Tag Archives: balance

Option Arm (Page 1 of 2)

March 26, 2019   Home Mortgage

An ARM offers low adjustable interest rates with the security of a fixed minimum payment. With ARMs, you have four different payment options each month. ARM mortgages give you flexibility that is unmatched by virtually any other home loan product available in today’s market. If your budget is a bit tight, you can choose to make the interest–only payment or the minimum payment: two payments that are lower than a standard mortgage payment. In months when your budget is not so tight, you can use the extra money toward saving for retirement, paying off high–interest debt, making home repairs, or financing college expenses.

An option ARM program calculates your minimum payment based on your interest rate minus a percentage for the first five years until it reaches the maximum deferred interest level of about 115 percent. During the first five years, your rate is fixed. After that, it becomes a six–month fully amortizing ARM. When that happens, the loan loses its potential to be a negatively amortizing loan. If you are looking into getting an option ARM, look for one that limits the potential for deferred interest or negative amortization. The minimum payment on Option ARM mortgages is the lowest of the four payment options, since it is less than the amount needed to cover the interest for the month. This is known as deferring your interest.

Remember that flexibility makes an option ARM mortgage a great choice for borrowers who don’t have a fixed income or for people with fluctuating income-like people who work on commission or self–employed borrowers; even people who are serious investors who want to channel their money into their investments, rather than their mortgage. Without a fixed income, it can be hard to meet a mortgage payment on time during slow months at work. Say you have a bad month of commission-sales are down; you have to fix your car; and finances are tight. With an Option ARM loan, you can choose to make just the minimum payment to get you through the month, and then make a larger payment when things pick up. However, this loan might be perfect for someone who is in sales and works on commission and who knows how to get by when sales are down. This is not the kind of loan for people who may have lots of debt and are looking to pay the minimum payment all the time.

The minimum payment on Option ARM loans may not fully cover the interest that accrues monthly. If the minimum payment does not cover the entire interest owed, it gets tacked onto your loan balance which means you can get into trouble very quickly, if you don’t know what you’re doing. Your loan balance can actually increase as you make these low payments. You can elect to use the minimum payment as often as you like, but if used too often without making some larger payments in between, you could end up with a mortgage balance that is higher than the value of your home. Quicken Loans offers an option ARM mortgage with a minimum payment that limits how much interest is deferred.

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Credit Card Debt Help – The Golden Rules For Using Credit Cards and How To Get Rid of Credit Card Debt (Page 1 of 2)

March 22, 2019   Auto Loans

Credit cards make spending money so easy. The process is one step removed and makes us far less careful about it than if we were handing over our hard earned currency. The combination of this with the fact that they are so easy to obtain for most people can be a recipe for disaster.

The use of credit cards has increased enormously over the last decade or so. Lenders are not always responsible about who they offer cards to – often people who clearly have no chance of paying them back if they use them to their full credit limit. Spending money on credit cards is one reason for many of the personal debt problems that people have today.

If you are one of those people with credit card debt, there are certain ground rules that you need to be aware of if you want to put the debt behind you. First and foremost being that you should not consider borrowing more money to pay off your debt, or taking out more credit cards for spending. Debt is rarely improved by borrowing more money and your situation is much more likely to be made worse than it was before. With credit card debt the best solution is to try to move your debt to another card with the lowest interest rate you can find, preferably 0%.

Balance Transfer Your Way Out Of Debt

You need to look for cards with the best interest rates for ‘balance transfers’. It doesn’t matter what the rate is for purchases, because you aren’t going to be making any. This is a very important rule – when you do a balance transfer, you must forget that card as far as spending goes. You will rarely find a card that has a special deal on both balance transfers and purchases, so chances are you will soon lose anything you gain on the balance transfer deal if you start spending on the same card.

You need to have some idea about how long it is going to take you to pay off the total debt on your credit cards. If you know you can do it in about a year, then you can look at doing one balance transfer with a good 0% deal and that should be all you need. Once you have transferred, you can just concentrate on paying back what you owe, without being charged any more interest. Just make sure you focus on when the 0% deal runs out and that you can pay if all off by then.

If you need longer than that to pay it off, then you can either find the lowest rate you can for the ‘life of the balance’ (you are guaranteed that rate until the debt is all paid off) or if you are organised and disciplined you can keep transferring your balance to the next special offer 0% deal and avoid paying any interest at all. I stress that if you are not organised this will not work and you will end up paying interest and other charges. Be honest and decide whether this is for you or not.

Understanding Credit Cards

The way you deal with credit cards will be improved by facing up to some basic truths about them first. The first thing to remember is that the every single credit card is designed to make money for the card company – they would not exist otherwise. This does not mean that there are not ways to take advantage of the benefits of credit cards without paying the card companies, but you need to understand where the traps are and how to avoid them.

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