Tag Archive | "credit card payments"

Calculating Your Mortgage Affordability

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The rising of home prices is a put down to many prospective home owners.  The rule of thumb is that prospective home owners can manage to pay for a mortgage that is priced 2 to 2.5 of their gross income. This means that a person with an annual income of $100,000 can manage a mortgage of between $200,000 and $250,000. Prospective home owners should consider the lender’s view, their finances and preferences.

The lender’s view

The lender’s view

Lenders judge the ability of borrowers to buy a home basing on: front-End Ratio, the Back-End ratio and down payment.

The percentage of borrower’s annual income committed to paying the mortgage per month is called the Front-End ratio. Mortgage payment comprises: principal, interest, taxes and insurance, collectively referred to as PITI. As a rule PITI should not exceed 28% of the gross income. Many lenders though allow borrowers to exceed 30% or even 40%.

The percentage of a borrower’s gross income needed to cover the debts is referred to as the back-end-ratio or the debt-to-income ratio. Debts are the mortgage, credit card payments, child support and other loan payments. The recommend debt-to-income ratio should not exceed 36% of the gross income. Maximum monthly debt ratio can be calculated by multiplying annual gross income by 0.36 and dividing the results by 12.
To be considered for mortgage loan the borrower should afford at least a down payment of 20% of the purchase price. However, some lenders accept a lower down payment. Read the full story

Should I Choose a Secured Credit Card or an Unsecured Credit Card?

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Whether you believe it or not, but I must tell you that there are a variety of credit cards and alternatives to the traditional credit card that we mostly use. Here I have explained you few forms of secured credit cards. It is better that you understand these options and choose any appropriate secured credit card for your particular needs.

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If everything else is equal, I suggest you that you should always choose an unsecured card rather than a secured card. On secured cards interest rates are almost always as high as the interest rates of unsecured credit cards. There is no reason to choose the secured option over an unsecured credit card.

4 Secured Credit Cards to Watch out for

Here I have mentioned few secured credit cards which you should avoid choosing for your financial needs:

Credit Cards Secured By Your Purchases

Retails stores also issue few credit cards. For instance, Sears card, take collateral in the items that is purchased by you using the Sears credit card. What it means is that if you are unable to make your credit card payments, then the lenders might decide to repossess the property that has been bought by you using that card.

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How to Save Your Credit During the Economic Crisis?

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Are you having a bad credit shape? If yes, then don’t feel that only you are facing this problem. Right now it seems that the credit horizon is quite discouraging, but however it’s never a bad time to begin paying off your debts and raising your credit score.

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Well today we are facing the credit crunch but it won’t last forever; if right now you take care of your credit, it will result in having an access to great rates after that the storm has passed away. You may follow the following tips for weathering the financial crisis and in order to keep your credit on higher levels.

You should never buy those things that you can’t afford.

During the credit crunch it becomes more important to pay down your credit card debt. If you are really willing to pay down or pay off your cards, then don’t charge more purchases that may sabotage your efforts. In order to purchase those things that are costly and still you want to buy them you must have to wait until your debt has dwindled. Also you should not fall prey to feelings of entitlement. May be it is tempting to buy things after a certain period of struggle, but before doing so; just once think about your financial future.

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