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From the monthly archives:

January 2009

What is 30 Year Fixed Rate Mortgage

by R. MAK. on January 31, 2009

in Interest Rates, Mortgage

As the name says, a fixed rate mortgage is a mortgage where for the whole duration of loan, interest rates are fixed. simply put, the interest rate in a fixed rate mortgage never changes. Fixed rate mortgages are popular of all other type of mortgages as about 75% of all mortgages that are taken for a home purchase are fixed interest rate mortgages. Largest benefit of a fixed rate mortgage is that you always know exactly what your mortgage interest and principle amounts are at any given time during the life of the mortgage. this helps you keep your budgets in shape.

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Fixed rate mortgage offers security and peace of mind as you are not worried about sudden changes in interest rates. For example if the lending bank offers 30 year fixed mortgage loan to a home buyer and both agree on a 5% interest rate. This 6% rate will be fixed for entire 30 year period for which mortgage loan was given. It does not concern the buyer or seller if the market rate increases to 6% or decreases to 4%. Home buyer will continue to pay 5% interest rate and bank will be content with that. Therefore Fixed Rate Mortgage rate applies same interest rate to monthly installments throughout the life of loan and it make possible a fixed monthly installment.

Main Benefits of a Fixed Rate Mortgage

  1. In comparison to Adjustable rate mortgage, A Fixed rate mortgage is easier to understand and less complex.
  2. As it is more secure loan, It is widely adopted by first time home buyers.
  3. It suites two kind of buyers, First those who have a steady fixed income like salary etc. & Second those who wish to keep their houses.(does not suit investors)
  4. As Interest rates fluctuate a lot, risk perceived by lenders is higher in fixed rate mortgage so the rate of interest is normally bit higher than adjustable rate mortgage.
  5. Since the risk perception is higher in Fixed rate mortgage, Lenders usually ask for higher initial monthly payments compared to those of adjustable rate mortgages.
  6. Fixed-rate mortgage is less flexible than adjustable rate mortgage.

On the other hand in Adjustable rate mortgage the interest rate is not fixed and it changes during the life of the loan. Usually the changes are linked with an index rate like LIBOR and move in accordance to it. In a fixed-rate mortgage, your interest rate stays fixed for the entire life of the mortgage.

Further Reading

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Financial Theorem

by R. MAK.January 30, 2009 Interesting

Engineers, Teachers, Programmers and Scientists can never earn as much salary as business executives and sales people. This theorem can now be supported by a mathematical equation based on the following three postulatesPostulate 1: Knowledge is Power (Knowledge=Power) Postulate 2: Time is Money (Time=Money) Postulate 3 (as Physics students knows): Power = Work/Time

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Sleeping over the Crisis

by R. MAK.January 30, 2009 Case Study

Guardian in a recent report revealed the perpetrators of the global financial crisis. It revealed their names and photos too. The British Guardian newspaper on Monday published a list of people whose work has proved fatal for the world economy. Lies have been told by both policy makers and business sharks. The publication also listed visionaries who, warned us long before the actual crisis hit our shores. Unfortunately for the all us, these people were not involved in the process of decision-making.In its famous “black list” Guardian has 25 spots. Almost half of them are filled with the people that have something to do with economic crisis of today. here are some of political and financial heavy weights.

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30-Year Fixed Mortgage Rates Outlook For 2009

by R. MAK.January 29, 2009 Loans

It had not been long since we expected that mortgage rates will go up in next few months. The prediction for mortgage rates to go up was made because investors were sidelined and inflation was likely to rise. The downward spiral in home prices and the global financial crisis scared the already shaking investors a bit more. But all is not bad news. If you are planning to buy a home during this crisis, you might strike a deal of your life if the rate for mortgage finance and refinance go down in 2009.All investment pundits are predicting that home finance rates will go down in 2009 compared to 2008. Let’s analyze the main factors or fundamentals of mortgage rates movement. Economic outlook, inflation trend and Government policy… all these factors are signaling that we have lower interest rates ahead of us.

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25 cent charge appears on millions of credit card statements

by R. MAK.January 26, 2009 Credit Cards

These 25 cents have been charged by Adele Services, Melville, N.Y. A simple search on internet reveals that there is no such company in Melville. even more surprising is that no business by this name was ever registered in state of New York. People are presenting many theories for explanation of such absurd charges. One is, that it is quite possible that some one got his hands on a large database of credit card numbers and customer information. they are trying to verify the credit card authenticity before ringing up bigger charges on these cards.

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Reasons Behind Sub Prime Mortgage Crisis

by HenryJanuary 23, 2009 Mortgage

This funny, shocking and surprising. It. Just what happened? How did this American (US) sub-prime crisis all start? Who screwed up? Why was it so predictable and why are the current US government reactions, by cutting interest rates, the wrong course of action If you want to truly know how it all came to be, this is a must see! here is a glimpse of it

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Free Credit Report

by R. MAK.January 18, 2009 Credit Cards

A Free credit report like paid credit report contains information regarding your credit history. This data is collected by a credit reporting agency. These credit reporting agencies then sell this information to credit providers like banks and lending institutions and of course the credit card companies.

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5 Expenses You Can’t Afford If You Have Credit Card Debt

by HenryJanuary 13, 2009 Credit Cards

You need to cut down your monthly expenses and live frugally if you ever want to get out of debt. Let’s assume you have a $20,000 in credit card debt and you current minimum payment is around $500 per month. Unless you really don’t want to pay your credit card bills at all. You have to pay it in full before you can cancel your credit card.

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Good News: Mortgage Rates Hit 5%, It’s Time to Refinance Your Home Equity Loan.

by R. MAK.January 9, 2009 Interest Rates

Mortgage rates in U.S. have fallen to another record low as the week closes. It is has declined for 10th consecutive week this time. As Freddie Mac reported this Thursday that 30-year fixed rate mortgage yields have averaged about 5.01% for the week ending on January 8th, 2009. it is a 9 basis point decline from last weeks’ rate. It is nice to compare it with the rates this time last year. which were 5.87% .house owners around US are struggling with increased cost of living and job uncertainty, these attractive rates can offer real relief in terms of monthly amount spent on home loan re-payments. Most of the homeowners will see this as an opportunity to get rid of expensive adjustable rate mortgage and get a fixed payment loan instead for the peace of mind that comes with it. As It the fixed-rate mortgages are not likely to go down any further, It is a good time to bet on them.

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How money is created as a debt by private banks

by R. MAK.January 2, 2009 Banks

“The Money Myth Exploded” was one of the first articles of Louis Even, and to this date it remains one of the most popular illustrated story to explain in layman’s language how money was and still is created by private banks as a debt.

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