Insurance and Credit

It is so hard top think of the future, and this is doubly so when you are constantly reminded of the obligations brought upon by the spending in your past. Why will you think of putting more money into savings when you are still worrying about your student loan? How can you think about the far-off retirement years if you have to worry about mortgages today?

In this time and year, even the current events present problems that will make you think twice before investing for the future. What if the total amount you have from ten years of frugality devalues by more than 50% in the stocks in less than a month? With the recession in full swing, this is unfortunately a very likely scenario.

It is thus very tempting to live for the moment, rather than think ahead and invest. It’s easier to think of this month’s bills, or even this year’s financial situation, instead of worry about what may happen in the years or even decades to come. I don’t blame them for thinking this way, but I also think that this is not the most responsible way of thinking.

You see, one of the fundamental truths of the human condition is the fact that everyone gets old sometime. And when your body has aged and has become weaker than it used to be, you just can’t work as efficiently as you did before. By then, the best course of action would be to rely on your investments.

Even that will be denied from you, however, if all your money has been stored in savings accounts with almost non-existent interest rates. Investing, then, can be summed up as the measure that you take for the inevitable rainy day. It may seem far away right now, but that doesn’t mean that it does not matter. So save up, invest, and be prepared. Who knows? If you do it really well, you may capable of retiring earlier than expected.

When purchasing a new property you can either use a mortgage broker or direct lender. A broker works with multiple lenders and is able to compare rates, turn times, service, etc among lenders. A direct lender will work directly with you. Both utilize loan officers who could be your primary point of contact, answer your questions, help you through the application process, etc. A direct lender can also be a wholesale lender and thus work directly with borrowers, or work through independent brokers.

When you are going to apply for a direct mortgage, you can utilize either a mortgage broker or a direct lender. Mortgage banks do allow borrowers to contact them directly. Direct lenders may also have an online application process. If not, you may be able to obtain an application at their offices or branches. Even if your realtor has recommended a specific mortgage broker, you still have the ability to attempt to obtain commitment from a direct lender on your own. For your first mortgage, there is no requirement that you must use a broker. You are able to apply with a lender directly.

A purchase mortgage is not the only product that direct mortgage companies might offer. Many lenders in this market will also offer a refinancing product. Refinancing may be advantageous if you are currently paying interest rates that are excessively higher than those currently available on the market. Refinancing may allow the homeowner to not only minimize the amount of interest being repaid to the lender, but also pull out some cash at the same time (called a “cash out” refinance). As with a purchase mortgage, the person requesting the funding is able to apply for a refinancing loan directly from the lender.

Refinancing for a better term is not the only alternative product available with direct mortgage lenders. Some of these direct lending sources will also have a line of credit or second mortgage product available, useful for home renovations or major home repair. These types of loans use the current equity of your property as the basis for securing the note. As with any other mortgage product, once issued, the bank or financial institution will place a lien against the title until the note is satisfied in full. Once full payment has been remitted, the lien will be removed and the title will be clear.

It’s up to you to decide whether to use a broker or a direct mortgage lender. Either way, there is a similar application form commonly known as a 1003. Remember, you can walk into a local bank branch, fill out your home loan application online, or work with a broker – the option is yours.

New relief for most workers, retirees and other Social Security recipients. The Making Work Pay credit, created by ARRA, offers tax credit anywhere from $400 to $800 for filers. The credit generally is phased out for joint filers with AGIs exceeding $150,000 and for other filers with AGIs exceeding $75,000. Unlike 2008′s recovery rebate, which was dispersed by checks, this credit will usually be dispersed through a cutback in income tax withholding.

In addition to the credit for workers, it also pays out a one-time payment of $250 to fixed-incomers. Disabled vets and Social Security recipients will generally qualify. In a similar way, it will create a one-time refundable tax credit to specific government retirees that may normally not qualify for Social Security benefits. This $250 reduces any applicable Making Work Pay credit.

The bulk of the tax relief for individuals involves expanding existing breaks. Here are the key changes to be aware of:

Credit for first-time homebuyers. First-time homebuyers that qualified last year could receive a refundable credit equal to 10% of the purchase price of a principal residence. Originally set to expire on July 1, 2009, ARRA decided to extend this credit to purchases made before Dec. 1, 2009. The act would also increase the highest credit from $7,500 to $8,000, if the qualifying purchase was made after Dec. 31, 2008. Perhaps most noteworthy about the act, qualifying purchases that take place after Dec. 31, 2008 eliminate the repayment compulsion for taxpayers. The only exception to this would be when a home is sold within three years of purchase.

American Opportunity education credit (previously called the Hope credit). This credit, expanded by ARRA, covers 100% of the first $2,000 of tuition for 2009 and 2010. This would also apply to related expenses (including books) and 25% of the next $2,000 of such expenses. For the first four years of postsecondary education, the maximum credit is $2,500 per year. (The most you could receive with the Hope credit was $1,800 and it only applied to the first two years of postsecondary education.) For joint filers with AGIs more than $160,000 and for filers with AGIs more than $80,000 the credit is phased out.

529 savings plans. Generally under the 529 plan, tax free distributions for education expenses include tuition, room, board, mandatory fees and books. For education expenses paid in 2009 and 2010, ARRA includes computers and computer technology.

Help given to laid-off workers. Although much of ARRA focuses on working Americans, it also provides some tax relief for laid-off workers. For 2009, the act suspends federal income tax on the first $2,400 of unemployment benefits per recipient.