The Many Types Of Mortgages Available

emily-stampThere are many types of mortgages in the world and every mortgage has different levels of benefit. However, if you don’t have enough information about the advantages and disadvantages, you can run into some serious debt. There is always fluctuations in every business and it is the same case with the mortgage system. If you make a decision on a mortgage plan after a lot of notary public or mortgage broker consultations, you won’t face difficulty in the future.

A fixed rate mortgage plan is one of the types of plans where there are no ups and downs. That means that once you have decided to mortgage your property through fixed rate mortgage, you will pay the same amount that was decided at the time of mortgage. You also get to decide to lift the mortgage and pay the money back. So in the fixed rate mortgage, the amount remains the same throughout the year. This fixed rate mortgage is usually preferred when it comes to choosing a long-term mortgage, usually 20 years or above. When you apply for the mortgage, the interest rate is fixed for you and will remain the same until you pay the amount back.

There is one major advantage and one major disadvantage of mortgaging your property through fixed rate mortgage. The advantage is that you won’t pay more if the interest rate increases and you’ll know the actual monthly payment by yourself without having to ask anyone. On the other hand, if the interest rate decreases at the time of paying for your mortgage, you’ll have to pay more than what is needed to be paid at present, which would mean that you lose money. There is a way in which you can refund it if it suits you. Fixed rate mortgage is suitable for people who will mortgage their property for more than five years.

Other than the fixed rate mortgage, there are several other mortgages. They include the adjustable rate mortgage. In an adjustable rate mortgage, when it is time to pay, the amount of present interest rate will be calculated and you’ll pay accordingly.

Interest only mortgage is another type in which the interest rate of every month will be included in the payment and at the end they all will be added to the final payment.

Balloon mortgage is similar to fixed rate mortgage. The only difference is that the rest of the mortgage remains to be paid at the end of the mortgage period.

Most Common Credit Card Pitfalls

emily-stampJust because you don’t use your credit card frequently doesn’t mean you don’t have to worry about the common credit card pitfalls. No one can disagree that a credit card offers great convenience. It makes traveling easier, shopping online is just a matter of few clicks, and it is a great help when you run out of cash at the end of the month or when you have to balance your budget. However, a credit card is not without its pitfalls and you can find yourself in one of them in just a few slip-ups. Even the most common credit card pitfalls are avoidable and here’s how you can do so.

Using Credit Card Checks

While these checks are handy and may prompt you to take a vacation or go on a shopping spree, do remember that it’s the equivalent of taking cash in advance. That’s not all; their high interest rates and fees involved as well. You can end up paying a higher interest when you cash that credit card check. You can avoid it by making sure you’re aware of any fees involved when signing the credit card check.

Playing the Reward Game

Many people get credit cards to get cash back or earn rewards and if you’re among them, just make sure you’re conducting annual reviews of your cards and weighing all the risks and rewards. It takes a huge amount of cash and a significant number of points before you can earn anything of value. Make sure you fully understand how much you need to spend to earn gift vouchers, airline tickets or discounts. Is it really worth spending thousand dollars to get $20 back? Think about it.

Maxing Out Cards

debt-helpEven if your company keeps reminding you that there’s a lot of balance available, make sure you avoid the temptation to use it all up. High balances take the toll on your credit score and higher monthly payments or even a debt consolidation service will also be part of the deal unless you bring the balance down. The rule of the thumb is to keep the balance at 30% or below whenever you can.

Investing in a Card

Many credit cards that offer rewards and benefits come with hefty annual fees, maintenance fees and other surplus charges. Make sure you analyze the deal and don’t fall for a deal that isn’t in your best interest. Using your credit card as a status symbol can do damage to your credit score.

Missing Due Payments

This is a very easy trap to fall into as you always think you don’t have a problem paying some late fees, but it can cost you more than just that. Your interest rate can double if you end up missing multiple payments. Late fees are imposed as a percentage of the total balance, which means you could end up paying hundreds of dollars in late fees. Subscribe to email or text alerts to remember the payment dates and clear your dues on time.

How to manage household finances effectively

emily-stampManaging household finances is no easy task. It can get overwhelming at times. If you are not cautious, you will find that your budget has gone haywire. A minor mistake is all that it takes for the whole budget to blow through the roof and as a result, you could end up facing problems in handling the financing of your everyday necessities, and may need to consolidate debt through a program to get back on track. To ensure that you do not have to suffer from a lack of money on a daily basis, there are certain steps that need to be taken.

Realizing how much money you have at hand

The first part of managing your household expenses is being clear about how much money you have at hand. Are you under any debt? Are there any installments that need to be paid? If that is the case, you will have to separate the required money and make your budget using the amount that is left.

Understanding desire and need

consolidateYour first focus needs to be on ensuring that the money you have is used to fulfill your necessities. Thus, you need to make it certain that you understand the difference between need and desire. For example, if your kid goes to school and needs new books, this is something that your budget must incorporate. On the other hand, if you are an avid reader, purchasing a novel is your desire and is something that can wait. You need to ensure that all your needs are fulfilled before you can move on to fulfilling your desires.

Keeping some money aside for emergencies

It is important that you allocate a certain amount of your budget for emergencies. Health issues, accidents, and repairs are some of the issues that may arise, and you need to be certain that you have some money set aside for them. This will ensure that any unforeseen emergency does not throw your budget into a complete disarray.

Saving

Apart from all the expenses, you should strive to make sure that some money is set aside for rainy days or for using when you need some leisure time such as taking a trip.

Having it all in writing

debtMentally thinking about the expenses and calculating the budget is not the right approach. If you do so, there are all the more chances of mix-ups and wrong calculations. Thus, it is advisable that you sit down and write your budget in a proper manner, taking all the factors into account. Ensure that you do not miss out on any expense.

Sticking to the budget

Once your budget is prepared, you need to adhere to it under all circumstances. You might have to kill temptations to make this happen, but ensure that you do not let your expenses go out of budget.

It is not easy to kill your desires and you might have to face problems while doing so, but the result would be worth it. By going through these simple steps, you would not have to worry about finances at the end of every month.