Top Timeshare Travel Destinations

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By , July 30, 2022 9:46 pm

Everyone would think that top timeshare travel destinations would only be in coastal states like Florida, North Carolina, Cancun (Mexico) and South Carolina. But you would be amazed to find that even places like Nevada, California and Minnesota are vying to occupy the top timeshare destination spot. Also the rocky mountain states of Arizona and Utah are also not far behind. Each of these destinations has some special traits which attract visitors from all over the world. Not to forget the kind of amenities these destinations offer which makes them a crowd puller.
Talking of Florida, one destination that immediately strikes everyone’s mind is Orlando. It is considered to be the most favorite family destination in the world. Home to some of the world’s largest and most popular entertainment companies it has number of wonderful theme parks to surpass the expectations of families across the globe. The unlimited and impressive list includes Disney World Resort, Universal Studio’s Universal Orlando Resort, Sea World Orlando and Islands of Adventure. Millions of tourists around the world are overwhelmed by the joy and excitement offered by these resorts. Daytona Beach is also one of the world’s most famous beaches with nearly twenty three miles of beach front. It offers visitors a chance to experience sailing, surfing and jet skiing. Many competitions take place round the year here.
When thinking of vacationing who can forget Cancun, Mexico which is know for its white sandy beaches, great weather, bright blue sky and outstanding hospitality. One can get attractive timeshare packages and vacation discounts here.
Next on the list is Hilton Head Island, South Carolina. This destination is popular for its mild climate round the year. It offers excellent golf courses and cruises with the experience of watching dolphins. One of the main attractions of Cancun is the swim with dolphins feature and interactive aquariums. It is also home to many world class resorts. It also offers best of night life with many bars serving free drinks also. Nearly four million visitors pay visit to Cancun every year.
One can never ignore California when it comes to tourism industry. While Anaheim is home to Disneyland providing greatest excitement and pleasure and offering great discount on timeshare accommodations one cannot return without visiting San Francisco and experiencing its magic. The list of attractions include Fisherman’s Wharf ,Ghirardelli Square, Coit Tower, the mansions of Pacific Heights, world’s biggest Chinatown outside Asia, Union Square, world renowned landmarks like crooked Lombard Street. Night life is one of the greatest. One can go hiking also in Muir Woods and taste world’s greatest wines. Cable rides, Pedi-cabs, Pier 39 etc. there is fun unlimited in San Francisco offering you the complete experience of your lifetime.
Las Vegas, Nevada is not far behind any other timeshare destination as it offers visitors the 360 degree of entertainment. It is second to none in providing the ultimate in fun and excitement. It is the casino capital of the world and wouldn’t be wrong to call it the night capital of the world. Whatever one can think of, Las Vegas has it and that too the greatest of them all, big hotels, big casinos, big convention halls, big malls and what not. You only some good cash in your wallet if you visit this place and rest assured you will get the fun of your lifetime.
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Are You Considering Re-Financing?

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By , July 27, 2022 2:12 pm

Homeowners who are considering re-financing their home may have a wealth of options available to them. However, these same homeowners may find themselves feeling overwhelmed by this wealth of options. This process doesn’t have to be so difficult though. Homeowners can greatly assist themselves in the process by taking a few simple steps. First the homeowner should determine his refinancing goals. Next the homeowner should consult with a re-financing expert and finally the homeowner should be aware that re-financing is not always the best solution.

Determine Your Goals for Re-Financing

The first step in any re-financing process should be for the homeowner to determine his goals and why he is considering re-financing. There are many different answers to this question and none of the answers are necessarily right or wrong. The most important thing is that the homeowner is making a decision which helps him achieve his financial goals. While there are no right or wrong answer to why re-financing should be considered there are, however, certain reasons for re-financing which are very common. These reasons include:

* Reducing monthly mortgage payments
* Consolidating existing debts
* Reducing the amount of interest paid over the course of the loan
* Repaying the loan quicker
* Gaining equity quicker

Although the reasons listed above are not the only reason homeowners might consider re-financing, they are some of the most popular reasons. They are included in this article for the purpose of getting the reader thinking. The reader may find their mortgage re-financing strategy fits into one of the above goals or they may have a completely different reason for wanting to re-finance. The reason for wanting to re-finance is not as important as determining this reason. This is because a homeowner, or even a financial advisor, will have a difficult time determining the best re-financing option for a homeowner if he does not know the goals of the homeowner.

Consult with a Re-Financing Expert

Once a homeowner has figured out why they want to re-finance, the homeowner should consider meeting with a re-financing expert to determine the best refinancing strategy. This will likely be a strategy which is financially sound but is also still geared to meeting the needs of the homeowner.

Homeowners who feel as though they are particularly well versed in the subject of re-financing might consider skipping the option of consulting with a re-financing expert. However, this is not recommended because even the most educated homeowner may not be aware of the newest re-financing options being offered by lenders.

While not understanding all the options may not seem like a big deal, it can have a significant impact. Homeowners may not even be aware of mistakes they are making but they may here of friends who re-financed under similar conditions and receive more favorable terms. Hearing these scenarios can be quite disheartening for some homeowners especially if they could have saved considerably more while re-financing.

Consider Not Re-Financing as a Viable Option

Homeowners who are considering re-financing may realize the importance of evaluating a number of different re-financing options to determine which option is best but these same homeowners may not realize they should also carefully consider not re-financing as an option. This is often referred to as the “do nothing” option because it refers to the conditions which will exist if the homeowner does not make a change in their mortgage situation.

For each re-financing option considered, the homeowner should determine the estimated monthly payment, amount of interest paid during the course of the loan, year in which the loan will be fully repaid and the amount of time the homeowner will have to remain in the home to recoup closing costs associated with re-financing. Homeowners should also determine these values for the current mortgage. This can be very helpful for comparison purposes. Homeowners can compare these results and often the best option is quite clear from these numeric calculations. However, if the analysis does not yield a clear cut answer, the homeowner may have to evaluate secondary characteristics to make the best possible decision.

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Re-Financing to Consolidate Debt

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By , July 24, 2022 7:08 am

Some homeowners opt to re-finance to consolidate their existing debts. With this type of option, the homeowner can consolidate higher interest debts such as credit card debts under a lower interest home loan. The interest rates associated with home loans are traditionally lower than the rates associated with credit cards by a considerable amount. Deciding whether or not to re-finance for the purpose of debt consolidation can be a rather tricky issue. There are a number of complex factors which enter into the equation including the amount of existing debt, the difference in interest rates as well as the difference in loan terms and the current financial situation of the homeowner.

This article will attempt to make this issue less complex by providing a function definition for debt consolidation and providing answer to two key questions homeowners should ask themselves before re-financing. These questions include whether the homeowner will pay more in the long run by consolidating their debt and will the homeowners financial situation improve if they re-finance.

What is Debt Consolidation?

The term debt consolidation can be somewhat confusing because the term itself is somewhat deceptive. When a homeowner re-finances his home for the purpose of debt consolidation, he is not actually consolidating the debt in the true sense of the word. By definition to consolidate means to unite or to combine into one system. However, this is not what actually happens when debts are consolidated. The existing debts are actually repaid by the debt consolidation loan. Although the total amount of debt remains constant the individual debts are repaid by the new loan.

Prior to the debt consolidation the homeowner may have been repaying a monthly debt to one or more credit card companies, an auto lender, a student loan lender or any number of other lenders but now the homeowner is repaying one debt to the mortgage lender who provided the debt consolidation loan. This new loan will be subject to the applicable loan terms including interest rates and repayment period. Any terms associated with the individual loans are no longer valid as each of these loans has been repaid in full.

Are You Paying More in the Long Run?

When considering debt consolidation it is important to determine whether lower monthly payments or an overall increase in savings is being sought. This is an important consideration because while debt consolidation can lead to lower monthly payments when a lower interest mortgage is obtained to repay higher interest debts there is not always an overall cost savings. This is because interest rate alone does not determine the amount which will be paid in interest. The amount of debt and the loan term, or length of the loan, figure prominently into the equation as well.

As an example consider a debt with a relatively short loan term of five years and an interest only slightly higher than the rate associated with the debt consolidation loan. In this case, if the term of the debt consolidation loan, is 30 years the repayment of the original loan would be stretched out over the course of 30 years at an interest rate which is only slightly lower than the original rate. In this case it is clear the homeowner might end up paying more in the long run. However, the monthly payments will probably be drastically reduced. This type of decision forces the homeowner to decide whether an overall savings or lower monthly payments is more important.

Does Re-Financing Improve Your Financial Situation?

Homeowners who are considering re-financing for the purpose of debt consolidation should carefully consider whether or not their financial situation will be improved by re-financing. This is important because some homeowners may opt to re-finance because it increases their monthly cash flow even if it does not result in an overall cost savings. There are many mortgage calculators available on the Internet which can be used for purposes such as determining whether or not monthly cash flow will increase. Using these calculators and consulting with industry experts will help the homeowner to make a well informed decision.

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Timeshare Presentations: How to survive?

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By , July 20, 2022 11:56 pm

Have you ever attended a timeshare presentation? I wish you would never attend one. It is traumatic experience sitting through a timeshare presentation. Compare it to buying a used car from a dealer; this is even more frustrating experience as more money is at stake here. What is a timeshare presentation? It is nothing but a sales pitch by the timeshare companies to force people into buying their timeshares. It begins with an invitation offering you an expensive free gift in return of attending the presentation. Now you go to the presentation thinking that there is no harm in attending and you get a free gift also in return, but you realize that you have made the biggest mistake of life only when you sit through the painful presentation.
The expensive gift turns out to be a gimmick and you are subjected to sheer pressure tactics of selling. The presentation usually last for ninety minutes and may go on and on in some cases. After the presentation, the salesperson will encircle you and will ask you if you have any questions. They go to the extent of literally pressurizing you. They want you to either make a commitment or sign a paper before leaving the presentation. When you say constant no to him, the manager will approach and offer you a good deal. Sometimes it becomes very hard to resist the temptation after being offered such great deals. But you have to go mentally prepared to say no to them at any cost. Tell them clearly that you have already spent your precious time and can’t spare your time further. Say that you have an appointment with somebody and you have to leave immediately. And do not forget to take your gift before leaving the presentation after all that was the reason why you attended the presentation.
The salesperson and the managers would do their best to convince you to sign some papers by offering many offers, but you should stick to your resolution to not to fall into the trap by constantly saying into your mind that “no, I can’t afford to buy a timeshare” and “will I be able to make payments every month”. Politely say “no” to any offers however attractive it may look. Also say them that you need time to decide, take their contact number or fax number and tell that you will notify them about your decision. Also tell them that you would not tolerate any courtesy calls or emails.
You can also tell them that you already have a friends or family members in that timeshare location and you don’t need to buy a timeshare. Also another reason you can give them to escape is that you just came to the presentation for the free gift or you can also say that you just wanted to educate yourself about timeshares and it is too early to make a decision about buying a timeshare. You can also say that you are not one of the frequent vacationers and would be able to vacation year after year and even if you go for a vacation you don’t like to go to the same location every year. Also say that you are not in the financial position to invest in anything now or in near future. Thus we have seen it all depends on our mental setup to sit through a presentation and still survive it.
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Does It Pay to Re-Finance?

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By , July 17, 2022 5:06 pm

This is a question many homeowners may have when they are considering re-financing their home. Unfortunately the answer to this question is a rather complex one and the answer is not always the same. There are some standard situations where a homeowner might investigate the possibility of re-financing. These situations include when interest rates drop, when the homeowner’s credit score improves and when the homeowner has a significant change in their financial situation. While a re-finance may not necessarily be warranted in all of these situations, it is certainly worth at least investigating.

Drops in the Interest Rate

Drops in interest rates often send homeowners scrambling to re-finance. However the homeowner should carefully consider the rate drop before making the decision to re-finance. It is important to note that a homeowner pays closing costs each time they re-finance. These closings costs may include application fees, origination fees, appraisal fees and a variety of other costs and may add up quite quickly. Due to this fee, each homeowner should carefully evaluate their financial situation to determine whether or not the re-financing will be worthwhile. In general the closing fees should not exceed the overall savings and the amount of time the homeowner is required to retain the property to recoup these costs should not be longer than the homeowner plans to retain the property.

Credit Score Improvements

When the homeowner’s credit scores improve, considering re-financing is warranted. Lenders are in the business of making money and are more likely to offer favorable rates to those with good credit than they are to offer these rates to those with poor credit. As a result those with poor credit are likely to be offered terms such as high interest rates or adjustable rate mortgages. Homeowners who are dealing with these circumstances may investigate re-financing as their credit improves. The good thing about credit scores is mistakes and blemishes are eventually erased from the record. As a result, homeowners who make an honest effort to repair their credit by making payments in a timely fashion may find themselves in a position of improved credit in the future.

When credit scores are higher, lenders are willing to offer lower interest rates. For this reason homeowners should consider the option or re-financing when their credit score begins to show marked improvement. During this process the homeowner can determine whether or not re-financing under these conditions is worthwhile.

Changed Financial Situations

Homeowners should also consider re-financing when there is a considerable change in their financial situation. This may include a large raise as well as the loss of a job or a change in careers resulting in a considerable loss of pay. In either case, re-financing may be a viable solution. Homeowners who are making considerably more money might consider re-financing to pay off their debts earlier. Conversely, those who find themselves unable to fulfill their monthly financial obligations might turn to re-financing as a way of extending the debt which will lower the monthly payments. This may result in the homeowner paying more money in the long run because they are stretching their debt over a longer pay period but it might be necessary in times of need. In these cases a lower monthly payment may be worth paying more in the long run.

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Tax Considerations When Re-Financing

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By , July 14, 2022 10:37 am

For many homeowners the overall goals of re-financing are often paying less in interest overall and reducing monthly payments. When a homeowner is able to obtain a lower interest rate, there is usually the opportunity to re-finance the mortgage to capitalize on the lower interest rate. However, a lower interest rate does not automatically translate to a savings. The homeowner must carefully consider the amount of money they will be savings over the course of the loan in relation to the amount of money they will be spending to re-finance the mortgage. When the closing costs associated with re-financing are larger than the savings, re-financing may not be warranted. Re-financing can also have financial ramifications associated with tax options.

Paying Less Interest Equals Less of a Deduction

In most locations, homeowners are permitted to deduct the amount of taxes they pay on their mortgage when filing their tax forms. This is usually quite a substantial deduction for homeowners who owned the home for the entire tax year. Those who re-finance their mortgage will typically be paying less money each year in taxes on the mortgage. While this is great in the long run, it can adversely affect the homeowner’s tax return.

Consider a situation where a homeowner is located just below a major tax bracket which would be quite costly for the homeowner. As all ready discussed, re-financing may result in the homeowner paying less money in taxes each year. This means the taxpayer will be able to make a smaller deduction this year now fall above the tax bracket they previously fell below. When this happens the homeowner may find themselves paying significantly more in taxes.

Consult a Tax Preparation Specialist

Determining the exact ramifications of paying less interest on a home mortgage on a tax return can be a rather tricky process. There are a number of difficult equations involved which can make the apt to make mistakes while trying to determine the consequences of paying less in taxes on the mortgage. For this reason, the homeowner should consult a tax preparation specialist when determining whether or not re-financing is worthwhile because the tax specialist can provide information regarding the impact of paying less in interest.

In selecting a tax preparation specialist, the homeowner should seek out opinions from friends and family members if the homeowner does not employ a specialist to prepare their own taxes. This can be helpful because trusted friends and family members are only likely to recommend professionals they feel were knowledgeable, trustworthy and caring. A tax preparation specialists should have all of these qualities but should also be well versed in the area of tax preparation. This will enable the tax preparation specialist to make all of the right decisions when considering the needs of the homeowner.

Online Calculators

For homeowners who do not know a tax preparation specialist or for homeowners who are unable to afford the consulting services of these individuals, there are online calculators which homeowners might find very useful. These calculators are readily available throughout the Internet and can be used to determine the tax ramifications to re-financing. These calculators ask the user to input specific criteria then returns results regarding the amount the homeowner will pay in taxes during the year if he refinances. Additionally the homeowner can run these equations several times to consider a number of different scenarios.

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Know your Timeshare Rights

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By , July 11, 2022 3:47 am

One of the biggest reasons why many people fall into the trap of scammers and frauds is that they do know their legal rights when buying a timeshare. It is always a good practice to know your rights when you are signing any contract or agreement. As with any other industry timeshare industry is also prone to unscrupulous tactics by some people. Everyday you hear a story of somebody being duped into buying a timeshare and the property doesn’t even exist or in some cases, is not up to the standard and what they were promised. We here these horror stores and we should learn from these. Here are few things that you should remember while buying a timeshare.

To understand our rights let us understand different types of timeshare plans first. They are basically of two types. A deeded and title timeshare and the second one are right to use also as called license to use timeshares. A deeded and title and ownership means the buyer owns the timeshare and acquires a specific facility for a specified length of time each year, for a specified number of years (generally 40 years) and a deed. A right to use timeshare means the buyer has the right to acquire all the above mentioned things except the deed i.e. title. A deeded timeshare is inheritable whereas a right to use timeshare is like a lease which expires after certain number of years.

Timeshare industry has also acquired the reputation of used car industry in terms of selling tactics they use. It starts off with an invitation to a presentation offering you an expensive gift. When you actually go there it turns out to be a pressure selling session of a used car dealer who doesn’t want you to go out unless you sign a paper. And the expensive gift also turns out to be a mere gimmick. And the people have to go through the trauma of sitting through the presentation which goes on for two hours also sometimes, full of pressure selling tactics. But as per the law the people are supposed to be informed about the length of the time they have to sit before receiving a free gift. Also they must be informed about the physical condition of the facility. The timeshare companies are also legally not permitted to misrepresent the market value of the timeshare property. They are also not supposed to misinform you about the resale or exchange potential of the timeshare property.

The law also prohibits the timeshare companies from not including the oral promises that were made before the purchase of the property in the written contract and also including any kind of fees that were never ever mentioned orally. The rules may vary from state to state. Some states also have a cool-off period usually of two weeks to allow you to cancel your contract should you change your mind.

Apart from these rights one should also consider things such as do you really want to buy the timeshare? Did u check out the facility? Did you contact the better business bureau? Did you talk to existing owners in the timeshare property? Do you plan to rent it? Do you plan on reselling it? Do you plan on exchanging vacation sites frequently? The answers of all these questions should be found out before making a final decision about buying a timeshare.
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Pros and Cons of Timeshares

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By , July 7, 2022 8:15 pm

Everything in life has pros and cons. While pros may be important to some and to some cons. It depends on how you evaluate the benefits of buying a timeshare with your lifestyle and financial condition. For some it might be a miniscule portion of their wealth but for some it can be hard earned savings of their life. In either case, a smart person will always look into pros and cons before investing his/her money.

Let us discuss the pros first. To begin with, timeshare properties are more economical compared to buying a piece of real estate property for life and only using it once a year. Compare this you buying a property for lifetime for $200,000 with timeshare which may be only $10,000 plus annual maintenance cost of $500 for the life. If we assume the lifetime period of 30 years the calculation will be as follows:

$10,000+30 years x 500 = $25,000 for the lifetime

Compare it with buying a real estate property for lifetime you will save $175,000. Isn’t that a lot of money? Is it wise to invest that much extra money for once a year use?

Let us compare this with the cost of Hotel. Suppose if you spend $1,200 every year on a hotel, let us consider the cost for 30 years:

$1,200 x 30 years = $36,000 which is still more than $25,000 you pay for timeshare for the lifetime.

Apart from saving money you get the comfort of your home. In a hotel you might get only a suite. But a typical timeshare condo has two or three bedrooms, one or two bathrooms, a kitchen, a dining room and even a laundry room. Also timeshare units are usually fully furnished. Most of the timeshare properties have an indoor or outdoor pool also these days. In addition to that you also get resort facilities. What more somebody might want when they get all these facilities and comfort of home?

If you have a timeshare you don’t have to worry about the upkeep and maintenance of the condo. It is taken care of by the developer. Now compare this with buying a real estate property for the life, you have to do all the maintenance.

Not to forget, if you or your spouse is a person who takes vacation lightly, this is for you. If you have a timeshare, you definitely make it a point to go for a vacation at least once a year. You are also saved from the hassles of planning a vacation every year.

Most of the timeshare companies are associated with other timeshare companies. This allows the exchange of timeshare. This is one of the many reasons why people prefer timeshare.

Now talking about the Cons of timeshare, timeshares has become an avenue for many scammers and frauds. The timeshare industry has been plagued with variety of scam and fraud related problems. People are invited to attend a ninety minute presentation completely free and then they are subjected to the techniques of pressurized buying which is unethical in any sense. Do not fall prey to these tricks. Always read the documents carefully specially the fine prints before signing any agreements. Research the timeshare company well and know their reputation.

By paying a huge upfront fee your money is tied up for a long time which means you are losing money’s worth in addition to paying interest if you have taken a loan for the rest of the amount. Also you have to pay regular maintenance cost.

One of the major cons is the appreciation. The timeshares don’t appreciate much. They may be stagnant or even depreciate with time. They are also difficult to resale compared to a real estate property.

And last but not the least; timeshares may not be flexible enough for you to use it every year at a specific time. Although some companies offer flexible timeshares but it is only on first come first serve basis many other timeshare owners might also be planning to do that.

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Tax Information about Timeshares

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By , July 4, 2022 12:59 pm

Some people have a misconception that timeshare sales are not subjected to income tax. But in reality timeshares sales are subjected to income tax. It is treated similar to any other kind of real estate property. As a timeshare property is a capital asset so when you sell a timeshare and make profit on it, it is considered as a capital gain. But you have to own the property for more than one year for it to be eligible for income tax. You can include all the costs associated with buying a timeshare like closing costs you had to pay when buying your timeshare, the annual maintenance fee for all the years that you owned the property and special assessments if any.

But Like any other real estate property if you sell your timeshare and if you incur loss which is called capital loss, you many not be able to deduct the losses in your tax returns. But situation might differ if you regularly rent the unit; any loss on sale would be termed as allowable business loss and would thus be deductible as an allowable ordinary loss in tax returns. Loss on sale would not be allowed by IRS if the unit had been converted back to personal use before selling.

There are no other deductibles allowed against timeshares. The exception is the property tax only if it is billed separately. They are also deductible if the resort differentiates it as a different item on your maintenance fee bill. You may also be able to deduct the interest on a timeshare loan, but, only if the loan is taken as a mortgage and there should be no other deductible mortgages except your primary home mortgage. But sad thing is not all timeshare loans qualify as mortgage loans as they are primarily termed as consumer loans. Also you have to keep in mind that you cannot deduct interest on multiple timeshare loans at a time if you also have a primary home mortgage. But you might be able to deduct interests on multiple timeshares if they are at same resort, as they can be viewed as one timeshare.
The timeshares can also be used for donating to a charity. But there are some restrictions. If you want to donate a deeded timeshare, the allowable deduction is normally equal to the fair market value of the timeshare on the date of donation. If the fair market value exceeds five thousand dollars you will have to get a written appraisal that should meet IRS guidelines. In case of non-deeded and right to use timeshares which are considered as tangible assets, additional rules apply. The fair market value of the timeshare must be reduced by the amount equal to any gain that would have been made had the property been sold by the owner.
When it comes to renting your timeshare you can claim deductions on all expenses including depreciation cost, cost of advertising, rental commissions and maintenance fees. Certain kind of special assessments may be deductible like repairs and unexpected expenses. Expenses like remodeling may not be deductible, so are the travel expenses

Also one has to remember that vacation home rules apply if you use it for at least fifteen days each year for personal use. The timeshares can also qualify however you should use it at least 15 days.

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Re-Financing with Shorter Loan Terms

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By , July 1, 2022 6:19 am

For some homeowners there is the possibility of making a sound re-financing decision even when interest rates are stagnant, the homeowner does not have a great amount of equity in the home and the homeowner’s credit score has not increased significantly. You might wonder how this is possible. It certainly isn’t an option for every homeowner but those who can afford to pay significantly more each month can yield huge financial benefits by refinancing their loan terms from 30 years to 15 years. The benefits which may result from this type of re-financing include a significant overall savings, the ability to gain equity quicker and the ability to repay the balance of the loan quicker.

Higher Monthly Payments Increase Overall Savings

Re-financing with shorter loan terms is definitely not an easy option but homeowners who have a large monthly cash flow or who receive a sizable promotion at work might be able to consider the possibility of re-financing by decreasing the loan terms from 30 years to 15 years.

The result of this type of re-financing will be a significantly higher monthly payment which is not conventional but can be worthwhile if it meets the needs of the homeowner. In particular this type of re-financing option is a viable solution if the homeowner can afford the increase in monthly payments and has an overall goal of reducing the amount of interest they will pay over the course of the entire loan.

Reducing the amount of interest is critical to the overall savings plan because the homeowner does not have the option of reducing their original debt but they can drastically reduce the amount of interest paid over the course of the loan. Consider two loans with a 5% interest rate. One loan is to be repaid over a period of 15 years while the other loan is to be repaid over a period of 30 years. It is clear that in this example, the homeowner with the 30 year mortgage will pay more during the course of the loan.

Equity Gained Quicker

Another major advantage to re-financing by reducing the loan terms from 30 years to 15 years is the ability to gain equity in the home at a significantly faster rate. The amount of the equity in the home is equal to the amount of the principal loan which has already been repaid by the homeowner. Under a conventional loan, the homeowner typically pays a combination of principal and interest with their monthly payments. The amount of the principal which is repaid on two mortgages for the same amount and with the same interest rate will be different if one loan is a 30 year term and the other is a 15 year term. The homeowner with the 15 year mortgage will be paying more of the principal each month and will therefore be accumulating more equity each month. Gaining equity in the home quicker is ideal because it gives the homeowner greater flexibility. The equity in the home can be used for a number of purposes including home improvement projects, travel, educational pursuits and small business ventures.

Loan Repaid Quicker

One advantage of shortening the loan terms, which cannot be denied by some homeowners, is the ability to repay the loan quicker by re-financing to shorten the loan terms from 30 years to 15 years. In this case the homeowner will have completely repaid the home loan a full 15 years earlier than they would have under the conventional loan. This is advantageous because it can enable the homeowners to enjoy living mortgage free a full 15 years earlier. Once the mortgage is fully repaid, the homeowner may be able to make significantly more sizable contributions to his retirement plan. Some homeowners may even be able to afford to retire once their mortgage is repaid in full. This ability can have a significant impact on the quality of life for the homeowner. Homeowners may find themselves with the financial means to travel, assist family in educational pursuits or invest in a small business.

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