Loan, Mortgage Finance
and Credit Card FAQs
Frequently Asked Questions and Myths

•		Payment strategies	•		Two smaller loans vs. one larger loan	•		Low APR credit cards
•		Transferring loans	•		Equity loans instead of regular loans	•		Getting loans when you have lots of credit cards

Common sense loan payment strategies...
Question: I know it's probably been said before, but can you give me a run down on some simple payment strategies?

Definitely! Some strategies might include:

• High Interest Loans: Pay off high interest loans first, while still paying adequately on your other loan obligations.

• Build credit responsibly with credit cards

  Charge cards usually have the highest interest applied to them. Try to pay off the balance each month on charge cards if possible. If not, put extra toward each monthly payment until you work it (or them) down to a zero balance. If your monthly payment is $60/month, attempt to put in $120 or more per month. Doubling the payments will cut interest charges significantly. Try to view charge cards as your own money rather than a loan. This may help you to view them more responsibly. If you can't cover them reasonably with your bank savings (or at least cover half of the charges), perhaps it's time to reevaluate your spending budget.

• Debt Consolidation Loans: Consolidating your loans into a single more manageable loan payment can get you out from under a financially strained financial disposition. However, don't make the mistake of taking on more debt just because your payment load is lighter. So many people fall into that trap. You can only consolidate a few times before you find yourself up against the wall where the only way out is bankruptcy.
  
  Going bankrupt is not a pretty situation even if lawyers are making it look like an attractive alternative. Just ask anyone who has already found themselves in that situation. Bankruptcy lawyers make it look like a welcomed alternative, but you pay the price in other ways not to mention their large fees to help get you out.
  
  Most people can apply for debt consolidation loans when there is a need to consolidate more than 2 existing credit bills. There are no special pre-requisites such as you must own a house or have a set amount of debt to qualify.

• Know the Interest Rate: Be sure what your interest rate is for your favorite credit card. Sometimes people mistakenly see the monthly APR on the card and confuse it with the yearly APR.

• Mortgage Payments: If your monthly mortgage bill comes to $1,027/month, consider putting in $1,100 each month. That extra put toward the monthly payment can cut years off of your loan and save thousands in extra interest charges. That extra bit also goes toward the principle amount of the loan which further adds value to your home and your investment.

• Cancel Mortgage Insurance: Most who put down less than 20% of the total value of the home are made to purchase mortgage insurance. However, the bank does not tell you when you can drop mortgage insurance which can add another $30 to $60 or more to your monthly payment. Once you own 20% of your home, you may cancel it.
  
  Even if you've only paid in a total of $12,000 on your $100,000 home (totals of all principle payments, and down payments), you may still be able to cancel the insurance because property values raise. That home may now be worth $112,000 or more if you've had the home for 5-7 years. By subtracting $12,000 from $100,000, we arrive at $88,000 which means you would only own 12% of the total closing value from the point of closing.
  
  However, adding in the appreciation value, we now find that you own about 22% of the home which means you can cancel your mortgage insurance. You can put the amount you pay for insurance to your principle portion of your mortgage saving you more money and building your home investment
  more quickly.
  
  The percentage of home ownership is figured by dividing the principle amount still owed on the home loan by the appraisal value, then multiplying that value by 100, then subtract that value from 100 which will tell you what percentage of the home you own. With the above figures it would be set
  up like this:
  
  $88,000 ÷ $112,000 = 0.786
  (rounded to nearest 1,000^th)
  0.786 × 100 = 78.6
  (or 78.6% of the home value owed)
  100 - 78.6 = 21.4
  (or 21.4% of your part of the ownership)
  
  Since the amount you would own is more than 20%, you can now eliminate that extra mortgage payment charge and put more towards your housing investment.