here are some major benefits you'll enjoy when paying your mortgage versus a rent payment: • Mortgage Interest Tax Deductibility; • Historically consistent payments; • Appreciation in your largest investment; • Ability to tap into the home's equity and accessing large sums of cash when needed; and • Tax-free gains on primary residences upon sale (talk to your CPA or tax advisor for specifics). Let's use an illustration to give a better demonstration of what a mortgage can do for you. For this scenario, we're assuming that we're renting a townhome for $1200 per month and the rental payment increases at 5% per year. We're going to compare this against the purchase of a $250,000 home using 100% financing at an interest rate of 6.875% fixed for 30 years. For our example, we're comparing the true mortgage payment versus the true rental payment excluding property taxes so as to have an accurate "apples to apples" comparison. With our mortgage of $250,000, we'll have a before tax payment of $1642. If you're in the 28% tax bracket, your true interest rate is no longer 6.875%. It's really 4.95% because of the tax deductibility of mortgage interest. Your monthly mortgage payment is now really $1182 - technically less than the rent payment! Out of your total monthly payment of $1642, $210 is actually going toward the principal of your loan (i.e. creating equity for you), leaving the $1432 as tax deductible mortgage interest. (Bear in mind that over time, more of your payment gets applied to principal and less toward interest). With mortgage interest totaling approximately $17,184 per year, and with your 28% tax bracket deduction, Uncle Sam will give you back over $4800 on your taxes!! Try getting some of your rent payment back each year! This tax deduction is about $400 per month of real money. Now, here's where the strategic part comes in: While many people will use their mortgage tax refund as a forced savings plan and consume that money yearly on vacations, new clothes, jet skis or other money draining expenditures, you should think about reinvesting that money back into your mortgage. Taking your yearly mortgage tax refund and applying it to your mortgage is the same as sending in about $400 extra dollars each month toward your mortgage principal. However, because the amount of principal that gets paid versus interest increases over time, you'll get less and less of a tax write-off over the years. Though the benefits are still huge and the concept here still works, and because your refund will decrease over time, we'll assume you were able to only send in $3960 per year ($330 per month) (even though if your income increases you may find yourself in a higher tax bracket.) By applying an extra $3960 each year towards your $250,000 mortgage, you will have it paid off in just 18 years!! Now you no longer have a mortgage or rental payment, and you own your home free and clear! Another way to look at it this: Uncle Sam paid for 12 years of your original 30 year mortgage. Talk about a tremendous benefit! Ok, so now what? You were already making a monthly mortgage payment of $1642 to the mortgage company, and even though your house is paid off, you're going to continue to make that payment - but this time to yourself. If you were able to earn a modest return of 6% per year by investing that money in that last 12 years, you would accumulate a nest egg of approximately $333,000. Conversely, by year 18, the renter is no closer to owing his home than he was when he started, and his rent payment has reached about $3000 per month! Your $250,000 home has been earning a very modest 3.5% appreciation per year, is now worth over $701,000 by the end of year 30. This figure, plus your investment account nest egg of $333,000, gives you a net worth of about $1,034,000!! Article Source: http://EzineArticles.com

Author: Ed Lathrop Probably the longest commitment we ever make in our lifetimes is the 30 years we commit to a mortgage. There isn't too much we can count on having after 30 years, but unless we sell our houses or hit the lottery, we can be sure we will be paying off our mortgages for a long time! Imagine how nice it would be to be mortgage free! It would, in many cases be like getting a $1,800 a month raise. It doesn't seem possible anyone would have any kind of financial difficulty if he didn't have a mortgage hanging around his neck. You could buy just about anything and go just about anywhere without needing to prepare your budget around that monthly mortgage payment. In this article, we will explain how to pay off your mortgage in double, triple and even faster time! Oh, it won't necessarily be easy, but it can be done. It has been said a person can do anything with motivation and a plan. So, here's the plan. Check your interest rate If you are paying over the market rate on interest it may behoove you to refinance to the lowest rate you can get. Here's why: A $250,000 mortgage at 8% for 30 years comes with a monthly payment due of $1,834.41. Looking at an amortization schedule for this mortgage we find on the first payment, the principal being paid is $167.74. A $250,000 mortgage at 6% for 30 years comes with a monthly payment of $1.498.88. Its amortization schedule shows the first payment's principal portion is $248.88. Why is this important? Because you want to pay off as much principal as possible while paying as little interest as possible. The early months are the most important ones With the 8% mortgage, as we have noted the first monthly principal payment is $167.74. The principal portion of the payment increases slightly with each payment. So, for payment number 6, the principal paid is $173.41. If we add the principal payments for payments 2 through 6 together we get $855.64, and if we add this amount to our first payment, we will have paid the first 6 payments of our mortgage. If we keep adding $850 to $1,000 to our payment every month for the next 6 months, we would have paid off the first 6 years already! As you can see, the early months are important in getting a good start to paying off a mortgage early. This is because in these months, the interest, which is time value, is expensive. So, by not using that time we save a lot of money. Double time and then some Now let's see what would happen if we doubled the payment every month. The payment due monthly is $1,843.41. If we paid $3,646.81 monthly, we would be paid in full in 7 years and 7 months. Now that's quick! Here's why it's important to get as low an interest rate as you can. If you had a 6% interest rate on the same amount for 30 years, the monthly payment would be $1,498.88. With this loan, if we paid a total of $3,646.81 monthly, we would be paid in full in exactly 7 years. So, we would save an extra 7 times $1,498.88 or $10,492.16. Who's got that kind of money? Of course, coming up with an extra $2,000 a month is a bit much, but this is the kind of money it takes to pay off a mortgage in a lightning quick mode. So, to get a more realistic goal, here's what to do. Look at the mortgage's amortization table and scan down to the halfway point. This would be payment number 180 on a 30-year mortgage. Take note of the principal portion of this payment. On the 6% mortgage we have been talking about, it is $607.73. If you pay this amount in addition to each of your monthly payments, you will have paid off the mortgage in full in exactly 15 years. Again, sometimes coming up with additional payments is difficult, but this method gives you an idea of how making relatively small additional payments can help you pay off your mortgage way ahead of schedule. Article Source: Article Base

By Kalinda Rose Stevenson, PhD Can the Federal Reserve stop a recession or prevent inflation by its actions? On Tuesday, August 5, the Federal Reserve voted to keep the interest rate for banks unchanged at 2 percent. Although I am by no means an expert on the economy and the role of the Federal Reserve, the actions of the Federal Reserve often remind me of that old cartoon about the conversation between Bob and Joe under the streetlight. Bob sees Joe looking at the sidewalk under the streetlight and asks: Bob: "What are you looking for?" Joe: "My keys." Bob: "Did you lose them here?" Joe: "No, I dropped them over there." Bob: "Why are you looking for them here, when you dropped them over there? Joe: "There's no light over there." The goal of the Fed is to control the money supply to prevent both inflation and recession. It's easy to think of the Federal Reserve as a giant puppet master in Washington, able to pull the strings of the economy when it goes off track. As powerful as it is, the Federal Reserve is really a one-trick pony, with one major tool. It can raise or lower the interest rates that it charges banks for money. The Fed's problem is that its main policy tool----setting interest rates for the banks----can only address one problem at a time. To get back to Bob and Joe, the real problem is "over there, but the Fed can't fix that problem, so it stands under the streetlight, looking for a solution in the wrong place. The two big threats facing the economy right now are inflation and recession. What can the Fed do when inflation is not the result of interest rates but the cost of oil? What can the Fed do when recession is not the result of interest rates but a result of the housing, mortgage, and credit crises? What effect does the Fed's decision to hold the banks' prime lending rate at 2 percent have on inflation when the primary cause of inflation is oil prices? Consider what happened in the 1970s, when oil prices shot through the roof and the Federal Reserve raised interest rates. The result was "stagflation," an era of both inflation and stagnant growth in the economy. Once again, we have rising inflation, triggered mostly by oil prices, and either the imminent threat or reality of recession as a result of the housing, credit, and mortgage debacles. What is the Federal Reserve doing in response? The decision on August 5, to keep the prime lending rate unchanged, is not so much smart strategy as recognition that the Federal Reserve can't do much to prevent inflation or control recession. So, will the Fed's decision help the economy? Will it either prevent recession or inflation? Wall Street responded favorably to the Fed's decision to keep interest rates unchanged, but it is important to note that Wall Street was already responding favorably because oil prices have fallen. Taken as a whole, the economy is affected by many forces. Many of these forces are far beyond the control of elected officials and the actions of any agency, such as the Federal Reserve. Although the actions of the Federal Reserve are powerful, they are not all-powerful. And so, the Fed makes its decisions under the streetlight, and keeps its fingers crossed, hoping that keeping interest rates for banks unchanged for now will buy time for other economic forces to work. Article Source: http://EzineArticles.com

By Tyron Mcdaniel Now more than ever, there are more people building their own dream home all around the country! You can drive through inner city America in most cities and experience the rapid redevelopment of the inner city with dense townhome construction and McMansions. (McMansions are semi-custom homes from 3,500 to 5,000 sq. ft) Likewise you can take an evening drive to the outskirts of town and see more McMansions and estate homes being built on acreage and waterfront home sites. Many of these homes are being built by families fed up with the low quality inefficient tract homes and are opting for a more custom and personal approach to the homebuilding process. Most people consider the merits and even dream of building their own home but never really grasp the true financial benefits and the reality of being able to design and build their Dream Home! The allure of being able to build the home of your dreams with your favorite amenities is quite a temptation to resist however most get equally (if not more) excited by the tremendous savings that can be realized! Building your Dream Home for less has nothing to do with cutting corners or building a home that lacks quality and first class workmanship. In fact, you will find that most Owner Built homes are superior in quality and design to many tract homes and overall provide a better quality of life for their owners. There are several pieces to the custom dream home puzzle however, I have found that there are (3) primary strategies to employ to help you build your Dream Home for less! #1 - Secure favorable terms from a local Construction Loan Expert first! - Working with a lender who is well versed in the various construction loan programs available will go great lengths in helping to save you thousands of dollars when constructing your dream home. In most cases, your Construction Loan Expert will be able to provide you with referrals of reputable builders, real estate agents and architects as well as contractors who work with owner builders. And because you have the money in advance of securing any of the other respective members of your Custom Dream Home "Dream Team" it gives you an unfair advantage in negotiations, not to mention the added savings of providing you with the best loan terms available. #2 - Eliminate the retail builder "markup" by managing certain aspects of the building process! - Most people think the largest cost savings are realized via sweat equity, however the time you spend planning and managing the process has proven to be 3 times more profitable than sweat equity! The best way to eliminate the retail builder mark-up is to hire an independent builder or general contractor to handle the day to day operations and management of your construction site. Generally you will be paying this construction professional based on the scope of the overall project or on a per square footage basis. People who build in this manner generally realize savings of 22-30% or more on the total construction costs of their Custom Dream Home. #3 - Build your Custom Home in a relatively new, growing community with strong demographics! - We have all heard that location, location, location is the key to success in real estate. Location is especially important when constructing your Custom Dream Home. It is important that you really study the building and development trends as well as the demographics of the areas that interest you before making the final decision. I have seen cases where a $400k home increased in value to $750k in a 5 year period while a comparable home in a comparable community in that same time period only appreciated $75k. So as you can see location is truly key and it could have a drastic impact on your overall net worth. I have found that upper middle class suburban communities and urban inner city areas tend to outperform over time so start your search there. Using these tips as a guiding point, you should be well on your way to planning and eventually building your Custom Dream Home for Less! I trust that you find this article informative and helpful and I wish you the best with your Custom Dream Home project! Article Source: http://EzineArticles.com