Points to Remember While Searching for Home Financing
25 November 2012
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After finding the right house to live in, you need to search for a loan to buy it. Normally, people don’t have enough money saved up to buy a house. They approach either a mortgage finance company or an established bank for home financing. Both options have their own merits and demerits. Let us now look at the advantages and disadvantages of securing a loan from a bank and financing by a home financing company.
The Bank Getting a loan from your local bank will be easier and faster since the bank already has all the information it needs to grant you the loan. The bank probably knows your credit historyand your ability to pay back the loan. Since you already have dealings with the bank, your loan application will be approved in your favor. The rate of interest on your loan will also be lower if you take the loan from a bank. On the other hand, if you go to a home financing company, you have to go through a mortgage broker and you have to produce a number of documents to prove your identity. Completing all the formalities required by the home financing company might waste some of your valuable time. The rate of interest will also be higher than that of the bank. If you decide to go with the mortgage broker, you will have no choice other than accepting the loan provider chosen by your loan broker, irrespective of the terms and conditions of the loan. The Mortgage Broker Some mortgage brokers act in the best interest of their clients and they search for the lowest rate of interest and easiest terms and conditions for loan repayment. It means that you can shop around for the right type of home finance. If you choose a mortgage broker, he / she will do everything necessary to secure the mortgage. You don’t have to waste your time and energy. If it is a bank that you have chosen to finance your home, you have to personally report to the bank during business hours. You have to accept all the conditions laid down by the bank. The final choice is yours. If you are short of time and don’t know how to secure a loan, choose a mortgage broker. If you can spare some time and go to your friendly local bank, the bank will be a better choice. Before taking a final decision, consider both the options thoroughly.
The Ideal Way to Settle Your Credit Card Debts
24 November 2012
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Being in debt is a common phenomenon and credit card debts constitute the major part of total debts. It looks so funny when we find people searching for different ways to settle their credit card debts when they have sufficient money in their savings account. Some say that they don’t like to withdraw money from their savings account because they have saved up the money for a specific purpose and that money will be utilized only for that purpose. Instead, they try to settle their debts with money either from their retirement benefits or from a mortgage. Let us now look at the relative advantages and disadvantages of using and not using the money that is lying in their savings account.
If you are planning to withdraw money from your IRA account before the stipulated time, you are liable to pay penalties. To make matters worse, the amount you will get after retirement will be too little. Remember that you will have no other source of income after retirement and the only income to pull on the rest of your life is the money in your IRA. So, leave it untouched and let it be there for your old age. A viable alternative is to take a loan by mortgaging your home. If the mortgage loan carries a lower rate of interest than the credit card debts, you will be a gainer. But you are assuming a greater risk by mortgaging your home. In case you are not able to pay back the mortgage loan, your home will be seized by the mortgagee. In the case of not paying your credit card debts, the worst you can expect to happen is a hit on your credit score. It is, therefore, advisable to take a mortgage loan only if you are confident that you would be able to pay back the loan on time. The best way to pay off your credit card debts, of course, is to use the money in your savings account. Savings accounts carry a very low rate of interest and it doesn’t make sense to keep your money in your savings account while you pay a very high rate of interest on your credit card debts.