Browsing CategoryFinance

Why Do The Payments On My Mortgage Increase When The Annual Percentage Rate Increases?

From time to time I have had the opportunity to speak with mortgage customers, credit card customers and customers who were in possession of checking accounts along with other financial products. I have worked in the financial industry for a number of years and sometimes it is not easy for a customer to understand some of the changes that took place concerning their own products or services. It was easy for me to explain but the customer did not always comprehend the information that I was sharing. Periodically I would have to explain to a customer why their mortgage payment increased because the annual percentage rate increased. This is why a personal loan can be great to pay down debt and your down payment more conveniently. With the constant rise in interest rates and the downfall of the economy, you can use personal loans in order to pay off your debts and thereafter clear your personal loan accordingly.

Well, when your loan was first set up you were put on a payment schedule that would allow your mortgage to pay off in 30 years provided you make your payments on time every month. Your loan is fully amortized. In other words, when you make your payments a portion of your payment will go to interest and a portion will go to principal. Since your annual percentage rate, (APR), increased a larger portion of your payment is now going towards interest.

  • Balance $50,000
  • Payment $500
  • Interest $246
  • Principal $254
  • APR 6%

Notice with a balance of $50,000 and an APR of 6% the interest that accrues in a 30-day billing cycle is $246. If this loan continues as it is the balance will be paid off on the scheduled due date. Assume the APR increases to 7% because this is an adjustable-rate mortgage. The amount of interest that now accrues or accumulates is $287, approximately. This means more of your payment is going towards interest and less is going towards the principal balance. This account now has $213 going towards the balance. It will now take a longer period of time for this loan to be paid off because the balance is being reduced slower. To offset this, the payment needs to be increased to make sure enough money is still going towards the principal balance. An increase is needed to at least $541 because that is how much the principal payment was reduced by. ($254 -$213). (The increased payment is for this example only and may not be the exact payment amount needed to pay off the loan at the established due date).

Now sometimes you have to go over the information quite a few times before the customer understands exactly what is going on. Changes in terms and agreements can be confusing at times. If you signed a contract for one amount and one or two changes suddenly takes place you feel like you have been blindsided. At times it is just a matter of emphasizing the fact that the payment increased was needed so that the loan can still pay off on time.

If you have a customer in your office then you can actually print out a couple of amortization schedules which allows the customer to see the break down of principal and interest when the annual percentage rate is 6% versus 7%. This makes it a lot easier.

Texas Tech Program Offers Invaluable Advice To Spend-Happy Students

Inside the College of Human Sciences at Texas Tech University, in room 153, is something you need to know about:

Thirty trained student-volunteer counselors and one coordinator are helping provide free-of-charge financial planning assistance to Texas Tech students. The aim behind this move is to help students cut down expenses of academic life and manage their funds in an organised way.

In a time of economic uncertainty it is more important than ever for college students to be money-savvy and avoid pitfalls like debt, overdrawn accounts, and poor credit ratings. These days, when a low credit score can sink a job applicant, it is important to get one’s spending under control as quickly as possible – irresponsible expenditures as a young college student may mar one’s publicly-accessible credit score for years.

Red to Black, with its own webpage on the Texas Tech website, offers a convenient and easy-to-use informative portal for college students, and their parents, to peruse. Students can find ready information on many pertinent financial topics for young adults (such as creating a budget, buying a car, and planning premarital finances) or call or e-mail to schedule an appointment.

Such a service being provided free-of-charge to Tech students is a handy bonus that should be sought by most – college years are often ripe for financial mistakes by young and inexperienced spenders. Students are notorious for landing in debt and going overboard with the credit cards, with the damage taking years, or even decades, to erase.

Unfortunately, many college students today, both at Texas Tech and around the nation, are underprepared for new financial freedom after years of living with parents or guardians. Without parents around to guide them, most students are free to make all sorts of financial mistakes, and many may continue to sink further and further into debt by being in denial about the issue – often fearful of parents’ reactions to learning about the initial mis-spending.

Like Texas Tech, many colleges and universities want to help their students avoid these common financial pitfalls, and with good reason: A student who falls into credit card debt is more likely to be unable to pay tuition and will, therefore, have to leave college. This hurts a university’s bottom line and harms its reputation – schools dislike having a high dropout rate, regardless the cause of the dropout rate.

In other words, students and their parents should not shy away from seeking university-provided financial planning assistance, especially if it’s free – universities have good reason to develop a mutually-beneficial money relationship with its paying clientele. If you’re a local west Texas parent, or any parent or guardian, of a Texas Tech student, please advise him or her to take advantage of the school’s Red to Black personal financial planning service.

You will be glad you did…especially if helping save your student’s credit rating keeps him or her from being denied job opportunities and sent right back home to live on your couch!

Rise Of Innovative Digital Financing And Its Perks For The People

Financing is a continuously evolving field which seeks convenience and efficiency for currency use. It develops new methods, techniques, systems and platforms to meet such goals. Until near the end of the previous decade, cryptocurrency have begun to rise. Bitcoin have started it all and many other digital coins have followed, as well as Bitcoin Circuit and other automated ways of handling the revolutionary currency type.

What is Cryptocurrency and how it all Begun

In a nutshell, cryptocurrencies are digital currencies or money that don’t have physical forms. Most cryptocurrencies run on a decentralized manner, meaning they are not controlled by banks, government entities or companies. They usually run on the blockchain, which is a peer-to-peer network of transaction records which cannot be edited or deleted by any means. The blockchain also solved the problem of possible counterfeiting and double spending, since it verifies every single transaction to be legitimate.

Cryptocurrency began last 2009 when Satoshi Nakamoto have launched Bitcoin or BTC. It’s a decentralized cryptocurrency which people can mine digitally by solving highly complex mathematical algorithm. Hence, people today requires the use of computers with impressive hash power to mine BTC. BTC runs on the blockchain, and carries perceived value from the people. If it looks or performs well on the market, its value increases, and its value drops when perceived otherwise.

Its value is also affected by the law of supply and demand, since there’s only 21million BTC that can ever exist. And in the third quarter of 2019, there are already about 18 million BTC circulating in the market.

Today, there are already around 2,000 known cryptocurrencies available. Some popular examples are litecoin, ethereum, dogecoin and dash. They come after bitcoin, and each boasts certain features and capabilities.

How Cryptocurrency have Revolutionized Financing?

With its nature and functions, cryptocurrencies is said to be the biggest financial innovations the world have seen. It promises digitalized transactions, which brings the idea of completely cashless commerce on the future.

Think of simply bringing digital keys when you buy different products or services anywhere. That means no hassle of holding physical coins and bills. It would minimize the cases of theft as well, as long as you’d safely hide your digital keys.

Aside from being a currency, cryptos are also assets for investments. That’s because of its volatile value which rises and drops on a given time. So when you acquire certain amount of BTC today, for example, you can trade it up later on and get substantial returns on investment.

No wonder why many people try their best on investing or trading cryptocurrencies, some are also willing to spend and invest on powerful mining machines to get cryptocurrencies first hand. Companies which develop mining, trading and investing platforms are also there. Meaning, they make cryptocurrency more accessible for people who don’t know much about computer coding and financing.

And as expected, government entities and banking institutions are also lured towards cryptocurrency assets. Today, experts are studying on how to incorporate cryptocurrencies for practical use, or how to stop it from happening because of its risks. And they all have different goals and purposes which drive their research.

You see? Financing have certainly evolved and revolutionized for the benefit of everyone. But it still has a long way to go towards the future. It would continuously reshape itself depending on the needs and preference of people too.

Whatever happens to financing and currency, just be sure to keep yourself updated with it. That would help you fully reap its benefits, and prepare for some problems that may come.

Understanding The Difference Between Rental Car Coverage And Rental Car Insurance

If you have ever had to rent another vehicle, then you may have been asked the question, “Would you like to purchase insurance for the vehicle?” Every time a person rents a car they are faced with that question. Some of them will stand and gaze at the agent wondering what they should do. The agent is trained to sell the insurance so they make claims that their insurance is the only way to protect the car from damage. These claims are designed to pressure you into buying their insurance product. In order to make an informed decision it will be vital that you have a good understanding of your own auto policy and what the car rental company is offering you. You can also visit to know more about the difference between rental car coverage and rental car insurance, and what benefits both of these offer. As it is really important that you secure yourself financially. The website is going to provide you with all the necessary details and prerequisites of getting you your preferred insurance.

Your Personal Auto Insurance Policy

If you have a full coverage auto policy, there is a good chance that you have some kind of rental protection on the policy. But the question of what does it cover comes into mind when faced with a choice to use it or not. Some of the things that the rental car limits cover include:

Rental car coverage will provide you with another vehicle in the event you are not able to drive your car. This may include while your vehicle is in the shop because of accident related damages or if your vehicle is broken down on the side of the road and you need a car to get to your next stop.    The coverage may be limited to a set dollar amount. The coverage amount can be listed in a set dollar amount such as 50, 75 or even 120. This means that the insurance company will pay a set dollar amount per day usually up to 30 days for you to drive a rental car.

Your rental car coverage will not cover the cost to drive another vehicle that is rented from a car rental place. This is an important thing to know. The actual rental car coverage amount is designed to provide you with a car while your car is being fixed. However, if you have full coverage, your policy may cover the liability and or the physical damage coverage to the car that you rent for vacation or some other need. You will need to specifically check with your agent to find out if your personal auto policy coverage transfers to a rented vehicle. If your agent tells you that it does cover the other car, then your deductibles may apply to any damages.

A Rental Car Companies Auto Coverage Policy

Each time you rent a car for vacation, work related duties or for some other need you will be offered a basic auto policy that is designed to cover the car that you are renting. You will have to answer the question of whether or not you need the extra coverage or not. Here are some of the things that their policy will cover if something were to happen to the vehicle.

You may be covered for liability exposures. Liability exposure can be anything from someone getting hurt by the car or law suit related charges.    Another coverage that comes with the policy is physical damage coverage. There are usually different levels of coverage that you can pick from. The best coverage will cover the rental car from just about any type of damage.    Of course if the car has been wrecked, then the rental company can no longer rent the car to others so the policy will most likely have a loss of use coverage. If you find that there is not coverage, then you could end up paying for that part out of your own pocket.

A Few Comparison Points

There is a difference between your auto policy and the rental cars policy.

With the rental cars policy you will not have to pay a deductible to use the protection. If you decide to let your own policy cover the car, then your deductibles will apply.    With your own policy every claim stays on your record for over three years. If you file a claim with the rental cars policy, your record stays clean since the claim follows the rental car company.    Your own auto policy will keep you from having to pay the extra charges that the rental company charges for its policy.

There are advantages and disadvantages to using your own policy or the rental company’s policy. It is important to check with your agent about coverage before making a decision.