Choosing a life insurance policy for many Canadians is not obvious or understandable. At the end of the day, what is life insurance for? It is security for our loved ones. Right?

It is supposed that life insurance is for those with big debt loads, young families, and young careers who want to protect their families. They are wisely planning to secure their family for the chance of the a tragedy.

So do people who have a reduced debt load and an empty nest still need life insurance or is it just for young people? Many people put a stop on their life insurance, thinking it is the financially smart thing to do. They have put their loved ones at risk even though they have saved just a few dollars.

Purcasing life insurance later in life may not be as costly as you think. A decade ago, it was much more expensive than it is now. The ten million Canadians who are in their forties and fifties can purchase life insurance at very affordable rates.

You can take advantage of the many different policies to protect your family and your wallet as you get older. Term life insurance is going to be smarter, safer, and more affordable in the short term. However, to prepare for long term, you have the choice of permanent life insurance where you can get from traditional whole life, universal, and variable whole life insurance.

If you want to save money and still keep your loved ones protected, these options will help prepare the future.

Buyers are offered the most guarantees with traditional whole life insurance. The certainties include minimum cash value and death benefits as well as annual premiums. Most of the whole life policies can use the dividends they earn to grow cash value or death benefits.

The premiums with universal life are really flexible, particularly in the early years of the policy. Universal life gives you maximum guaranteed premiums and minimum guaranteed cash value and death benefits. As an alternative to dividends, universal life policies earn interest at a set rate every year.

There is also variable life, which is for the more knowledgeable risk taker. Variable life has the fewest guarantees and because of that, it offers the most potential for cash value increases. There are mandatory guaranteed yearly premiums and guaranteed death benefits.

Getting life insurance can be tricky, but can be valuable for your loved ones down the road. To get professional council and great deals on life insurance, visit www.infoprimes.com

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For many reasons, both on lenders and buyers sides, the average mortgage loan today is no longer fixed for 25 years or so. Interest rate volatility, frequent sales and purchases of homes and other factors have led to the ARM, or Adjustable Rate Mortgage to be the norm in our days.

Today, ARMs are based on different indices, and you can choose the right index to tailor your mortgage to your specific needs.

If you choose a rate that is tied to an index that reacts quickly to changing rates, you can take advantage every time the rates are falling. If you use an ARM that changes quickly with changing rates, you can lock in lower rates as they fall. If you choose a lagging rate ARM, you still have time once rates have started to move up. Here are some examples:

The six month CD ARM- The rate on these mortgages can change 1% every six months. This index reacts quickly to general market changes.

The twelve month spot ARM- This rate will change only 2% every twelve months. This will react more slowly than the CD ARM.

The six month Treasury Average ARM- Reacts slowly to changes in the interest rates, since there is less or minor volatility when treasury instruments.

The twelve Month Treasury Average ARM- This rate changes 2% every twelve months, but since the underlying treasury bill reacts more slowly when markets change, it will lag behind the spot ARM.

In this article you will find all the basics you need in order to acquire the best adjustable rate mortgages rather than a fixed rate.

Finding the best mortgage is not easy, you need to find the annual percentage that will be better for you and your whole family.

You don’t always need to accumulate points for a better adjustable rate mortgage, there are some pages that can help you out by calculating your points automatically and in the best of all is that really fast.

When you are at home you can use your free time to check about mortgages over the Internet, you will be amazed about all the information you can get so read carefully before taking any decisions.

You will need to decide between adjustable rate mortgage or a fixed rate and this information depends on how well you really understand about ARMs.

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The difference between a 15 and 30 year mortgage is fairly simple- you pay a 15 year loan off faster. Of course, the payments on the 15 year loan will consequently be higher than on the 30 year loan.

But the 15 year loan builds equity in the home a lot more quickly than the 30 year loan, with the result that the monthly payments are higher. Once a 15 year home loan is paid off, there is still plenty of equity in the home and a new loan can be negotiated.

It depends on your needs; some people prefer a shorter mortgage to build equity in their home faster, some want to keep monthly payments down. If you can afford the higher payments of a 15 year mortgage, should you automatically choose it? If you pick a 30 year home loan, you always have the option to pay additional payments and reduce the principal more quickly. The benefits are not exactly the same as picking the 15 year mortgage in the first place, but you will build equity faster than maintaining the required payments. In this case, picking the 30 year option even if you can afford the higher mortgage payment of the 15 year option gives you the flexibility of havaing payments low when you need to and paying the whole thing when you want to, to build equity.

Of course, there are a lot of people who believe they can build wealth by other means. If you were given the choice of a $100,000 home loan at 7% for 30 years or 6.75% for 15 years (the longer term is always at a higher rate since the lender is taking more of a chance on rates moving up) you would have a choice of paying $665 or $885, respectively. What can you do with that $220 in additional savings? However, the equity built is a lot different $5,868 for the 30 year loan vs. $22,933 for the 15 year mortgage. There are some who believe putting the additional $220 into the stock market would yield a better return, or maybe an investment in a child’s 529 education plan is a more important need. Everyone’s needs are different.

The bottom line is that the 30 year mortgage proves to be much more flexible compared to the 15 year term. Depending on your level of discipline, investing the difference into some other investment plan may be a good idea at your particular stage of life. Many people, however, finding an extra $220 in their pocket will only waste it; those are the kind who should choose the automatic wealth building power of a shorter term loan.

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Before you even consider about shopping for a home, you should determine how much you are able to afford to pay for it. It is a sad fact that most borrowers have no clue how much they can afford to pay for a home and end up wasting their time looking at homes that they discover, once they apply for a home loan, are way out of their price range.

Understanding how the process of how a lender knows what you can afford to pay for a house will make it easier for you. Your total expenses will also come into play, since they will have an effect on how much income you have left to pay your home loan each month.

To do this, lenders use certain ratios that tell them what you are able to afford, ratios based on income, expenses, debt, down payment and closing costs.

You can do these calculations yourself, or you can ask for the assistance of a mortgage broker to do them for you.

One of the biggest stumbling blocks to owning a home is the down payment. Today, people don?t put aside a certain amount of money into a savings account to save up for something. No down payment loans are rarely granted today days, since they were such a big reason for the mortgage problems over the last couple of years.

Assume at least a 10% down payment to buy a home. So, if you are looking in the $200,000 price area, you have to have $20,000 on hand, plus a reasonable amount for closing costs. You can get an estimate of closing costs from your lender.

A very low assumption would be that you have to have $25,000 available. Now you have to look at what you can afford for a monthly basis. You can calculate how much you can pay based on income and current expenses if you visit one of the many calculators available on the net, or you can take the easy route and speak to a mortgage consultant.

Typically, the standard used is that your housing costs should not exceed 25% of your income. But this does not take into account extraneous credit card debt. If you are spending 25% of your income on your house, the rest is (in a perfect world) expected to be spent on utilities, food, entertainment, education and savings. A high credit card debt will mean that you will have that much less to use for your basic needs.

Without these additional issues, you can count that a monthly income of $6,000 means that you can manage $1,500 in mortgage, taxes and insurance. With this information at hand, you can now really start to shop for a home.

When you apply for a mortgage, the rate you are quoted will be the rate for that day. Usually, you don?t close on the same day you are inquiring about rates, so you will have to take a chance that the rate will go up.

Because of this worry by borrowers, most lenders now offer a lock in period, which means you can keep the quote you are given, for a while, anyway. They understand that there is usually a period of time between when the mortgage application is made and the loan is closed. And since many people figure how much mortgage they can afford based the interest rate, they realize borrowers want to maintain that rate. The lock in period is the period during which the prospective borrower can obtain a rate for a future closing. This applies to both interest rates and points.

The lock in rate may be fixed at the application point, the processing stage or the approval stage of the mortgage.

Perhaps you have a chance to lock in 5.5% interest with one point for 30 days. You then have the right to borrow at 5.5% even if you are not able to close on the mortgage for the next thirty days. Thirty days are usual lock in periods, and are given as a marketing device since the lender usually has little risk that rates will move dramatically during a short period. However, if you want a longer term, you may have to pay since lenders do not want to take such a risk for an extended time without getting something in return.

Remember that the lock in period can turn against you if rates go down instead of up, unless your agreement allows you to get out of the agreement. This has to be done as you apply for the lock in rate.

If your loan is not settled during the lock in period, it will expire and your new loan or new lock in period will be at the higher rate. If rates have not changed, a lender might be willing to issue a new guarantee at the same rate.

Lock in periods can be a number of mixtures of terms, as follows:

Both rate and points are locked in. The bank fixes both the interest rate and the number of points for the lockin period.

Rate is locked, points are not. The bank may choose to protect itself by setting a fixed base rate for the lock in period, but maintaining the right to change the points to maintain the rate. You may have to pay additional points to get the guaranteed rate.

When interest rates are moving up quickly and dramatically, opting for a lock in period is a wise move, and can even be worth paying for.

Many people don?t really know what ?points? are when it comes to discussing their mortgage. Points are fees paid to the lender at the closing of the mortgage. Each point=1% of the mortgage. If your mortgage is for $100,000, one point would cost you $1,000.

Lenders take these upfront payments to reduce the long term cost of the mortgage. The ratios change, depending on the market and the bank, but here is an example for a mortgage at 6.25%: if you pay one and one half points, you will lower the mortgage rate to 5.875%, if you pay 2 ? points, you would reduce the rate to 5.375%.

The important thing to consider when you are deciding upon paying points is how long you plan on living in your home, and whether or not you can afford the points upfront. Don?t consider the idea of borrowing extra to have the money to pay for points; this doesn?t make any economic sense. First time home buyers frequently will not find it any benefit to pay points, since many do not stay in their first home for long.

Points should be viewed as an investment in the mortgage. Paying 1.5 points to lower your mortgage from 6% to 5.5% is an investment, but is it a good one? It is a bit like prepaying part of your mortgage interest bill.

It can be calculated whether or not it is worthwhile for you to pay points, depending on how long you will be in your home; use one of the many calculators on the internet or ask a mortgage consultant to do it for you, free of cost.

The $100,000 loan we were talking about would require $1,500 in points to lower the rate to 5%. It is necessary to find the breakeven point on how valuable this $1,500 investment will be. The monthly mortgage for a 15 year 5.5% loan is 599.55 a month. The monthly mortgage for a 30 year. 5.5% loan is $567.79 a month.

The points paid will save you $31.76 a month, but you had to give the bank $1,500 in order to get this savings. If you divide your investment of $1,500 by your savings of $31.76, you will see that it will take 47.23 months for you to recoup the investment. If you don?t plan on staying in your home for this length of time, you will not have any advantage from paying points.

After that point, however, the upfront investment of $1,500 is covered, and you will now save a total of $31.76 each month. Let us now suppose (this doesn?t happen very frequently today) that you really stayed in your home for the thirty years; you would save that $31.76 over the course of 30 years, a big savings of $9,933.58!

When you send in your monthly home loan payment, part of it goes to pay the lender its interest, and part of it is used to pay off the loan. At least most home loans work like this. A new type of loan has been designed to allow the monthly mortgage payment to be as low as possible, by requiring only the payment of interest.

The home owner can choose how much to pay each month, as long as he pays an amount that will meet the interest, and does not change the loan balance. Of course, most lenders will allow you to pay more than the minimum interest payment any time you want, but that is not the purpose of the loan, which is to keep the monthly payment as low as possible.

Interest only loans were based on the theory that it doesn?t matter that the principal was never reduced, because when the house was sold, the increased value would allow the borrower to pay off the loan. It used to be that homeowners built equity by paying off part of the loan, and by the additional value of the house.

Today?s falling housing market means that borrowers can no longer depend on an automatic increase in their house?s value. There are situations where interest only loans are a good solution. But these situations should only be temporary ones.

Perhaps there is a situation where one partner is not employed or only working part time while he completes school. This is a temporary situation, and as soon as the second partner finishes his studies and starts a job, the loan should be switched to interest plus equity or additional payments should be made to reduce the mortgage.

Another valid situation might be if the primary income owner had an erratic salary pattern, in which he had little to no income for a time and then a windfall income. Such an example may be a project worker who is only paid when the project is complete. While the project is underway, it is best to keep payments as low as possible, a need the interest only mortgage could meet, and then when income is realized, higher payments can be made.

But for any of these cases, the homeowners cannot count on the value of the home rising and has to make sure principal payments are made. If you are paying off the principal a little at a time each month, when it comes time to sell the house, you earned some equity in it, even if home prices have not gone up. If you merely pay the interest each month, you will never lower the principle, and if the home sales price is lower than the mortgage, you will not be able to pay down the loan.

One of the most important decisions to make when you want to a home is to time the interest rates exactly right. If you think interest rates are going to increase, you will want to lock in a lower rate now, but if you think rates can still fall considerably, you may want to wait before you commit to a mortgage.

What determines interest rates depends on a lot of factors, so knowing what they are as well as how they behave can help you make your decision. Interest rates are actually the price of money, and just as the law of supply and demand dictates price, the law of supply and demand will influence the price of your mortgage: its interest rate.

The inflation rate, which shows the supply of money, is the first and most important factor in interest rates. Inflation is measured by two important indicators called price indicators. The PPI (Producer Price Index) and the CPI (the Consumer Price Index).

PPI is the measure of change in prices in a given length of for goods at the production level. Increases in the Producer Price Index gives us higher prices for finished goods, and that means inflation.

CPI, or Consumer Price Index is the difference in prices at the consumer level, as measured by a standard basket of consumer merchandise. It is considered the most important measure of inflation, since rising prices that consumers pay for goods are the basis of inflation. The basket of goods used is indicative of the kinds of goods consumers frequently buy, and because it includes food and energy prices, which can move up and down too much, they are frequently removed from of the equation. This allows them to look at the core inflation rate to better analyse where overall prices, and therefore inflation, are going.

GDP or Gross Domestic Product also predicts inflation and therefore interest rates. The Federal Reserve Bank tries to keep the economy growing at a ideal rate; too slow and production will lag, which causes recession; too fast and the economy will overheat. The Fed has the power to intervene in the economy in a number of ways so that it can decrease rates to slow the economy down and increase rates to speed it up.

The next most important interest rate indicator is the unemployment rate. Low unemployment is considered inflationary since employers have to chase after too few candidates, and will raise wages to do so. High unemployment usually leads to lower interest rates eventually since employers can keep wages lower since there are so many candidates for each job. In other words, higher wages lead to a wage price spiral and lower wages bring prices down.

Watching these interest rate indicators will help you to decide when it is a good time to enter the home loan market. In general, a slow economy, with high unemployment, means that interest rates will be falling, and you should hold off on your borrowing for a while. Conversely, higher GDP and decreasing unemployment will mean an increase in interest rates.

You have a lot of choices to make in buying a home and deciding upon a mortgage, and in today’s confusing loan world, you now also have to choose the index that you want for your Adjustable Rate Mortgage (ARM).

When we speak of the “index”, we are speaking of the base financial instrument that the changing rates will be based on. These indices could be such things as the T-Bill rate, the rate of Federal Funds, or rates based on LIBOR.

The rate on an ARM is adjusted periodically upwards, or downwards, based upon the movement in the general interest rate environment, but tied to a specific instrument. For example, if you pick the CD rate as your index, when CD rates increase, your mortgage rate will increase. Adjustable rate mortgages have adjustment caps, which says that the interest rate can only be adjusted at given periods, even if the underlying interest rate goes up more often; this can be an advantage if you just readjusted and then rates move up. But be aw are, however, that if you just readjusted at a higher rate, and your index rate goes down, you are stuck with the increased rate until the next adjustment period.

Your ARM may be tied to the Treasury Bill rate, which is the rate the United States Government pays on its 90 day investments. Another index that is often used is the Federal Funds Rate. LIBOR, the London Interbank Offered Rate, is a very popular index, and is the rate used by large global companies to borrow.

The index is an individual choice, based on the individual loan, and how the borrower feels interest rates will behave. If you prefer a rate that is responsive to the interest rate market, you would choose the CD rate as your index. ARMs that have the Tbill rate as the index do not move as frequently as the CD index. LIBOR is the index that moves the most frequently and the most quickly, so if you want to take frequent advantage of the downward level of lowering rates, this is the one for you.

But in addition to these standards, new products are always been introduced on the market; an example would be the option ARM, that will let a homeowner decide how much mortgage he is going to pay each month! The options that are offered are interest-only payments, and a lowest possible payment that can’t be less than the interest-only payment. There is a real danger in option mortgages that the loan will end up with negative amortization, which means the mortgage balance increases instead of decreasing as it normally would.

With all of these choices, a potential borrower should be sure to talk to a professional mortgage broker who understands the various products and can help you choose the best one for you.

It was simple in the old days: you went to a bank for a home loan, put down a deposit, and walked away with a thirty year loan at a fixed rate.

The world has evolved, and now a potential borrower has to choose among different types of mortgages, such as fixed or variable rate. A fixed rate loan will usually be at a higher rate than a variable rate mortgage. This is because the lenders have to make up for the fact that interest rates may move against them. For this, they expect to earn more interest on the initial rate.

If you can afford the higher interest rate, a fixed rate home loan makes sense since you now have protection against increasing interest rates. However, if you do not plan on owning your home for a very long period, they may not be the best choice. It will take a minimum of five years to level out the higher initial interest rates.

To keep your mortgage payments down, and if you feel you will sell the house in a few years, the best route is to secure an adjustable rate mortgage. Adjustable rate mortgage payments are lower and future higher rates are not an issue, since when the loan is paid down, this situation would be the same.

On top of the choice of fixed or adjustable rate loans, lenders now offer more choice (some say confusion) with loans based on various indices, various adjustment caps and maximum rates.

Lenders in addition offer borrowers a lock in term. The lock in period guarantees a given rate for a fixed time. The rate on the mortgage will be influenced by the lock in period, since a longer lock in rate will mean a higher interest rate.

The next issue the buyer has to decide upon is the size of his down payment. In a lot of cases, there is not much to decide upon, since the buyer will deposit as much as he can afford. In some instances, however, those with cash to spare may have to make the comparison between the benefit of a higher down payment with the option of earning interest with another investment.

A borrower will also have to decide on the points he wants to pay to reduce the home loan loan rate. The length of time you will hold the mortgage will be an important deciding factor.

How can the poor borrower decide among all of these options? With all of these types of loans, and new ones being brought on the market almost every day, such as interest only loans and options based loans, it is no wonder today’s borrower is confused.

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