1st Media Finance

December 14, 2010

Is Mortgage Refinancing a Good Option?

Filed under: Financial Tips — Tags: , , , , — @ 12:22 pm

Looking for a refinance guide to help you decide if you need to refinance your mortgage? Understanding the basics of mortgage refinancing is very important before you make your decision. Though there are many benefits you get from mortgage refinancing but there are also some risks involved. Awareness is your key in order to reduce these risks.

What are the common reasons why people decide to refinance 2nd mortgage? The main reason why people consider mortgage refinancing is for them to get lower interest rates. Having lower interest rates would also lower the monthly repayments. If you are planning to refinance your mortgage and you are looking for the best rates, it may be better if you consider getting fixed rates instead of variable rates. With fixed rates, you will also have a fixed monthly payment.

When you refinance your mortgage, you can also change the terms of your loan. You can extend the loan or choose a shorter loan term if you want to pay it as soon as possible. However, short term loans would entail larger monthly payments but more savings in the long run. If you can’t afford the monthly payments with a short-term loan, then choose a longer loan term.

You can also take advantage of mortgage refinancing in order to pay off your other debts. If you have credit card debts and other personal loans, paying off these loans through mortgage refinancing could be a good idea considering the lower interest rates of refinance 2nd mortgage. In paying off your other debts, you will have fewer things to worry about and you can just concentrate on paying of your mortgage. Mortgage refinancing also gives you extra cash which you can use for home repairs and improvements.

If your financial situation has changed of if you want to take advantage of the lower interest rates offered by many lenders then perhaps refinancing your mortgage may not be a bad idea. When you refinance your mortgage, you are basically getting a new mortgage as replacement for your current mortgage. You will have to go through all those credit checks and application process again.

November 23, 2010

Title small cap fund

Filed under: Financial Tips,Investments — Tags: , — @ 7:01 pm

For those of you who are interested in investing into the stock market, a small cap fund may be an important component of a well designed financial plan. However, new funds are being introduced each week, and with already several thousand of these funds to choose from, which is the one for you?
To be clear, small cap funds ideally serve a niche in an investment portfolio. Nonetheless, a consideration of some important principles of investing is helpful prior to deciding if a small cap fund is right for your portfolio. First, a well designed portfolio will be diversified among many different types of investments. A well managed mutual fund or exchange traded fund will assist in providing diversification small cap funds generally divide the investments in the portfolio among at least several hundred individual corporations, so this accomplishes diversification among small caps. However, in any given investment period, small cap stocks may outperform other sectors, or they may lag behind other sectors. A wise investment strategy is to balance the composition of one’s portfolio with large cap funds, mid cap funds, and possibly ‘style funds’, which include growth funds, value funds, international stock funds and emerging market funds, among others. A healthy mix of many of these in a portfolio will assure that an investor sees at least a portion of the best returns for any given period.
A second piece of wisdom in investing do not go hunting the small cap fund that has historically performed well. Likewise, one should avoid liquidating funds in one sector of a portfolio to buy shares of a competing fund when that fund is performing well. A mutual fund performance comparison may provide a snapshot of the returns for any financial quarter, but it does nothing to summarize the risks that the fund bears as it continues business, nor does it summarize the accounting assumptions that were made to create such lofty returns. Successful investors have found that the best strategy is to develop a sense of value of the fund in question, buy when prices are advantageous, and maintain discipline to the model investment strategy, particularly when some sectors underperform others. Assuming that one has the wisdom to diversify investments appropriately and to maintain discipline, periods of underperformance for any particular sector will become opportunities to increase one’s holding at a discount relative to an optimally performing sector. Such opportunities can make one a savvy investor.

November 16, 2010

Avoiding Mistakes When Rolling Over Your 401k

Filed under: Financial Tips — @ 5:20 pm

A big question that comes up when you leave your job is should you or should you not do a 401k rollover? When we say “rollover”, we mean that you can either transfer the assets into your new company’s 401k plan, or you can also tranfer it into an IRA account. Either way, doing a rollover is a very good move, but there are some mistakes that you need to avoid. Here are some of the most common mistakes people commit on 401k direct rollovers, and why you should avoid them.

NOT FOLLOWING THE 60- DAY RULE
Once you decide to do a rollover, the government will give you 60 days to transfer the assets into an IRA or another qualified plan. If you fail to do this, the assets (which are now in the form of a check) would be considered as regular income. This means you will pay for taxes, which is usually 20% of the total amount. Furthermore, you will also need to pay an additional 10% if you are under the 59 ½ years old when this happened.

FORGETTING THE ONE- YEAR ROLLOVER RULE
You can only do a rollover from a 401k plan into an IRA once a year. This begins when you receive the distribution, and not on the date when you did the last roll over. This one year rule applies to each IRA account, and not per individual.

NOT FOLLOWING THE SAME PROPERTY RULE
This is a very common mistake, so you might want to be careful about this. Once you do a rollover, you need to rollover the same property into the new IRA. You CANNOT purchase other investments with the money, or take a cash distribution from the plan. Failing to follow this rule will hit you the same as the 60- day rule, where the IRS would treat the money as regular income.

FAILING TO REMEMBER THAT RMDs ARE NOT ELIGIBLE FOR IRA ROLLOVER
When you are 70 ½ or older, you cannot include RMD (required minimum distribution) into a rollover, as it would be considered as an excess distribution.

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