Underwater Mortgage Numbers A Misleading Statistic

If you are looking to buy a home in Maryland or Virginia, statistics showing the number of underwater mortgages in a particular area could be a little off-putting. There are times when statistics are important, and times when they are not. This is one of those situations where the statistics could perhaps be ignored.

Why so? Underwater mortgages only tell you one thing – homes were once worth a lot more than they are now. Underwater mortgage statistics don’t necessarily relate to foreclosures or short sales. In fact, there are tens of thousands of home owners around the nation who have no idea what their homes true value is today. Their mortgage may well be underwater, however, these home owners are oblivious to that fact until it comes time to sell – then they may get a rather rude shock.

Statistics are just numbers and they are constantly moving. There are areas in both Maryland and Virginia where mortgages were underwater two or three months ago. Today, those home owners have equity – not much, but they do have equity. If you are looking at statistics prior to buying, look instead at days on the market, the number of foreclosures completed, or about to commence. The number of short sales and bank owned sales is also worth consideration. High numbers across those statistics could reduce home values.

At the same time, forward numbers that indicate a reduction in those numbers, for example, few foreclosures expected, could indicate a stabilization of the market in that area. Statistics are a valuable tool, however, when you read scary numbers such as 30% of homes in a particular area are underwater, ignore them – unless of course they mean the homes are literally underwater – if that’s the case, you would hope the home owner has good flood insurance.

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5 Financial Numbers You Should Know

iStockphoto

Financial literacy is an important, lifelong personal finance skill that everyone should have because it fosters careful spending and informed decision making. Responsible personal finance habits will guide you toward a life of financial freedom, and increasing your vocabulary of money words can only help. Here are five money definitions you should add to your financial literacy repertoire so you know how to get the most out of your money and financial decisions.

[More from Manilla.com: 5 Tips for Boosting Your Stock Portfolio]

1. Credit Score

Your credit score impacts many facets of your life including getting a loan for a car or house and being approved for a credit card. Because a poor credit score can have such a negative impact on your life, it’s important that you frequently check your credit score. Experts recommend checking your credit report at least once a year to catch errors or identity theft.

2. APY

APY—or annual percentage yield—is your yearly compounded interest generally associated with a bank account. Every year, your financial institution will pay you a certain percentage of the money you keep in an account and the APY determines how much you receive.

[More from Manilla.com: Financial Tracking & Budgeting Basics]

3. APR

APR—or annual percentage rate of interest—works the other way around. APR is the interest that you pay a financial institution or creditor on loans or credit cards. Therefore, if you know you won’t be able to pay your credit card bill in full each month, choose a card with a lower APR.

4. Mortgage rate

A mortgage rate is the interest rate charged by a mortgage lender, in this case regarding home ownership. Before getting a loan, shop around for a financial institution that has a low mortgage rate because a house is a large investment, and paying an above-market interest rate is a waste of money. Once you’ve obtained a loan, you should know your mortgage rate so you can make sure you’re getting the best deal out there. If you happen upon a lower rate, consider refinancing your home to save money. Before you make your decision, calculate the “payback period” because refinancing fees can be expensive.

[More from Manilla.com: 10 Steps to a Financially Organized Life]

5. 401(k) Fees

Recently, NerdWallet published a study that calculated fees associated with companies’ 401k plans can actually reduce a two-income family’s return on investment by as much as $155,000 in a lifetime. Many of us are unaware of these costly fees. How it works is when you invest in a company’s 401k plan, the money is often used to purchase mutual funds, some of which charge high fees and front-end loads. These high fees are associated with active funds using managers who make the stock purchasing decisions. On the other hand, passive funds that follow a market index without an active manager generally have lower fees. Do some research to learn more about your company’s 401k plan and the funds it selects to ensure you’re getting the most out of your hard earned money.

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

5 Financial Numbers You Should Know

iStockphoto

Financial literacy is an important, lifelong personal finance skill that everyone should have because it fosters careful spending and informed decision making. Responsible personal finance habits will guide you toward a life of financial freedom, and increasing your vocabulary of money words can only help. Here are five money definitions you should add to your financial literacy repertoire so you know how to get the most out of your money and financial decisions.

[More from Manilla.com: 5 Tips for Boosting Your Stock Portfolio]

1. Credit Score

Your credit score impacts many facets of your life including getting a loan for a car or house and being approved for a credit card. Because a poor credit score can have such a negative impact on your life, it’s important that you frequently check your credit score. Experts recommend checking your credit report at least once a year to catch errors or identity theft.

2. APY

APY—or annual percentage yield—is your yearly compounded interest generally associated with a bank account. Every year, your financial institution will pay you a certain percentage of the money you keep in an account and the APY determines how much you receive.

[More from Manilla.com: Financial Tracking & Budgeting Basics]

3. APR

APR—or annual percentage rate of interest—works the other way around. APR is the interest that you pay a financial institution or creditor on loans or credit cards. Therefore, if you know you won’t be able to pay your credit card bill in full each month, choose a card with a lower APR.

4. Mortgage rate

A mortgage rate is the interest rate charged by a mortgage lender, in this case regarding home ownership. Before getting a loan, shop around for a financial institution that has a low mortgage rate because a house is a large investment, and paying an above-market interest rate is a waste of money. Once you’ve obtained a loan, you should know your mortgage rate so you can make sure you’re getting the best deal out there. If you happen upon a lower rate, consider refinancing your home to save money. Before you make your decision, calculate the “payback period” because refinancing fees can be expensive.

[More from Manilla.com: 10 Steps to a Financially Organized Life]

5. 401(k) Fees

Recently, NerdWallet published a study that calculated fees associated with companies’ 401k plans can actually reduce a two-income family’s return on investment by as much as $155,000 in a lifetime. Many of us are unaware of these costly fees. How it works is when you invest in a company’s 401k plan, the money is often used to purchase mutual funds, some of which charge high fees and front-end loads. These high fees are associated with active funds using managers who make the stock purchasing decisions. On the other hand, passive funds that follow a market index without an active manager generally have lower fees. Do some research to learn more about your company’s 401k plan and the funds it selects to ensure you’re getting the most out of your hard earned money.

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.