Your home loan consists of four elements, two that you are probably aware of, and those are the principal and interest. Two additional elements, taxes and insurance, must also be considered when applying for a loan, secondary elements which can be the deciding factors in whether you get approved for a loan or not.

Which brings us to an important question — if you are in the market for a new home, have you factored in what your property taxes and homeowners insurance premiums will be?

Some things for you to consider:

You may have a general idea how much taxes you’ll be paying annually for your home, but there are factors which can skew these numbers tremendously, even in the same taxing district.

For example, taxes on a three bedroom ranch home could be higher than on a four bedroom colonial, because the width of a ranch home is wider than with a colonial. Other factors that can make a difference include: the age of the home, location, and property size.

Homeowners’ insurance isn’t as easy to figure out today as it was in the past. You may think that $500 annually will cover your insurance needs but discover that your home is in a flood plain, necessitating that you take out expensive flood insurance which is only available through the federal government.

You also discover that since your home is a little too close to the ocean, where all homes have seen rates double, triple, even quadruple since the 2005 hurricane season. What had once been a fairly small expense, home insurance isn’t any longer.

You’ve done your homework finding an excellent mortgage loan. Now go and check out what you’ll be paying for property taxes and homeowners insurance to see if you can really afford your new home.

Tags: home buy, home insurance, home loan, mortgage, private property, Property Taxes, real estate

If you’re considering refinancing your home, you’re not alone. Some homeowners are scrambling to beat a pending mortgage reset while others are simply wanting to find a better deal. A third group is even looking to consolidate some debt and are thinking of a new mortgage, an equity loan, or a equity line of credit to wipe out other expenses.

Tempting as it is to make a quick decision about home refinancing, it is always best to do your homework and weigh your options first. That mailing from a national mortgage lender, the email from a local broker, or the pop-up you got when visiting a personal finance site may be enticing, but better deals could be available to you.

Two key components should be considered when evaluating any refinance offer:

• What will your costs be to refinance?

• How much will you save each month by refinancing?

Some homeowners have been shocked to learn just prior to closing that they are responsible for thousands of dollars in closing fees, money that could be best used for reducing their debt.

If you can refinance for free, then the first question doesn’t apply. However, “free” may exclude some charges including title insurance, application fee, and related expenses.

Other things to consider when calculating your costs are:

• How big is your current mortgage? If you can’t handle the higher costs of a mortgage reset, then refinancing is the way to go.

• How long do you plan on staying in your home? If for just a year or two, then refinancing may not make sense. However, if you see yourself living in your home for at least the next five years, then you should recoup the costs related to refinancing.

Keep in mind that rolling your personal debt into a loan could be helpful, but it will add to the cost of your mortgage and add in an additional monthly expense in the form of an equity loan/line of credit payment.

Finally, keep tabs on the current financing trends. If rates are trending downwards, waiting to refinance could save you additional monies, perhaps enough cash to help you tackle your other debts separately.

Tags: equity line of credit, equity loan, home refinancing, mortgage, mortgage reset, refinance, second mortage

Several banks in my area have launched marketing campaigns touting their “free checking” accounts for new customers. Wooing new business is big business and financial institutions are battling community banks, credit unions, and online institutions for consumer money.

Free checking isn’t always what they say it is, with various strings attached to force you to do banking their way. Let’s take a look at some of the schemes out there and what you should look for when reading the small print:

Free Checking For A Year — One of the better offers available, you can get free checking with a bank for the first year. In some cases you may have to keep a minimum amount of money in the account or deposit $100 to get the free checking. Not a bad option, but remember: come the thirteenth month you can expect to pay an average of $12 monthly for an account that is no longer free.

Free Checking With Savings — You can get free checking all right, but the bank also requires you to open up a savings account and keep at least $1000 in it at all times. They’ll pay you interest on your account, usually a paltry .5%, which is well below the 3% ING Direct pays its customers for savings. Still, you’ll only get $25 extra in interest by depositing your money with ING, but you’ll be able to save $144 in checking account fees with this deal.

Free Checking With Mortgage – If you already have a mortgage at a particular bank, you may be eligible for free checking there as well. This is a good deal if the mortgage rate you received is a good one, otherwise you might do better looking for a new mortgage which could save you hundreds even thousands of dollars annually.

Checking With Interest — This is one of the worst ways for consumers to keep their money in a bank. Usually, in exchange for free checking, you’ll be required to open up a “super checking” account and maintain it with at least $1500 at all times in order to avoid a monthly fee. You’ll also be given interest, usually a paltry .25-.30 % on the balance which is $3.75 interest for the year.

Hidden Fees and Then Some — With most any checking account, there can be numerous fees which are usually hidden. Sure, you may get a little booklet explaining what these fees are, but who reads them? Besides, they’re frequently updated making it difficult to track the changes. Hidden fees include: ATM fees for using your debit card at other banks, overdraft costs, a per check charge for writing out a check, online banking fees, transfer fees, canceled check return fee, and check printing charges.

Rarely does a bank offer absolutely no strings attached free checking. Some banks offer excellent plans for seniors while others offer free checking to everyone else as long as you have at least one other deposit account or loan that is open and active.

Tags: banking, banks, checking, direct deposit