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If you are not familiar with the term equity it's the difference between the total amount you owe on your mortgage and your home's appraised value. If you have some equity in your home you might want to borrow against it instead of getting a bank loan. There are two benefits to this. First, getting a home equity loan will be less complicated since you've already been approved for a mortgage. While you will need to get your home appraised, your lender should be able to help you through the process. Second, and equally important, the interest payments you make on a home equity loan are generally tax deductible – unlike the interest you would pay on a personal loan.
Don't count on lenders loaning you an amount equal to the total amount of equity you have in your house. At the most you'll probably get 75%. Let's say you have $100,000 in equity. This means you should be able to borrow up to $75,000. This can be a very good deal if you plan on staying in your home for some time or if your home is worth a good deal more than you paid for it. Of course, if you don't have much equity in your home or if you think you'll be moving in just a year or two, this tip is likely not for you. And you will need to be sure you make all the payments on your home equity loan on time as you’re borrowing against your house so if you were to fall behind you could actually lose your home.
#4. Pay your insurance premiums once a year
Do you have an insurance policy that you plan on keeping for at least a year? Then this tip could help you save some money. You're probably now making payments monthly on your life insurance and auto insurance. However, you don't have to do this. In fact, insurance companies would rather that you pay in one lump sum annually. That way they know that the policy is paid up for the next year. They allow you to pay monthly as a courtesy but they do charge you for this by multiplying each of your month' payments by .08 to. 09%. While this may not seem like much let's say that the total premium on your life insurance is $400 a year. When you pay this monthly, it will cost you $36. If you multiply that by 12 months you'll see that you'll be paying $430 for the year. That's an extra 8% or $32. Of course, to pay in one lump sum means you need to have the money available. One way to do this is by setting up a separate savings account specifically to cover your annual insurance payments and then auto-contribute a little to it each month.
#5. Auto-draft your investing
If you are investing for your retirement, as we hope you are, you're undoubtedly paying a commission or fee every time you make a trade. However, most brokerages will drop this if you create an auto-draft where you're automatically contributing an amount to your account every month. The reason they are willing to do this is because it ensures that you'll be paying them every month instead of just occasionally when you make a trade. Do be sure to ask your broker if it would be willing to waive its commissions before you create that auto-draft.