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Buying a house may be the biggest financial decision that most people ever make. Many of us, however, can’t just go out and spend the tens or hundreds of thousands of dollars needed to buy a house. Instead, most homebuyers must borrow most of their home’s purchase price through a mortgage.

This article will focus on adjustable-rate mortgages, also known as an ARM. We will look at how ARMs work, and look at the different varieties of adjustable-rate mortgages.

An adjustable-rate mortgage is a mortgage where the interest rate charged on the mortgage changes based on a general interest rate. As that rate changes, so will the mortgage’s monthly payment. An ARM is the opposite of a fixed-rate mortgage, which has a set interest rate and mortgage payments that are always the same.

The adjustable-rate mortgage lets the borrower get a mortgage that usually has a lower interest rate than the fixed-rate mortgage. This interest rate usually is a fixed amount above the index rate, and increases or decreases as the index rate changes.

Hybrid ARM

A hybrid ARM is the most common type of adjustable-rate mortgage. This ARM has a set period of time (usually five years) where the rate is fixed. After the five years is over, the interest rate resets every year. The hybrid ARM especially can be helpful if you are planning to move from your home after a few years. You will get a lower interest rate during those few years and can sell the home before the monthly payment changes.

Example: A hybrid ARM versus a 30-year fixed mortgage

If you borrowed $250,000 for a 30-year fixed-rate mortgage at 6.5 percent, your monthly payments for the lifetime of the loan would be $1,580.17. If you had a hybrid ARM for five years at 4 percent with an indexed rate for the remaining 25 years, however, your first 60 payments would be $1,193.54. Those payments would then change year after the 60 payments were finished. If, for example, the rate at the state of year six was 8 percent, the payment would become $1,745.22. The payment could go up or down, depending on how the index rate changed.

Option ARM

An option ARM may offer various payment options, including a minimum payment option and an accelerated payment option, which cuts down the term of the mortgage.

Some borrowers may find the option ARM appealing because this type of mortgage has low minimum payments and interest-only options. These options enable some borrowers to qualify for larger mortgages. Keep in mind, however, that these payments carry additional risks for the borrower. Primarily, any difference between the minimum payment and what would be paid under a fixed-rate or fully amortized loan is added to the amount of your mortgage. When that amount rises to a certain limit or a set time passes, the payment will reset. The borrower then will have to pay off the principal and the interest throughout the remainder of the loan.

Example: Option ARM Payment Scenario

If you borrowed $250,000 at a teaser rate of 1.5 percent, your initial monthly payment would only be $862.80. The fully amortized payment for the index rate of 6.2 percent, however, would be $1,531.17. The difference of $668.37 will be added to your mortgage every month. In the second year of your mortgage, the loan’s terms will cause your payment to increase to $927.51, but the full amount would be $1,659.40 because the index rate is now 6.56 percent; $731.89 would be added to the principal balance each month. By year five, you will pay a minimum of $1,071.85 and you are adding $940 a month to the principal.

At year six, though, the bank will ask for its money back. This is the year when the option ARM will reset. You now owe almost $300,000, rather than $250,000. Your monthly payments for the next 25 years will be $2,312.10 at an 8 percent interest rate.

This loan is best for people who want an initial low monthly payment, but can afford a higher payment. This loan also may be a wise idea for people who plan to move from their homes before the ARM resets. You should not use an option ARM to buy a bigger house with a larger loan because you can afford the low payments.

How to Avoid Being Bitten by your ARM

There are several things you can do to avoid the shock of sudden increases that will happen when the rate and payment reset. You must plan ahead.

Your Payment: You should be aware of how much of each monthly payment goes toward interest and how much goes toward principal. You should try to pay off all the interest so that your loan amount does not grow. If you have an option ARM, that means you must ignore the tempting low payments and pay a higher payment from the start. If you have a 6.2 percent interest rate, a $250,000 will create $1,291.67 in interest during the first month of the mortgage. If you’re not paying at least that much, the interest will be added to your balance. That will make things much worse in the years to come.

Your Lender: Talk to your lender before you make late payments or default on your mortgage. The lender wants its money back, and would much rather negotiate with you rather than take your home through foreclosure. You also have an interest in paying your loan: You want to keep living in your house. You might consider changing the mortgage to a fixed-rate mortgage, or offer to make a balloon payment. You can make a balloon payment when you sell your house, or by negotiating again at the end of your fixed years of the ARM.

Your Income: Bringing in more income will help you be prepared for the higher payments when they start. You could consider getting a part-time job, or renting out a room in your home. Although bringing in roommates isn’t a suggestion for everyone, it will help offset your mortgage payments. You should be aware, though, that this may have income tax implications. You also would need to become familiar with the landlord-tenant laws for your area.

Your Expenses: You should cut out any expenses that are not absolutely necessary. Do you really need premium cable channels? Do you really need an unlimited text-messaging plan on your cell phone? What about the second or third car? You don’t need a car to fit every slot in your garage.

Your Location: As much as it may hurt, consider moving. Although you could afford your house with a low monthly payment, the amortization may put your dream home out of reach. It may be a wise idea to sell your house, downsize, and move to a home that you can afford. With luck, you will be able to sell your house for enough to pay the principal. Leaving on your own terms is much better than going through a foreclosure if you default on the terms of your mortgage.

What Should I Do Next?

Although adjustable-rate mortgages work well for some homebuyers, they’re not the best option for everyone and usually has the same effects as having loans with bad credit. Some types, like the option ARM, can be devastating and risky if you aren’t aware what interest resetting can do to your payments. Make sure to look beyond the tempting low payments for the real terms of your mortgage and prepare some sort of debt consolidation for review. Ask your lender what it all means if you don’t understand the loan. This is your home, and you want to keep it.

With gas prices hovering well over $3 per gallon, it’s no surprise that drivers are looking for ways to realize better fuel economy and cut their costs at the gas pump. And while most gadgets on the market claiming to increase your vehicle’s gas mileage are scams, there is an inexpensive, commonly found additive that will in fact increase your mileage per gallon.

Better yet, this additive has been around for decades, and it’s available at your corner hardware store, auto parts store, and even most drug stores. The additive is acetone, it’s perfectly safe, and just a few drops added to your gas tank will increase your vehicle’s gas mileage by 3 to 4 miles per gallon.

What Is Acetone?

Acetone is a colorless liquid that is commonly found in many pharmaceuticals, paints, and lubricating oil. In essence, it’s an additive that helps reduce surface tension (friction). Normally, acetone is available in 16 ounce cans and is usually sold for about $3.

How Does It Work?

Without getting too technical, a few drops of acetone added to a gas tank helps improve the fuel’s ability to vaporize. What this means is fuel that vaporizes easier causes less friction throughout the engine, thereby using less energy and gas. Think of it like any other lubricant … the smoother an engine operates, the less energy is needed to provide power. Further, a smoother engine with less friction will emit fewer harmful hydrocarbons into the air.

How Much Acetone Should I Use And How Much Money Will I Save?

Three of four drops of acetone per gas tank is plenty. Use an eye dropper to prevent using too much. We find that using a few drops every other tank is sufficient. On average, with all other conditions being equal, you’ll find your gas mileage increased by about 15%. That means an average 14 gallon gas tank will actually give you about 15 1/2 gallons worth of mileage and performance. Given the cost of gas at $3 per gallon minimum, you’ll be saving about $4.50 per tank. If you fill up once a week, that’s a savings of almost $250 per year.

Other Benefits Of Acetone

Because acetone works, in effect, as a lubricant of sorts, you’ll notice an increase in engine power and longevity of the engine. This is because acetone vaporizes most of the gasoline fluid and helps the engine operate with less stress. If you have a diesel vehicle, you’ll find acetone particularly helpful. You’ll notice much less black smoke emissions and exhaust soot.

Summary

Acetone, a commonly available additive, is one of the best additions you can add to your fuel tank to improve fuel economy. You’ll typically realize a 15% increase in your gas mileage using just a few drops of acetone on alternating fill ups. Be sure to follow proper handling and storage instructions, just as you would with any other chemical. Finally, keep your vehicle maintained. Poor routine maintenance habits are the biggest cause of substandard fuel economy.

With gas hovering around the $3.40 per gallon mark, a tank of gas now costs the average driver a hefty $50. Take that figure to almost $100 if you own a truck. And with no end in sight to these high prices, drivers are searching for ways to squeeze every last drop out of a gallon of gas.

Of course, there are a number of common sense tips that relate to your driving habits. Combine errands, take public transportation if available, and car pooling are tried and true methods to lessen the bite on your wallet. But if you must drive (and that’s most of us), here are some lesser known tips to help you save a few dollars per week. These five tips are strategies you can use starting today to save as much as $10 per week. That’s over $500 per year!

Gas Saving Tip #1: Anticipate Traffic Conditions

More often than not, we’re in a hurry when we’re driving. After all, we want to get somewhere and get there quickly. However, rapid acceleration and frequent braking are huge gas guzzlers. Learn to anticipate traffic conditions. If you see a stop sign or red light ahead, take your foot off the gas and cruise to a stop. It will save gas as well as wear and tear on your brakes.

Tip #2: Inflate Your Tires Properly

Underinflated tires are one of the biggest causes of inefficient fuel economy. Studies show you can increase your gas mileage by 5% with properly inflated tires. It’s interesting to note that cold weather affects tire pressure the most. Check the air pressure in your tires monthly, especially in winter.

Tip #3: Idling Gobbles Gas

Sitting and idling wastes gas, so if you’re waiting in a traffic jam or sitting at a railroad crossing, turn off your engine. The same holds true for warming up your car. Warming it up for a few minutes is plenty. Anything beyond 5 minutes and you’re wasting fuel.

Tip #4: Change That Air Filter

Chances are, your air filter is dirty, and this wastes fuel, particularly on acceleration. Change your air filter every 6,000 miles and you’ll improve fuel economy by as much as 6-8%.

Tip #5: Put It In Cruise

If you’re a highway driver, use the cruise control function as much as possible. Driving at even, consistent speeds is much easier on fuel consumption.

These five simple gas saving tips will have you filling up less frequently and saving as much as $10 a week on your fuel costs.

The foreign currency exchange market - usually abbreviated to “forex” or just “FX” - is the largest marketplace in the world, with over 1 trillion dollars traded on it everyday. The forex futures market is a derivative of the global FX market.

Foreign exchange traders who are interested in forex futures will find a wealth of information on the internet. There are thousands of people daily getting into trading on the forex global markets.

Foreign currency trading has an almost mystical hold for many people. The global forex trading marketplace is vibrant, fast-paced, and very exciting. The trading action happens very quickly, and while it is possible to “learn as you go”, it is certainly advisable to learn the basics before risking real money.

Futures are exchange-traded contracts to buy or sell a specified amount of a given currency at a predetermined price on a set date in the future. All forex futures are written with a specific termination date, at which point delivery of the currency must occur unless an offsetting trade is made on the initial position.

When dealing specifically with forex futures a trader must be aware of current trends and how to read them. Forex futures can be purchased and held, or traded as you see fit. The particulars of knowing how and when to put the plan into action separates those who make a few dollars and those who make fortunes.

Trading forex futures is true speculation and appeals to many people. There is more than 4 trillion dollars being traded on a daily basis around the globe and much of this trade deals with future currency values. It is imperative that traders understand how these trades are structured. A good way to learn about the forex market is from other experienced investors in this field.

Forex futures work much the same way as other futures contracts. As such, tiny shifts of even a fraction of a point can mean the difference between profit and loss. Forex trading is impacted instantly by worldwide economic factors. Because of this, it is essential for brokers and traders to stay on top of world economic news.

We all know that the bailout plan failed because the public is pissed off and would rather take a short-term financial beating themselves than reward the power elite who have been fleecing us for decades. The public is sick to death of trickle-down economics, and the outcry was just too loud for representatives to ignore.

So congress needs to figure out a way of getting cash back into the credit market in a fashion that is quick and fair to the public. So, here it is:

We should take the $700 billion and simply pay down the mortgages of all the homes purchased between certain dates, (let’s say 2000 when real estate prices started going berzerk and 2006, when they really started falling). That’s it. Simple.

Well, I realize it isn’t that simple, and I anticipate some of the issues below to factor in, but first, let’s see how this solves the problem.

I did some poking around at the National Association of Home Builders (NAHB) website and discovered that there were roughly 26 million homes sold between 2004 and 2007. Now let’s estimate that there were about 35 million sold between 2000 and 2006 (pretty rough estimate, but in the ballpark, I’m sure). Dividing into the $700 billion, that comes out to an average of about $20,000 per home. With an average home value of $200,000, that means about 10% of the home value. Are we on track?

So then if you bought a home for $200K, the Bailout Commission writes a check for $20K that gets applied directly to your mortgage. You paid $500K, your mortgage holder gets a check for $50K, etc… The first thing that happens is the lenders are all of a sudden flush with cash. They pay their obligations. The credit markets unfreeze. Financial institutions get back to business. (Hopefully without making the same mistakes).

Meanwhile, you’re content, right? You may not have received cash to spend but your mortgage is reduced significantly. If you bought a home during those years you’re probably still in the red, but not as much as before. So you’ll still have to take some hits, but it will definitely soften the blow. You’re less likely to foreclose and you feel more hopeful for the future.

Alright, before everyone starts knocking the idea apart, I’ll point out some of the obvious objections:

1. Stop! It’s Socialism! - Well, I guess it is. And there will definitely be some idealogues who will rebel against it. But somehow I think those objections will come from the people who don’t get any benefit from the plan. I have a funny feeling that the 40 million families who get those mortgage reduction payments will be able to live with it.

2. That’s not right… It’s not fair! What about all the people who bought homes before 2000? - Are you serious? You’ve enjoyed 6 years of super-low interest rates and hyper-appreciation. And now you want this mortgage reduction payment as well? In the name of fairness? Please. And as for those of you who bought a home after 2006 when the market was already going down, well, I’m sorry, but that was just not too bright. You don’t deserve a break.

3. I don’t get it… It’s too complicated. How do we figure out who gets how much? - We may need to come up with some fancy formulas, but I actually think it will be pretty straightforward. It’s just a flat percentage of the purchase price of the home across the board for everyone.

What other flaws do you see with this plan? Let me know! And if everybody else thinks this is as simple as I do, let’s push it on our representatives.

In the interest of full disclosure, I should divulge that I am among those who would benefit from this type of plan, so I do have an agenda, but at least it isn’t a hidden agenda.

Most people tremble in fear at the mention of a credit report, simply because so many people are dealing with creditors and debt that are dragging their credit scores down. Most people jump into the idea of owning credit cards and taking out loans before they have taken the time to think about their credit report, and how it will be positively or negatively affected by their actions. Everything that you do with your credit cards affects your credit report, and your credit report has a strong impact on your entire life, including whether or not you can take out a loan, buy a house, buy a car, or even get a job in some circumstances.

In order to best impact your credit report, developing it into a healthy picture of your finances, you need to understand what it is and how it works. Your credit report is changed every time you apply for a credit card or a loan, not just when you get approved or denied. Your credit report is also changed every time a credit card company or lender reports on your payment history.

If you miss a payment, for instance, your credit card company or lender will report this to the credit reporting agencies and this will show up in your credit report. This also happens when you make your payments on time; which should be a powerful incentive to always make your payment sin a timely fashion. Your credit report is affected by whether you make the minimum payments or always pay off your credit card in full.

As long as you follow a couple of common sense rules, there is no reason you can’t get a credit card or take out a loan; just keep the following in mind before you do so:

-Make sure that you understand how this will affect your credit report. If you don’t understand the terms and conditions of the credit card or loan; interest rate, late payments, defaults or anything else, you may want to reconsider if you really need this credit card. You should be wary of doing anything which can have a negative impact on your credit report. Remember, a credit card involves a lot of responsibility.

- Make sure that you have the means to make your payments before you take out that loan or apply for a new credit card. While it might seem like a good idea to take out a loan to help you through some tough financial times, how will you make that first payment in a month? If you cannot afford to make the payments, you should not ask for a loan.

- Remember that loans and credit cards all have different terms and conditions, as well as different interest rates. If you intend to apply for a credit card or take out a loan, be sure to shop around for one whose terms fit into your budget. Don’t apply for the first credit card that comes along; be open for the best opportunity. Each card differs and some of the credit card companies have different interest rates and conditions for the same cards depending on various factors. If you want a credit card which meets your needs, you have to shop around.