Category: Home Equity Loans

When comparing two investments with equal risk, a rational person will choose the investment with a higher rate of return.This behavior is called Risk Aversion and is a basic tenet of personal investing.

An off-shoot of Risk Aversion is that a rational person will only invest in an instrument of greater risk if the returns are greater, too.

A “spread” is the difference among investment return rates. Typically there is a 1.5% difference between government and mortgage debt.

In July, 2007 we began to hear about the increasing number of mortgage delinquencies and the now well known Credit Crunch. This occurred when the “spread” grew and mortgage investment was a higher risk.

The “spread” almost doubled in a year. On September7, 2008 the takeover of Freddie Mac and Fannie Mae was announced by the federal government. This action offered the “risk free guarantee” for mortgage debt. After the announcement of the takeover the “spread” decreased.

This is one reason why mortgage rates fell Monday and why they should continue to stay low over the near-term. With the U.S. government backing the mortgage market, there’s no room for the risk premium that helped keep rates high this past year.

This will not mean more people will be able to get mortgages. However, those who qualify may find that financing is cheaper.

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The mess on Wall Street confirms what we have been telling folks - the time to be DEBT-FREE is NOW!

While huge companies are falling to the way side, the firms with no debt and cash reserves are doing just fine. That is Exactly the position you need to be in as an individual. If you are Not paying the typical amounts to interest and taxes, you are going to be in a MUCH better position than most people are these days.

No doubt inflation has effected your family budget.

The Bush oil men started their plan of bringing on HUGE oil and gas prices several years ago. They apparently never stopped to think that if people are paying 3 times what they are used to for gas, they might not be able to pay their mortgage bills, car notes, or credit card bills.

Of course, with Lehman, Merrill Lynch, Fannie & Freddie and many others in the financial sector gone, folks are wondering where it all will end? Are we at the bottom yet?

Of course, now that Lehman, Merrill Lynch, Fannie & Freddie and many others in the financial sector have waved bye bye, folks are wondering where it all will end?

My guess is that this HUGE economic mess is no where near finished. Who knows, it might even lead into the Great Tribulation mentioned in the bible. No matter what happens, we better all take steps to protect ourselves now, and not wait on Washington to fix it.

The United Kingdom area offers a type of mortgage called an “offset” mortgage. This type of mortgage allows users to have money in a bank account through their company, but that money is savings is deducted from the final loan amount. If you have a loan out for 100,000 euros, and you have 50,000 euros in savings, then your total balance that will incur interest will be only 50,000 euros. Over time this saves a considerable amount of time and money. Some places in the United States are incorporating similar things into mortgages, but it is usually only available in European countries.

The advantages of using an offset mortgage are incredible, and those who use it rarely complain. It is friendly to your wallet, and also tax efficient. Offset mortgages allow room for low interest.

If you have a mortgage, or two, out for a total of 500,000, but you also have a savings account that you cannot use; then an offset mortgage comes into play. You can pay these off fast, and easily.

If you have money in your savings for the offset mortgage, and do not touch it at all, you can reap major benefits. Many people are turning towards offset mortgages because of this; especially if they already have savings. Having a savings account determined already will simple allow you to grow and expand upon what you already have.