40-Year Mortgages: An Alternative to Interest-only Loans?Written by Chris Rocks
Interest-only loans are quickly becoming a mainstream loan product. Borrowers who were initially turned-off by perceived risk associated with an “interest-only” loan are now starting to see benefits: Lower payments, less money tied up in equity, more flexibility, etc. For savvy borrower, an “interest-only” loan can be an important component to an overall financial plan -- allowing them to divert principal payments to other financial goals. “Interest-only” is typically an option only available on adjustable rate mortgages (although some lenders are now offering this option on 30-Year Fixed Loans). Borrowers who plan on keeping loan for a long period of time and are uncomfortable with a loan product that has an adjustable rate component, may be interested in 40-Year Fixed Rate Mortgage. (Note: Some lenders do offer a 40-Year term on their adjustable rate mortgages) The more flexible underwriting guidelines of a 40-Year mortgage may also attract some borrowers who are interested but do not qualify for an interest-only loan. A 40-Year Mortgage is exactly as it sounds – a mortgage that is re-paid over a 40-year term. Due to a longer repayment period, 10 years more than standard 30-Year Mortgage, monthly payments are lower.
| | New car financingWritten by Jakob Jelling
Most people go shopping for a new car and then consider their financing options. While this is standard method it may not be your best option. Just like shopping for your new car, you need to carefully research your financing options and be prepared for it. Being prepared will ensure that you get best possible solution and rates, thus saving you possibly thousands of dollars in interest over term of your loan.When it comes to financing, tiny differences can mean a lot to how much you pay. Consider a $20,000 loan for 5 years at 11% and 9% interest rates. At 11% your monthly payment will be $434.85 and you will pay a total of $5,879.70 in interest. However, at 9% your monthly payment will be $415.17 and you only pay $4,740.98 in interest. Over term of your loan you will save more than a $1,000 by getting a 2% break in your interest rate. For this reason it makes sense for you to research your financing options before finding a vehicle you wish to purchase. The first step to researching your financing options is to examine your credit file and score. One in four credit reports contains information that is wrong and could result in you paying a higher interest rate than you should or perhaps even being denied your loan. Another important aspect of your credit file is your FICO score. This score will determine interest rate lenders will give you. It is important to know what interest rate is fair for you to be paying for two reasons. First it will allow you to know when you are getting a good deal thus making negotiating process easier for you. Second, it will help you to make sure lenders are being fair and honest. It is not uncommon for lenders to misrepresent your actual credit score or to add a few percent to your loan in order to increase their profits.
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