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Five Best Home Finance Moves.
These smart steps will have you sitting

Five Worst Home Finance Moves.

Know these bad moves and save big money.

by Mike Sheridan
Five Best Home Finance Moves.
Praesent Now may be the best time to gauge exactly where you are in the home financing cycle. It's always good to step back and look at the entire financing picture—where you've been, where you intend to go and where you'd like to be in five years. has discussed this "home finance check up" with a number of finance and housing experts to determine the five best home finance moves you could make right now. Some suggestions:
Best Move Number One: Wake Up and Smell the Green
Assess where you are today financially speaking, and where you'd like to be in five years. Start by getting a detailed picture of how much you are spending to maintain your lifestyle, where you want to be several years down the road and how you expect to achieve that. Make sure you have checked your credit report at least once in the past six months. Examine your credit report carefully to make sure no one else has requested credit in your name and closed accounts you no longer use. This will prepare you for the future should you decide to refinance or trade up to a newer, larger home.
Best Move Number Two: Take Advantage of the Rise in Home Values
Lisa Mihailuk, senior vice president at Countrywide, one of the nation's largest mortgage operations, notes that savvy individuals can use additional equity built up in their homes to pay off high-interest credit card debt or to modernize their current home. "In recent years, some homes that were valued at $85,000 are now worth $95,000. People can tap into that equity to pay off credit card debt or make improvements," says Mihailuk. Not only that, but interest on credit card debt is not deductible while mortgage interest is.
Best Move Number Three: Play It Smart When Refinancing Your Mortgage
Before you sign up for a refinance deal, first talk to at least three financial professionals: a direct lender such as a bank, an experienced mortgage lender and a mortgage broker. All have advantages. The direct lender may offer lower rates because it doesn't have to share fees. And a mortgage banker can act quickly; if he or she likes the loan application, they can make a commitment immediately. Last, don't overlook a mortgage broker, since they represent 50 or more lenders and can shop the loan around.
Best Move Number Four: Seek No-cost Refinancing
The reason? "Any loan fee you pay has to be amortized over the life of the loan," says noted real estate broker and syndicated columnist Bob Bruss of San Francisco. "Say you pay a $1,000 loan fee or points for a refinance," he continues, "that has to be amortized over the life of the loan, which can be about $33 a year on a 30-year mortgage. Instead, pay a little higher interest rate and get a no-cost loan where you don't have to pay title insurance, credit report and appraisal fees out of your own pocket. It may be at a little higher interest rate—7.12% instead of 7% —but it will all be deductible."
Best Move Number Five: Renovate Rather Than Relocate
With the economy going through an uncertain phase, now may not be the best time for a move. If it isn't, don't deny yourself creature comforts. If you want that gourmet kitchen, then go for it —finance the renovation through a home equity loan. By using an equity line of credit, you can deduct the interest on your income tax. But check with your real estate professional to make sure that the improvements you make will add value to the home.
Duis Five Worst Home Finance Moves.
DonecNobody's perfect. Sometimes we make inadvertent mistakes even when we have the best intentions. But good intentions may yield some bad decisions when it comes to your personal finances. For homeowners, or even those who want to buy a home someday, here are the five worst mistakes you can make.
Worst Move Number One: Not Keeping Your Financial House in Order
There are a few simple things you can do to keep your finances in good condition. Among them:
* Check your credit report twice a year.
* Make sure your will is updated.
* Is your insurance protection updated? Do you need more insurance?The last one is a biggie. It's very important that you have enough insurance to protect your dependents and income—to say nothing of your home—in case of death or disability. Also, keep in mind that you can save several hundred dollars a year on homeowner's insurance and renter's insurance by shopping around. Compare rates.
Worst Move Number Two: Thinking the Good Times Will Last Forever
As the stock market has shown, what goes up must come down. So start tightening your belt now, just in case. Control impulse buying by using shopping lists and sticking to them. Avoid going into debt to support a lifestyle you cannot afford and never borrow money to spend. (That can mean taking out a loan, or even using a credit card to buy something you don't have money for today.) Remember: If you want to buy a bigger house tomorrow, you've got to plan now.
Worst Move Number Three: Failing to Be Charitable
Charitable deductions can add up to tax savings later on and now is the time to take them. Storing an old printer or monitor in the basement? Donate it. It might be worth several hundred dollars to a charitable organization. And you get to take the deduction on April 15.
Worst Move Number Four: Refinancing Too Large an Amount
Edith Lank, syndicated columnist and author of "The Homebuyers Kit" and "The Homeseller's Kit," says one of the worst home finance moves "is falling for those offers to mortgage your home for 125% of its value—and there's a new one just out for 105% from a reputable bank that should know better." The noted financial and residential real estate author cites several reasons for such refinance deals being a worst move: "You probably pay high interest, and the Internal Revenue Service (IRS) lets you deduct only the interest paid on the actual value of your home. [In the end, such] risky, financial problems could result in loss of your home."
Worst Move Number Five: Getting a So-so Refinance Rate
Shop around. You may think it's easier to work with your existing mortgage lender but in most cases your lender will require the same documentation that others do. Your current lender will still have to verify your employment income and the like. So it might pay to talk to other lenders as well.