Long Term Cash

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Long Term Cash
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Refinance
Home Equity Loan
Reverse Mortgage
Auto Loan
Student Loan

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Home » Long Term Cash

Sorting out long-term finance solutions takes a bit more time and patience, but putting the time and effort in now will help you in the long run. These financial instruments can be very confusing to the untrained person, but with some knowledge, you can really take advantage of all your options. If you don’t have a clue what you are doing, you can easily be suckered into something that will hurt you in the long run.

In college, I had a friend who worked a summer for a very unethical loan broker. My friend quit when he realized that this guy was screwing the average working homeowner. This broker was selling sub-prime loans to people who absolutely could not afford them. He would sucker his victims in by offering shockingly low introductory rates (so low that the mortgage balance was actually going up rather than being paid off). The victim would take the loan, and after a few years the monthly payment would more than double and the poor soul would default on the loan and eventually lose his or her house.

Unfortunately, stories like these have been all-too-common; giving mortgage brokers a terrible name. After the whole sub-prime collapse in the last few years, the industry has wised up to these unethical lending practices. It is a lot harder to sell a risky now than it was a few years ago. Still, you should be very cautious when looking for any type of long-term mortgage or loan.

Here is a brief overview of some of the popular long-term financing solutions:

Mortgage – Probably the biggest loan most people will ever get in their entire lives. Financing your home is an excellent choice as property values tend to increase over time, and it is almost impossible to buy a house for just cash.
Refinance – Refinancing your home mortgage is basically replacing your current mortgage with a different one.
Home Equity Loan – As your home increases in value over time, you build up what is called “Equity”. If you have considerable equity in your house, you can borrow against that value (pull some cash out of your house) in what is called a “Home Equity Loan” or “Home Equity Line of Credit”.
Reverse Mortgage – When you are nearing retirement, this becomes an option if you have a bunch of equity in your home. It is basically like getting a little Home Equity Loan each month; you get a check every month, but your mortgage balance keeps going up. Eventually you sell the house and pay off the reverse mortgage.
Auto Loan – Although I don’t think it’s a good idea to finance something that decreases in value, many people still choose to take out an auto loan. Using an auto loan to purchase a dependable, efficient car while building credit by making all your payments on time can pay off in the short and long run.
Student Loan – Education is one of the best investments someone can make, not only financially, but also on a personal level. Most people aren’t fortunate enough to be able to afford collage in cash, so there are plenty of ways to pay for your education through loans, scholarships, financial aid, etc.

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