Home Loans
Saving Money on Banking and Credit Services
(presented by www.refinance-refinance.net - mortgage lenders)
By Chemain Evans
From radio spots and junk mail to television and newspaper
ads, American consumers are bombarded with invitations to
utilize various banking and checking services. And even though
they come with the obligatory fine print, so much of it remains a
mystery to most of us. So how can you really know whether you
are better off staying where you are at, or switching to a new
service? From checking accounts to home loans, and a whole lot
in between, here are some answers.
Checking
You can save more than $100 a year in fees by selecting a
checking account with a low (or no) minimum balance
requirement. There are usually stipulations attached so make
sure you can meet them. Request a list of these and other fees
that are charged on these accounts and compare carefully. In
addition, banking institutions often will drop or lower checking
fees if paychecks are directly deposited by your employer. Direct
deposit offers the additional advantages of convenience,
security, and immediate access to your money, so look into it if
you don’t already have it.
Savings and Investment Products
Before opening a savings or investment account with a bank or
other financial institution, find out whether the account is
insured by the federal government (FDIC or NCUA). An
increasing number of products offered by these institutions,
including mutual stock funds and annuities, are not insured,
which means you absorb 100% of the risk.
To earn the highest return on savings (annual percentage yield)
with little or no risk, consider certificates of deposit (CDs) and
treasury bills or notes. These are not liquid (easily accessible)
investments and need to be left alone until they reach maturity,
but they do carry a better return than a traditional savings
account. Plan accordingly.
Once you select a type of savings or investment product,
compare rates and fees offered by different institutions. These
rates can vary a lot and, over time, can significantly affect
interest earnings.
Credit Cards
You can save as much as a thousand dollars or more each year
in lower credit card interest charges by paying off your entire bill
each month. If you are unable to pay off a large balance, pay as
much as you can and switch to a credit card with a low annual
percentage rate (APR). For a modest fee, RAM Research Corp.
(800-344-7714) will send you a list of low-rate cards. You can
obtain a list of low-rate cards by accessing
“www.ramresearch.com” on the Internet. In addition, you can
reduce credit card fees, which may add up to more than $100 a
year, by getting rid of all but one or two cards, and by avoiding
late payment and over-the-credit-limit fees.
When shopping for a credit card, look for more than just the low
interest rate. Compare other fees (such as over-the-credit-limit
or late payment) and also look at the billing cycles. Some cards
have a 28-day billing cycle instead of a monthly one, which can
really throw off your budgeting. Also, you know all the
“freebies” that the credit card companies offer you-like cash
back, airline miles, etc.? You pay for them in the form of a higher
interest rate, so decide whether they are really worth it!
Auto Loans
If you have significant savings earning a low interest rate,
consider making a large down payment or even paying for the
car in cash. This could save you as much as several thousand
dollars in finance charges. Think about it-you could be earning
minimal interest by keeping that money in the bank, or saving
yourself substantial interest by paying cash up front.
If you need to finance your auto, you can save as much as
hundreds of dollars in finance charges by shopping for the
cheapest loan. Contact several banks, your credit union, and
the auto manufacturer’s own finance company. Get the lowest
interest rate for the shortest amount of time that you can.
First Mortgage Loans
Although your monthly payment may be higher, you can save
the shortest-term mortgage you can afford. On a $100,000
fixed-rate loan at 8% annual percentage rate (APR), for
example, you will pay $90,000 less in interest on a 15-year
mortgage than on a 30-year mortgage.
You can also save thousands of dollars in interest charges by
shopping for the lowest-rate mortgage with the fewest points.
On a 15-year, $100,000 fixed-rate mortgage, just lowering the
APR from 8.5% to 8.0% can save you more than $5,000 in
interest charges. On this mortgage, paying two points instead
of three would save you an additional $1,000.
If your local newspaper does not periodically run mortgage rate
surveys, call at least six lenders for information about their rates
(APRs), points, and fees. Then ask an accountant to compute
precisely how much each mortgage option will cost and its tax
implications.
If you are considering an adjustable rate mortgage loan (ARM),
be aware that the interest rate on most ARMs can vary a great
deal over the lifetime of the mortgage. Most ARMs lock you into
a rate for 3-7 years, and then begin varying. An increase of
several percentage points might raise payments by hundreds of
dollars per month. If you know you will only own your home for
just a few years, an ARM might work for you if you plan to sell
before you move into the variable period.
Consider refinancing your mortgage if you can get a rate that is
at least one percentage point lower than your existing
mortgage rate and plan to keep the new mortgage for several
years or more. Ask an accountant to calculate precisely how
much your new mortgage (including up-front fees) will cost and
whether, in the long run, it will cost less than your current
mortgage. Keep in mind that most refinancing loans reset your
mortgage length to 15 or 30 years, not to where you are
currently.
Be cautious in taking out home equity loans. Although the
financing industry touts these loans as a great solution to debt
or as a way to get what you want right now (vacation, remodel,
etc.), these loans reduce the equity that you have built up in
your home. If you are unable to make payments, you could lose
your home.
Compare home equity loans offered by at least four banking
institutions. In comparing these loans, consider not only the
annual percentage rate (APR) but also points, closing costs,
other fees, and the index for any variable rate changes. Your
home is probably one of your greatest assets, so take this kind
of a loan very seriously.
In Conclusion
As is the case with most things, a little investment of time can
save you quite a bit of money on your banking and credit
services. However, your time is valuable, too, and the cheapest
option may not always provide the services you need. Consider
your options and make the best choice for your individual
situation.
Chemain Evans is a quality control specialist for Simple Joe, Inc. Income & Expenses PC software is a Simple Joe product that is a quick and simple way to keep track of your expenses and stay within your budget. Learn more at http://www.simplejoe.com
===========================================
For additional Mortgage Refinancing information
and resources visit Mortgage Refinancing.
(http://www.refinance-refinance.net)
===========================================
Technorati Tags: mortgage refinance, refinance, home refinance, bad credit refinance, bad credit mortgage refinance, loan refinance, home loan mortgage refinance, mortgage refinance information, refinance mortgage, home equity loan, home equity loans, equity loans, debt consolidation, debt consolidation loans, debt consolidation loan, consolidation loans, credit card debt consolidation, credit card consolidation
