Mortgage Financing - A Q & A
When considering mortgage financing, it is important to look at three key issues - the rate structure, the loan term, and the tradeoffs in paying points. Fixed-rate mortgage payments remain constant over the life of the loan, but they are generally higher than those for adjustable-rate mortgages. Adjustable-rate mortgage payments typically start off lower, but can increase (or decrease) after the introductory rate expires according to changes in the underlying rate to which they are pegged (e.g., prime interest rate), potentially costing you more over an extended period of time.

The length of your loan term often affects both your interest rate and the size of your payments. You may obtain a lower interest rate on a 15-year mortgage that can significantly reduce the overall interest cost on your loan over the shorter payment period. However, your 15-year loan payments will be decidedly higher, typically reducing your maximum buying power and limiting your selection of potential properties to purchase. Particularly for first-time homebuyers, it may make more sense to take out a 30-year mortgage and make additional principal payments only when you can truly afford it.

Points are another factor to consider. One point equals 1% of the total principal amount of the loan. To determine whether or not paying points is cost-effective for you, calculate how much additional interest must be paid over the life of the loan in order to pay less money up-front. Paying points up-front reduces the initial interest rate on your loan. A general, though imperfect, rule is to equate each point paid with a reduction of one-quarter percent. The tax consequences must also be considered, for while points paid on home purchase mortgages are typically fully deductible for the year in which they are paid, points on refinanced mortgages must be prorated over the life of the loan.

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The Planning Process: Retirement Planning

Financial independence during retirement is a goal that many of us desire but rarely plan for adequately. We can estimate what you need to maintain your current lifestyle at retirement. Any company-sponsored retirement plans, individual retirement accounts, savings accounts, and other sources of income are evaluated. Then, an effective, step-by-step strategy is determined, taking advantage of current tax laws and suitable investment vehicles. Creating a strategy will help set the stage for a happy, secure retirement.

Five essential steps on the road to retirement

Establish Your Objectives
Determine Your Investment Style
Evaluate Investments
Choose an Appropriate Investment Plan
Execute and Periodically Examine the Plan
Establishing your retirement plan through Lincoln Financial Advisors means maximum investment flexibility. You have the ability to select and then reposition your portfolio holdings to satisfy ever-changing personal and economic conditions. Our selection of self-directed retirement accounts includes:

Classic IRA - An account established and funded by individual contributions or an individual retirement plan transferred from another financial institution.

Rollover IRA - A retirement account funded by distributions received from an employer's qualified pension or profit-sharing plan upon termination of employment.

SEP-IRA - A retirement account established and funded by employer contributions.

Start now!

The longer you wait to create a retirement plan, the more you jeopardize your future happiness. You'll thank yourself tomorrow for what you start today.