Financial Decision-Making 101 How to Keep Your Money in Your Pocket

Saving money can be difficult. Money is tight, bills are due, and unexpected expenses are always popping up out of nowhere. A 2016 GOBankingRates survey stated that in the U.S. 35 percent of adults have a few hundred dollars in their saving account and another 34 percent of those adults have zero dollars. At the end of the day, we all want to use our hard-earned money to enjoy ourselves. Bills are less fun to pay, and one of the biggest bills is the mortgage. While owning a home is a rewarding and satisfying experience, it’s expensive. You may also be choosing a bank, applying for business loans, or opening personal checking accounts. A helpful way to think about any investment or obstacle in one’s way is to learn about it, and this article will answer the question, “what is a fixed rate mortgage?” and many others. Hopefully it will also provide solutions to keeping more of your money in your pocket where it belongs.

So what is a fixed rate mortgage? When you’re buying a home, you can only benefit from knowing every option, and fixed rate mortgages can save a lot of money. Instead of one’s interest rate climbing or falling over time, it will stay the same. You will always know how much interest you’ll pay and there will be no surprises. When you’re saving money, one of the easiest ways it can be subtracted from is when something comes up that you didn’t expect: hospital bills, car maintenance, or, of course, changes to bill amounts. While your cell phone plan may charge you for going over on data, a fixed rate mortgage will always be the same, and you can plan accordingly. Most banks will offer a 15-year fixed rate mortgage and also 30-year fixed rate mortgages. Before anything, you should ask yourself, “What mortgage is right for me?” Not everyone would benefit from a fixed rate mortgage. There are also adjustable rate mortgages that will typically cost less, while being less predictable. It’s all about what works for your budget and what will benefit you most.

Only when you sort out your finances will saving money be an option. Again, ask yourself, “What is a fixed rate mortgage?” and “What mortgage is right for me?” A careful examination of any financing contract or investment will only benefit, and neglecting one’s situation and failing to pay bills will only hurt you. Right now, 1.24 percent of home mortgages are in delinquency, which means the buyer failed to pay them off. This is a huge wound to both the buyer and the seller, being a bad mark on the buyer’s credit and the seller not receiving money owed. This is part of the real estate disaster of 2008, where $1.4 trillion of mortgages were issued but many buyers failed to pay. This resulted in a crash and skyrocketed prices. The total percentage of homeowners since 2004 has gone from 69 percent to 63.4 percent largely because of the complications that arose from failed mortgage payments. Proper financing would’ve avoided this problem for all involved.

Another big bill to pay is a car payment. Personal transportation is part of just about everyone’s life, but unlike home mortgages, cars are essential to these people. And their numbers are growing; 107 million people have car loans according to the Federal Reserve Bank of New YOrk, and in 2012 that number was only 80 million. While home and car payments have different sizes of audience, these two do share the fact that people have trouble paying them off. In the U.S., 6 million people have failed to make car payments for 90 days or more. This is another instance of faulty financing. If these people had only gauged their car to their budget, they could’ve made their payments and avoided the dings to their credits and the stress of being behind.

It can only help to ask yourself questions like “What is a fixed rate mortgage?”, “What mortgage is right for me?” or “What car can I afford?” before making decisions. If you plan ahead and make smart choices, you–and your savings account–can benefit in the long run.

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