Hi, this is Dora L again.
Today, we’re going to talk about interest rates and some tips on how to get a good one and not be taken to the cleaners. Since the 2008 financial meltdown, banks have been holding onto their money like Scrooge McDuck sits in his vault guarding his cash. So, it’s no wonder it is harder and harder to get a home loan or loan for anything else. But, there are some tricks and tips that can make things simpler.
- The first rule is of course shop around. This may be a bit wearing on your shoes but it can save you thousands of dollars in the long run, which can buy you an entire closet full of fashionable footwear. This means of course that you check with credit unions, banks, and mortgage brokers as well. You can also shop around on the Internet and see what your favorite search engine delivers to your screen. However, doing it this way can possibly confuse you more than help you.
- Which is why I recommend you get a good basis of doing the math on figuring your interest and loan. So downloading a financial calculator is a prerequisite before you go out the door.
- Another option to get a good deal on a good interest rate is to watch the stock market. Banks get nervous when the stock market tanks and they’re afraid they might lose money when the stock market goes up. Why and how this happens is a mystery that perhaps Warren Buffett can explain. However, I only know is that when there is a sudden shift in the market interest rates change dramatically almost overnight and if you are paying attention, you can lock in a rate that is much lower than if you wait a few more days.
- Please, please avoid choosing an adjustable-rate mortgage (ARM). Look at what almost destroyed the banking industry along with the housing market back in 2008 happened precisely because people bought in at a low-interest rate and forgot that in a short period of time 4 to 5 years the rate would then go up to whatever the market would bear at the time. This took $300 monthly mortgages to $3-$4000 monthly payments.
This is all due to people not reading their mortgage contracts and especially the fine print.
- By the way, another tip, READ all the documentation on a prospective loan/credit card and its interest rates. If you cannot understand what it is saying, it behooves you to hire a lawyer and have everything explained to you in simple English. Yes, I know lawyers cost an arm and a leg today. However, you can save thousands of dollars in interest payments by understanding exactly what they’re asking for before you sign on the dotted line. The reason why they have fine print is that they do not want you to read these things. This has caused more bankruptcies and foreclosures that I can possibly relate to you. People, today want instant gratification and get their loan the next day. They cannot do that, however, it can cost them big bucks in hidden fees, charges, and changes in the interest rate based on how you go about making your payment.
Watch your interest rates in the stock market; do not go with an ARM loan. Get legal help in reading a mortgage contract or even a credit card application. In addition, along with this READ the entire document and understand it fully before you sign.
That’s it for today, the big clock on the wall says it suppertime and George gets cranky if he doesn’t get his dinner on time. So until next time this is Dora L wishing you well and I’ll be back soon with more money tips and tricks.