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Sunday, December 28, 2008
To plan for early retirement you have to think beyond the regular full time job that you have and even beyond the 401K you are working hard to build. There are other avenues of saving for your future so that you can enjoy retirement at an early age.
These avenues can really help your finances grow so that you will be able to stop working well before you reach the age of 65. And even after you reached your financial goal you may find it easy to continue following the same pattern and continue to build on your savings.
The first key is to not rely on the government for your retirement and to realize that saving your income in a pension plan or a 401k is only setting you up for disaster. Social security is drying up and stocks are crashing literally every 10 years now so those two methods are useless. So how do you do early retirement planning? You invest.
The Variety Is Astounding
Probably the best way to secure your financial future is through investing in real estate. There are a lot of ways to do this and before you put a single penny into any investment you are best served by taking classes, reading books, and becoming very familiar with how to purchase land and property and what is involved in it.
There are always advertisements out there telling you how you can make millions in a day. To learn how to avoid the frauds and find the real investment opportunities you have to educate yourself. With a little know how you can find properties to invest in that have real potential for huge value increases.
You can buy property, fix it up, and sell it for a profit. Or you can invest in rental property and sell when it is time to retire. Any way you look at it investing in real estate is a solid way to secure your financial future.
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Spending some time looking into this matter could save you a significant amount of money especially if a loan is over a long period of time. Talk to your mortgage or loan company to see if this is possible or consider refinancing your higher interest loan with one that has a lower rate, this will help reduce the monthly payments and possibly leave you enough money at the end of the month to pay off a lump sum or to end the loan earlier than you may have thought possible.
Second, read the loan's terms and conditions and ensure that when you save enough money to pay off the loan earlier, you will not be left with an early settlement fee. You can search for important matters such as this on the phone, Internet or having a one-on-one talk with a financial advisor.
And of course, before taking out new loans or refinancing existing ones, be sure that you are completely happy with the decision you are about to make and again, check the terms and conditions.
Your credit score will play a huge part when looking for a lower rate of interest, if you have kept all your payments on existing and previous loans up to date you will be in a stronger position. If, however, your loan company cannot offer you a lower rate always ask them why and what you can do to be considered for a more preferable rate.
You might also want to think about a zero percent interest free credit card if you have an existing loan that has a high interest rate. In this way, you can just have the loan moved to the credit card but be wary that if you do this, always know when the zero percent rate will end, or you might end up paying a much higher interest rate.
Also ensure that the handling fee charged by the credit card company does not outweigh the savings made by moving the loan across.
Just remember that even if the interest rates on a variable rate mortgage appeals to you, the rates of loan mortgages can just go up or down, so be prepared for that. Fixed rates may provide you security thus giving you confidence to think that you will not be affected by a sudden increase in the interest rates of loans mortgages, but before knowing it, you have already been paying more than you think.
A reverse mortgage lender loans money, typically anywhere from 50% to 75% of homes value, to the borrower. The borrower uses that money as he or she sees fit.
Interest accumulates on top of itself and the loan to the senior borrowers. This is how reverse mortgage lenders make money. Only upon death and/or sale of the home is the loan typically required to be repaid to the lender.
Reverse mortgage companies are very careful about how much money they lend in relation to the value of the home. This is why age plays such an important role in this calculation.
The calculated loan amount helps the lender avoid being placed in a position where more is owed than the value of the home. The norm is the borrower or the borrower's heirs will have equity at sale.
If the borrower dies the home is passed along to the estate for liquidation to pay the mortgage company back. The mortgage company allows roughly 12 months for a sale.
Lenders are in the interest business. They are not in the foreclosure business. While the home is being marketed for sale they are still making money. Therefore, if it is being marketed at a fair price by a professional realtor, extensions are normally granted.
Of course the home always gets sold and the mortgage company gets their fair share of the proceeds. They are not, as many people still believe, entitled to all of the remaining proceeds.
Reverse mortgage folklore explains how the mortgage company gets all of this equity. Dirty, filthy banks praying upon seniors. On the contrary, the estate gets it.
From time to time a senior lives far longer than expected and the mortgage amount is greater than the sale price of the home. If this is the case, no worries for the borrower or heirs.
Reverse mortgages are known as non-recourse loans. This means if more is owed that home can actually sell for to repay the bank, the heirs or borrower are not on the hook for the difference.
Regardless of some of the mythology reverse mortgages are fairly safe for the borrower and estate.
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