Home Equity Loan – With a Reverse Mortgage, Your Home Pays You!Written by Charles Essmeier
The home equity loan has become quite popular in last five years, and Americans have tapped into equity of their homes in record numbers. The reasons vary, although home improvement and debt consolidation are most common reasons for borrowing against a home’s equity.
In last fifteen years or so, a new twist has arrived in home equity market –- reverse mortgage. Like a traditional home equity loan or line of credit, a reverse mortgage allows you to borrow against equity in your home. Unlike those other options, you don’t have to make payments in order to pay it back. The repayment takes place when you die, when you move, or when you sell your home. You must be at least 62 years of age to qualify, but unlike other loans, you do not have to have any appreciable income in order to get a reverse mortgage.
There are a number of advantages of a reverse mortgage over
| | Beware Paying the Credit Card Minimum PaymentWritten by Johann Erickson
Need a new iPod? The computer store running a special this week? Want that new outfit? Got to have that CD? Before you reach for your credit card and make that impulse buy, think for a moment. The payments won’t be much? Think again. Paying only minimum payments on your credit cards can cost you.
“But,” you say, “my balance is low, and with this purchase, it will only be $1,000. I can pay that off in no time!”
Well, if you enter Twilight Zone and never again use card for any purchases, are never late, and go over your credit limit, you can pay off card by making minimum payments. It’ll only take a little under five years! Just fifty-eight short months of your life, costing you $154.48 in interest charges, that is, if your card rate is only six percent.
But what about higher rates? Generally, higher interest rate, more you pay and longer it takes to pay off card.
But what about higher rates? Generally, higher interest rate, more you pay and longer it takes to pay off card.
Everybody knows that, you argue. Everybody uses credit. Well, true, nearly everybody uses credit, because it seems like we’re not really spending our money, but someone else’s. Plastic is deceptive.
Most folks do make impulse buys, rationalizing that they can pay off their card balance in a short time. But life happens to best repayment plans. Think you’ll never get sick, fired, laid off or downsized? Do you drive a forever car that will never need major repairs? Think again. And when these things happen, minimum payment beckons like a shining solution.
But is it?
Hardly. Let’s say that you had several cards, all having a $1,000 balance at different interest rates. Note long repayment times, assuming, unrealistically, that you never make another purchase with any of these again. Check chart for repayment times and interest rates.
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