The most significant investment that many U.S. residents will make is the purchase of their home. Consequently, most home buyers will view and compare many houses in their price range, evaluate the appreciation potential of homes in particular neighborhoods, and conduct other research to help them choose the right home.

Yet many homebuyers, especially first-timers, do not carefully consider their mortgage refinance loan options even though most of them will take out a loan to purchase their home. Knowing how to pick the right mortgage loan is key to getting the best mortgage rates in 2012 and beyond.

Homebuyers should consider the following factors when they research mortgages to help them get the best rates and save the most money.

Income

A homebuyer’s income is the single biggest factor to consider when examining mortgage loan options. Buyers who are just starting out in their career generally earn a lower salary than those who have been working for decades. At the same time, buyers at the beginning of their careers are all but certain to see their income increase over time.

In order to guarantee the lowest possible mortgage payment, such buyers need to find the lowest possible mortgage rates when they buy. Over time, the mortgage rate and payment can rise because the incomes of these buyers also tend to rise.

Such individuals will likely find the best mortgage rates in an adjustable-rate mortgage that charges an interest rate lower than the fixed-rate average for the first several years of the loan and then increases the interest rate each year thereafter.

On the other hand, those whose income is stable and not likely to increase substantially will likely want a fixed-rate mortgage. The interest rate on this type of loan remains constant for 15 or 30 years, which means that the monthly mortgage payment remains constant as well.

Current Market Conditions

Getting the best mortgage rates also depends on current economic conditions. No matter the year in which they are purchasing, homebuyers should have a good idea of where interest rates are heading based on the news and the actions of the Federal Reserve.

If signs point to mortgage rates remaining steady for several years, it can be wise to choose an adjustable-rate mortgage because rate increases will not likely be very steep when the interest rates on these loans reset. If rates are likely to increase sharply, however, it is better to lock in a fixed rate before average rates go up.

In 2011, the U.S. federal government has generally taken action to keep average mortgage rates at historic lows. Fixed rates may remain low in 2012 because many experts do not expect the housing market to hit bottom before 2012. Nevertheless, low fixed rates cannot last forever, so buyers should look carefully at what the government is doing if they want to get the best deals.

Years in the Home

Obtaining the most beneficial mortgage rates also involves taking into consideration the number of years that one expects to live in a home. Those who are certain to live in a home ten years or more should go with a fixed-rate mortgage because it will save them money over time. Buyers who will probably move within five or ten years may do better with an adjustable-rate mortgage if they are likely to sell the home before their rates rise.

Of course, these are just some of the factors that homebuyers need to consider when looking for the best mortgage rates. Buyers who do their research and take their time in examining their mortgage options should find success when it comes time to close on the loan.

Photo By Jen and a Camera

You might not realize how much money you have tied up in insurance, and it’s not as if you can just cancel all of your policies. You need automobile, home, life, and health insurance at a minimum, and if you company doesn’t offer the last two as part of your benefits package, you may be drowning in insurance debt. Rather than go without and suffer any resulting consequences, give this line item on your household budget a quick audit to see if there are areas where you can realize some savings.

Automobile Insurance Savings

Local insurance agents will tell you there are numerous ways you can save on your automobile insurance. If you are a young driver, you might not have as many cost-saving options, but there are a few tricks that might help you, too. No matter your age, check your annual mileage to see if you fall under your policy’s low-mileage cap. If you do, you’ll pay less for your coverage. Talk with your insurance agent about driving courses. Seniors in particular can earn lower insurance premiums by taking a driving course and graduating with a certificate.

Purchase rather than lease your car. If your vehicle is paid off, you don’t have to carry full coverage in most states. If you lease your car, you might save money on monthly payments, but you’ll likely more than make up for that with full auto insurance coverage, a requisite to your lease contract. Finally, talk with your agent about anti-theft, safe-driver, and any other available discounts. If you have a car alarm, there is less chance your vehicle will be stolen. If you pay your premium in one annual sum, you’ll also save money that can go back into your home’s budget.

Home Insurance Savings

As with a car alarm, many home insurance carriers offer policy discounts if you have a burglar alarm installed in your home. Make certain your carbon monoxide and fire detectors are operational, too, and see how much savings that will fetch you. To stay out of debt, many subscribe to the “If you don’t need it, don’t buy it” philosophy, and this will save you money on your home insurance coverage. The more stuff you have, the more insurance you need, especially if you purchase a ton of valuable things. Live moderately – no, live modestly, and see how easy it is to save on your homeowner’s policy.

Combined Savings

Talk with your agent about combining your coverage, especially if you pay for health and life insurance, too. Many insurance companies want to place all of your coverage under one umbrella so they receive all of your business. In order to encourage their customers to do this, they offer significant savings – sometimes as much as a few hundred dollars – if you let them insure everything. Plus, it’s just easier to bundle your insurance; you make one payment for all of your policies and boom, you’re done. If you pay for the entire year, as discussed above, you’ll pay a lot less.

Is your insurance keeping you in debt without you even realizing it? Go over your policies carefully and then take a long, hard look at your life. Figure out where you can save and reduce this necessary debt.

If your inbox, internet ads, or television commercials are anything like mine, they’re probably yelling at you about your tax refund.  It’s Waiting For You!

As though it’s been lost all year long, or you forgot to pick it up after soccer practice on Wednesday.

Is your return just sitting there on the curb, in the rain, cold . . . lonely?  Hoping to see you drive up with a smile and a treat from McDonald’s?

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choicesDebt and investment are not often talked about in the same sentence.

After all, when someone is ridden with debt, it’s hard to think about investment. All your extra money needs to go towards servicing that debt, leaving nothing left over for investment.

There are some exceptions where certain investments balance well with certain low-interest debt, but these are in the minority. People with debt have to put a lot of attention and energy into getting rid of their debt, otherwise it’ll never happen. Investments are something to think about much later, if at all.
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How to Stop Worrying about Money

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You do it.  You know you do.  And it’s okay… I do it too. I’m talking about worry.  Specifically, worrying about your money.  How much you make, how much you spend, how to get out of debt, or how to avoid falling into debt. I actually don’t worry nearly as much as I used to.  […]

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Debt Freedom is a Lifestyle, Not Just a Goal

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I have a  family member who uses smokeless tobacco, which caused oral cancer in his lip and soft palate.  Thankfully, the doctors were able to remove the cancer with surgery. This was more than 7 years ago, but unfortunately he still uses smokeless tobacco to this day. His choices make us all sad and concerned, […]

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Bank Of America Sold My Checking Account

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Have you ever had one those moments where you realized that you don’t know how the world works? Like, you thought you had a handle on the flow of things, but then something happens and you realize “I have no idea what’s going on.” Well, it happened to me.  Bank of America sold my checking […]

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