• As a typically general rule, homes appreciate about 4 or 5 percent a year. Some years will be more, some less. The figure will differ depending on neighborhood and region.
• 5% may not seem like that much at first. Stocks might appreciate much more, and you could easily earn over the same return with a very safe investment in treasury bills or bonds.

But take a second look…

• Let’s assume that you bought a $200,000 house, you did not pay cash for the home. You got a mortgage as well. Suppose you put as much as 20% down – an investment of $40,000.
• At an appreciation rate of 5% per year, a $200,000 home would increase in value $10,000 during the first year. Therefore, you earned $10,000 with an investment of $40,000. Your yearly “return on investment” would be an amazing 25%.
• Obviously, you are making mortgage payments and paying property taxes, accompanied with several other costs. Nevertheless, because the interest on your mortgage and your property taxes are both tax deductible, the government is essentially subsidizing your home purchase.

Income Tax Savings

• Due to income tax deductions, the government is subsidizing your purchase of a home. Each and every interest and property tax you pay in a given year can be deducted from your gross income to reduce your taxable income.
• For instance, imagine that your initial loan balance is $150,000 with an interest rate of 8%. During the first year you would pay $9969.27 in interest. When your first payment is January 1st, your taxable income would be as much as $10,000 less – because of the IRS interest rate deduction.
• Property taxes can be deducted, too. No matter what property taxes you pay in a given year may also be deducted from your gross income, decreasing your tax obligation.

I’m aware of the fact that there are all kinds of “what if…” scenarios that could go along with the presented situation. Nevertheless, let’s just assume that you are disciplined enough and would not charge the TV and then go buy something else for your $2,000. What is more, bear in mind that you are not spending money you do not have because we have assumed that you saved up for the TV. To put it simply, you are not purchasing now and paying later.
In my personal opinion, although you are taking on debt, I see nothing wrong with taking advantage of the 0% offer. I think that it really is not a debt if you posses the money to pay it off any time you want but you have decided not to do so. I perceive it as a method for smart people to use debt for their own benefit even though the benefit is relatively small (approximately $91 if you get a 3% interest rate on your savings for a period of 18 months and less if you have to make monthly payments since you will be drawing down your $2,000 over the 18 month period).

Using A Credit Card / Interest Free Overdraft as a Loan

You can use a credit card in order to borrow money at very low rates. It requires a certain amount of care; but, if you build up a balance and then transfer it to other cards, it is frequently possible to enjoy interest free credit for as much as 12 months. Normally, banks charge a 2% balance transfer fee. If you switch credit for 12 months, it is an effective interest rate of 2%.

Complain

Banks are aware of the importance of Public Relations. They don’t like sad customers. If you received a late payment penalty, or were charged for going £1 overdrawn, don’t just feel unhappy and inwardly curse the bank. Write a polite letter and explain why the penalty was unjust, not deserved, an accident caused by lost post, etc. You’d be surprised that banks frequently reply to complaints in a favourable manner.

Don’t Stay With Existing Products For Ever

This is the most significant single mistake people make. Financial companies perceive such loyal consumers as the ‘cash cows’ - they are simply easy pickings. Even if they get charged high interest rates, the banks are aware that they won’t lose their customers because they are either too lazy to change accounts or have a strange feeling of loyalty towards the company. The same applies for insurance, savings accounts and mortgages.

Why You Should Not Wait to Purchase a Home

People who already own a home typically need to sell it in order to come up with the down payment for their next house.  Even if that is not the case, they would have to carry the debt and obligations on two homes at the same time.  This can contribute to financial hardship, even when you rent out the previous house.  There are maintenance costs, renters don’t always make their payments on time, the rent may not cover the mortgage and other costs, and in some cases the property may be vacant.
Therefore, if you are a move-up buyer and intend to buy your next home during a depressed market, you normally have to sell your current home during that same depressed market.  If you want to sell during a boom, then you also have to purchase during the same boom

But ultimately, for one reason or another, the economy slows down. Companies lay off employees and people are more careful about where they spend money, probably saving more than normally. As a consequence, the economy slows down even more. If it slows enough, we witness a recession.

During such a time, fewer people are buying homes. Even so, certain homeowners find themselves in a situation where they have to sell. Families grow beyond the capacity of the home, employees get transferred, and some might potentially find themselves unable to make their mortgage payment - perhaps because of a job loss in the family.
In the business cycle of real estate, there are buyers’ markets and sellers’ markets.  The whole market is based on supply and/or demand.

Supply and Demand

During sellers’ markets, homes sell fast and sellers have a lot of pricing power. Consequently, prices rise more rapidly than at other times. During buyers’ markets, homes may remain on the market for some time before selling, so sellers become more flexible and may even decrease their prices.

In real estate, the connection between supply and demand is evaluated as “available inventory.” At the current sales pace, how long would it take to sell the total number of homes available on the market? This is the method used by the real estate industry to measure inventory.

Inventory can be measured in weeks and months. Longer inventory periods are connected with buyers’ markets. Shorter inventory times are associated with sellers’ markets. Certain buyers and sellers hope to time their purchase to benefit from market cycles.

1. Check Your Credit Rating

• It is vital to be aware of your current credit rating and examine if it’s accurate. You can gain access to your credit rating via agencies like Equifax and Experian. According to the consumer credit act of 1974 , you are entitled to see it at a cost of £2. This £2 figure is established by the government, therefore if agencies start charging a lot more be very suspicious. If you spot any inconsistencies chase them up with the financial institution involved.

2. Understand why you were turned down

• Although it is not compulsory, the majority of companies will provide an explanation why they rejected your application. This can be advantageous in understanding what you have to do. Additionally, it can help you avoid applying for the same products and being rejected in the future.

3. Avoid Getting Repeatedly Rejected

• Those who have a trail of turned down applications will become suspicious to other companies. If your application is rejected, try to understand why, wait a while and then try again. Applying on mass should be avoided; make sure you do one at a time.

4. Avoid Being associated with bad debtors

• If your debt is joint with someone else whose credit history is bad, this can seriously damage your credit score. If you have an ex partner, who has a bad credit history on your credit report, have them removed.

5. Make Sure You are on the Electoral Roll

• Companies investigate this and become suspicious of people who avoid being on the electoral roll.

Who Benefits from Falling House prices?

First time buyers. Currently the ratio of house prices to incomes is very high, as much as 5 times salary. Falling house prices allow for increased affordability. Additionally, rising salaries and pricing can cause real house prices fall more than nominal. Those who are a first time buyers wait with their purchase so the prices can become more affordable.

People who want to buy bigger houses. If the price of your house is falling in value, then it will also be less expensive to buy other houses. If you want to move to a more expensive house, this will actually make it less expensive.

What Will Happen To Interest Rates?

Another beneficial thing about falling house prices is that the cost of mortgages won’t rise. If anything dropping house prices should encourage the MPC to cut interest rates. This is due to lower house prices that will allow for lower growth and lower inflation.

How Much will house prices fall?

Currently, the most important factor of falling house prices is the problem with getting a mortgage. It is the reduced amount of mortgage approvals due to the credit crisis that is squeezing housing demand. If this is overcome, then prices may fall less than some people expect. Interest rates are rather low, supply remains constrained and many people would like to get a mortgage. Those who wait hoping for house prices to fall 30%, may never have the opportunity to purchase a house.

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