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Advantages of Land Contracts for the buyer:

Buying property using a land contract may benefit you if you have a difficult time finding bank financing due to credit problems or have non-traditional income sources. In that case, without the use of a Land Contract, buying your home would be much more difficult.

Won’t your income and savings, crucial aspects of your financial status, and your ability to handle more debt (a mortgage loan) increase in the coming years? Of course they will! But a lender bases its decision on what you make NOW, and what you have saved NOW. Many individual sellers, on the other hand, will recognize that your financial future is indeed bright.

Many of the usual closing costs are eliminated when you use a Land Contract to complete your real estate sales transaction. Purchasing a title insurance policy for the lender is not an applicable cost when there is no bank involvment in the transaction.

Also, you probably don’t need to pay for a new survey if you are buying a home in an established, platted subdivision. There is no need for an appraisal, either. You and the seller have already agreed upon the value of the home. Neither of you are concerned anymore about the prices that comparable homes have sold for in the area.

The single biggest closing cost is usually the discount points charged by the bank to increase its yield, or its profit from the interest on the loan. You will not have this expense when you buy on a Land Contract. If the seller feels she needs a higher yield, she should have insisted on a higher interest rate when you were negotiating your purchase agreement.

Advantages of Land Contracts for the seller:

A Land Contract allows the seller to make additional money on the financing of the sale of their property, collecting not only the purchase amount but also the interest on the principal balance. By acting as the bank in the property transaction, she gets to make the profit as the bank “normally” would.

Selling a home on Land Contract when you have an underlying mortgage loan is a time-honored method of profiting in the residential real estate market. The Land Contract payment will usually far exceed the mortgage loan payment amount, due to appreciation.

When a home is sold using a Land Contract, the seller retains ownership rights. She can pledge the equity in the home as collateral, or even get a bank loan in the amount of the principal balance.

There are considerable advantages of land contracts for both the buyer and seller when a Land Contract is used to convey the property. Another factor that can benefit both buyer and seller is the fact that the sale can be closed tremendously faster. It is not unusual for a Land Contract transaction to be closed within a few weeks of the final signing of the sales agreement.

Paul Anderberg

More information about Land Contracts, and many other topics important to first time home buyers, can be found at the author’s website:
http://www.first-time-home-buying.net

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You insure your home. You insure your life and the lives of your loved ones. Why not insure your investments?

With current market conditions tossing most portfolios around, it would make sense to protect your portfolio. After all, the work we do significantly lowers the risk of losing money in an investment we choose to get involved in. But we never completely eliminate all the risk in the market.

Buying a protective put will help protect your new stock purchases in the market. This can be really helpful when you want to buy a particular stock, but the overall bias in the market is down. What is a put? A put is a contract that gives the buyer the right to sell stock at a certain price and during a defined period of time, up to the expiration of the contract.

When you buy a stock, three possible events can occur.

The stock can go up.
The stock can do nothing
The stock can go down.

In two of the three scenarios above, you do NOT make money. In one of the scenarios (where the stock goes down), you have a significant chance to lose money. Let’s focus on what happens when you lose money.

At this point, I think it’s prudent to draw a comparison. If you drive a car, and your car is wrecked in an accident, you have insurance to put you back “whole” or close to it, again. A put works in similar fashion.

Suppose when you buy a stock at $80, you also buy a put that expires in 6 months, and you pay $3 for that contract. Much like insuring your car for the next 6 months. If nothing happens to your car over the next 6 months, you won’t get that insurance premium returned to you, will you? You won’t get it returnedand in fact, you will usually pay another premium to cover your car for another 6 months.

The purchase of the put means you can sell the stock at $80 anytime before the contract expires. Even if the stock drops to $35, you have the right to sell at $80.

If the stock goes along as planned, and goes up, congratulations, you’ve made money. The premium you paid for the put was for insurance for the six months. Just like the example with your auto insurance, that money will not be returned to you (it was the cost of coverage).

If the stock does nothing, although you have not made any money, you know that your investment was covered in case of something negative happening for the last six months.

If the stock goes down, you have coverage, and you also have choices. Remember what you own with a put is the right to sell the stock, in this example, at $80, no matter what’s the current price of the stock (whether it is $75, $45, or even $1).

You can sell the put in the open market for whatever is the current value.
You can exercise the option and “put” the stock to someone at $80, no matter what the current price of the stock.

If you decide to exercise the put, you have yet another set of choices. You can put the money in your pocket (remember that you effectively sold the stock for $80). Or you can buy the stock back at the lower market price, if you like the stock and think it makes sense for you. If the stock has dropped a lot, you could conceivably buy even more shares than you originally purchased.

This strategy isn’t for everyone. And you shouldn’t rely on this article as complete and personalized investment advice for your situation. But if you are investing money that you care about, whether it is in a home, a car or a stock, you should take steps to protect it. Which is why we should really talk.

With the market on defense, it makes sense to have some protection for some of your prized possessions. If you’d like to see how you could get some coverage for the stocks you own, visit Mullooly Asset Management, at www.mullooly.net, or call us, toll free at 877-223-7300.

I hear too many people say they’re staying away from the stock market, because it is too risky and you can lose a great deal of money. Without measuring or knowing the risk, or a game plan in place, you are almost certain to lose money. In my next article, I’ll share with you a strategy that can limit the amount of money you lose in a stock, to a small amount. This approach can keep you afloat in the market longer than trying your luck on buying a single stock.

About the Author:

Thomas P. Mullooly, President of Mullooly Asset Management, LLC (http://www.mullooly.net) has spent over twenty years in the investment industry, as a broker and as an investment advisor. Mullooly Asset Management is a fee-only registered investment advisory firm based in New Jersey, specializing in retirement plan accounts, particularly managing 401k, 403b, and deferred compensation accounts for individuals. Feel free to contact us to check out the relative strength of your portfolio by sending an email to tom@mullooly.net or visiting http://www.mullooly.net/403b-plan.html or sign up to receive the market report and tips on how you can soundly invest your money at http://www.mullooly.net.

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The most traditional way of saving money is through a savings account at your local bank. There are two types of savings accounts: passbook and statement. You usually don’t have a choice between the two, most banks offer one or the other.

A passbook account comes with a little booklet that you use to keep track of your deposits, withdrawals and interest. You are responsible for all of the necessary math. With a statement account, you receive a monthly or quarterly statement that details the transactions. Most savings accounts are insured up to $100,000 by the Federal Deposit Insurance Corporation (FDIC) or the Nation Credit Union Share Insurance Fund (NCUSIF).

A savings account is a liquid savings, which means that you can withdraw your money at any time. Federal regulations only allow you six electronic, telephone or preauthorized transfers each month. No more than three of the transfers can be made by check, draft or debit card. But you can usually make unlimited withdrawals through the teller or ATM. Certain savings accounts have a limit of, for example, three free withdrawals per month if your balance falls under a minimum amount. Make sure that you read and understand the savings policies before you open an account.

Most savings accounts have very low balances to open an account - sometimes just a dollar is required. But they may charge a monthly maintenance fee on accounts that fall below a minimum balance, such as $100. The fee can often be as much as $10 a month, which will quickly eat up your account. If you are looking for a savings account for your children, there may be special accounts that waive or lessen the fee.

There is a big difference in the amount of interest earned on savings accounts compared to other forms of savings. Most banks pay very little interest on savings as count, often as little as 0.25%. There are higher interest payments available through high-yield savings or money market accounts that are found online. Many high-yield money market accounts allow you to write checks, though high-yield savings accounts usually won’t offer that feature. There are some high-yield savings accounts that will allow you to link to your checking for faster and easier deposits
and withdrawals.

Online accounts are easy to open, but aren’t for everyone. Many people are concerned about entering personal information online. You may feel more comfortable being able to walk into a local bank and talk to someone face-to-face if you have a problem with your account. You simply have to weigh the customer service of a local bank with the higher interest available through an online institution.

It is highly recommended to keep an emergency fund in a savings account. You should have enough money in a savings account to pay all of your expenses for a three to six month period. You can also use the money for car repairs, insurance deductions and large appliance replacement. A savings account can often help to see you through a true emergency without ruining your financial stability.

Martin Lukac, represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!

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