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Financial Insights

5/22/2022

Pros and Cons of the 30 vs the 15 Year Mortgage

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Most homeowners consider the advantages and disadvantages of a 15-year versus a 30-year mortgage term when purchasing a home. Of course, the longer the loan, the more expensive it will cost the consumer over the term of the loan, but it also offers more flexibility. On average, almost 90% of homebuyers choose 30-year mortgages. Loan terms are principal determining factors in the decision making process as they state your interest rate, monthly payment and amount of interest paid.

For each type of a loan, an amortization schedule is determined which allocates a portion of the payment towards interest and the rest for interest. At the onset of the loan, more of the funds will go towards interest. Those that have chosen a 30-year mortgage will pay more interest over the term of the loan than those who choose a 15-year mortgage.

To better understand the differences between the two types of mortgages, let’s compare the pros and cons of each.

15 Year Mortgage

Advantages

  • More of the mortgage payment is being applied towards the principal, it decreases faster allowing for equity to build sooner.
  • Consumers are generally charged a lower interest rate because the bank considers the shorter term to be lower risk.
  • The overall amount paid on interest is much less.

Disadvantages

  • Monthly mortgage payments will be higher because the same amount needs to be paid over a shorter span of time.
  • A larger mortgage payment may reduce the overall budget for a home.

30 Year Mortgage

Advantages

  • Lower monthly mortgage payment because it is amortized over a longer length of time.
  • A higher budget can be assumed for a home because the monthly payments are lower.

Disadvantages

  • A higher interest rate will be applied to the loan because of the increased risk the lender is assuming for the longer length of the loan.
  • The overall amount paid on the loan will be greater.
  • It will take longer to pay down the balance and build equity.

Those who typically consider 15-year mortgages have higher incomes, low debt and/or are considering a less expensive mortgage. 30-year mortgages are preferable to those who prefer to use the additional income saved from lower mortgage payments on other investments, debt or prefer a more expensive property. A last consideration is to choose the 30-year mortgage, guaranteeing a lower mortgage payment, but then regularly adding additional funds to pay down principal faster..  In this way, you can skip adding the additional funds if they are needed for other expenses, but you can also accelerate the payoff of the loan.


5/10/2022

Post Retirement Jobs Worth Considering

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Recent studies show that twice as many retirees are working after retirement than three decades ago. May factors contribute to this shift. Retirees today are healthier, more educated and many are younger than the standard retirement age of 65. Therefore, whether it be by preference, necessity, or interest, those who have officially retired are more likely to seek a form of secondary employment.

There are several types of jobs that would significantly supplement a pension or perhaps allow an able body and sharp mind to contribute and occupy their time. Here are numerous options to choose from for a retiree that would like to be productive with their newfound freedom.

Mystery Shopper – This is a fun job that doesn’t demand much and allows you to enjoy various forms of entertainment, restaurants and shopping. As a mystery shopper you are paid to experience all of these types of establishments and provide feedback. The pay varies but some scenarios provide up to $50 per hour.

Adjunct Professor – If you have a degree and are looking for a part time position that makes a difference, this could be your ideal job. Retirees will also benefit from the higher pay range of up to $74 per hour.

Pets – If you love animals, this is a great way to earn up to $45 per hour. Pet owners appreciate someone who will treat their pet with kindness. Pet walking a couple hours per day or even pet sitting can be an easy task that will earn you a great income with the bonus of spending time in great company.

Librarian – If you enjoy some quiet time and love to read, consider putting in a few hours at your local library. This extremely relaxing job has a higher pay rate of $13 to $42 per hour.     

Furniture Refurbishing – If you are skilled with your hands and like to be crafty there is fun to be had and money to be made in the restoration of used furniture. Inexpensive or even free furniture pieces can be found on various sites such as OfferUp or local thrift stores. DIY ideas are available online for anyone starting out or in need of inspiration. Furniture can be resold for a 100% profit.

Transcriptionist – Another home-based option is to transcribe information. This is done by listening to information and then typing it onto a document. Hours are flexible and the pay is $10 to $28 per hour.

Proofreader – If your pre-retirement occupation or education involved great grammar skills you may want to consider proofreading. Proofreaders will be assigned articles and books to read through for mistakes and the pay range is $12 to $30 per hour.

House-sitter – If you were fortunate enough to retire to a vacation hot spot, you are in luck. Out of town landlords will pay a pretty sum for someone to periodically check on their properties and do simple tasks such as water the plants, check on plumbing, mail, appliances and overall functionality. If the property is rented on a regular basis, they may need someone to check the renters in and out and facilitate cleanings, or any other requests the renters may have. These services are not typically time consuming but can add to your monthly income if you can acquire several clients.

Landscaping – For some, this may be a lifelong hobby that you can turn into earning potential at around $10 to $20 per hour. Working with the earth is a great stress reliever and spending time outdoors is a positive change to being in an office, not to mention the immense benefit of being active. Taking on small landscaping projects, perhaps even just weekly grass cutting, can earn you some extra dollars without much time or strain.

Tour Guide – If you like to socialize and meet new people, consider being a tour guide. All national parks or tourist attractions offer tours and are usually willing to train guides. Depending on the attraction, a tour guide can earn $6 to $40 per hour.

Data Entry – Work online from the comfort of your own home and be paid to enter data into spreadsheets and documents. This is an extremely low stress job that pays $14 to $18 an hour.

Tutor – Retirees can use the expertise they’ve gained in their career to tutor online in whatever area they are skilled. You can set your own hours and earn up to $20 per hour. ESL Teachers are especially in high demand and earn a bit more, usually up to $25 per hour.


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