A debt consolidation loan can come in very handy for many consumers but these loans should be examined carefully before signing up for any. Like all financial instruments, this type of loan will have its benefits and its drawbacks. Let’s look at a few of the more important issues concerning debt consolidation loans.
A debt consolidation loan is the replacement of multiple loans with a single loan. One of the benefits of a debt loan is that the borrower will often see a lower monthly payment and a longer repayment period. Here is a very simple example of how a consolidation loan might work out:
Let us assume that you have three outstanding loans. The monthly payments are: $75 for one loan, $100 for the second loan, and $125 for the third loan. On a monthly basis you are paying a total of $300 to cover all of the bills.
Using a consolidation loan the new lender would assume those bills for you and then invoice you one single bill per month. In this case, the one monthly payment might be $200, which saves you $100 per month. Keep in mind that as you pay less per month you may also have […]
Full Article At: KnowHow-Now.com Articles
As children, many of us began saving by plugging our pocket money into a piggy bank. It’s a good early lesson in money management, but as adults, it’s necessary to do more than just stash your cash under the bed.
But before starting to put your hard earned money into a savings account, you should first pay off any significant debts you may have. This is because the rate of interest on loans is generally higher than the maximum interest on savings accounts. Therefore it makes financial sense to pay off these debts before starting to save.
The one exception to this rule is the student loan. According to Student Finance Direct: “All student loans accrue interest which is linked to the rate of inflation in line with the Retail Prices Index. This means that in real terms, the amount you pay back will have broadly the same value as the amount you have borrowed and no profit is made on the loan itself. Interest accrues on your loan until it has been repaid in full. The current interest rate is 2.4%”.
If your only debt is a student loan, then you would be better off financially, by putting your money […]
Full Article At: KnowHow-Now.com Articles
The first thing a lender looks at when determining your ability to qualify for a mortgage is called your 0debt-to-income0 ratio. That is the percentage of your gross monthly income that you spend on long term debt. This includes your mortgage payment, taxes, insurance and HOA fees. I also includes any consumer debt payments such as credit cards, student loans or installment payments. Plus it includes car payments.
Now you0re wondering just how much that new car payment can reduce the purchase price of your new home. Let0s crunch some numbers. Say you earn $5000 per month and have an average car payment of $400 per month. Calculating based off an 8% interest rate that car payment would cut your purchase power on your new home by about $55,000. That makes a considerable difference in the type of home you will be able to purchase.
It does not matter if you feel you can afford both the more expensive home and the car payment. The mortgage companies approve based on their guidelines not yours. You should still take the time to get pre-qualified with a lender.
Getting pre-qualified with a lender is one of the first steps in any home purchase. Your Realtor […]
Full Article At: KnowHow-Now.com Articles
