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Advantages and Disadvantages of a Mortgage Loan

A mortgage loan is a very specific type of loan for the purchase of a property. The property may either be a house, a lot or both. Mortgage loan has been specifically created for acquisition and ensure that terms address the matters concerning on the purchase of a property such as valuation, property appreciation and property ownership. There are specific advantages and disadvantages of getting a mortgage loan and knowing what they are will assist in planning action.

Advantages:

  • Liquidity – an individual or entity who wants to purchase property but is not liquid enough can still do so by getting a mortgage loan. This loan allows the buyer to be funded by the lender on the purchase of property. Despite an individual not having enough cash, mortgage loans grant the individual the chance to make a purchase. Payment by the individual buying the property can now be done by paying installments rather than one go.
  • Credit Score – paying a mortgage loan consistently and without defaults build a good credit standing, like with any other loan. The advantage of having a good credit score from a mortgage loan allows you to get lower interest rates as granted by the lender.
  • Interest Rates – the property purchased serves as a collateral to the loan which allows the lender to foreclose the property and recover the default payments. In this case, the loan itself can be granted a lower interest rate compared to other types of loan. The lien on the property gives the lender security which does not require them to recover the fees as soon as possible via charging high interest rates.

Disadvantages:

  • Higher Purchase Price – all loans require an interest to form part of the borrowed money for the lender to recover the value of money that may have been earned and protect from the inflation of the economy. Because of this, a higher price is being paid by the buyer upon paying the full loan amount where the principal is equivalent to the property value.
  • Charges – other fees are incorporated in the principal loan and interest rates. Because of the purchase of a property, there are other fees like legal fees and insurance fees which are charged to the buyer and incorporated in the amortization to be paid. These charges are not present in other type of loans.

Advantages and Disadvantages of Consolidating Credit Cards

There are instances where a cardholder may hold several cards that may prove to hurt your pocket when managed inappropriately. There are instances where consolidating a credit card may be beneficial and outweigh the reasons not to take one. Below is a list of advantages and disadvantages of consolidating a credit card.

Advantages:

  • Interest Rates – having multiple cards will most likely have different interest rates. Consolidating under one credit card may be advantageous if you consolidate under the lowest interest bearing rate.
  • Single Card – credit cards are one of the debt instruments that have the most complicated rules and complex interest rates computation for an average person. Most people wouldn’t focus on these rules and computation. Consolidating will help in just understanding rules and fees of a single card.
  • Credit Limit – consolidating under a single card allows you to maintain under a single credit limit which may prove to be more practical than having several cards. The sum of credit limit of multiple credit cards may sometimes be too high and beyond the card holders capacity to liquidate.

Disadvantages:

  • Payment Spread – with a single card, you cannot spread your payment under multiple dates. You will have to pay a single lumpsum amount to cover the monthly dues. This becomes difficult especially when all the cards that have been consolidated have an existing debt carried with it.
  • Unresolved Debt – putting all your debt under one credit card may not equally solve the problem of being under too much debt. It only pushes you to eliminate other cards that have been a burden. The actual debt on the other hand is still the same. It may prove to create a lesser interest rate but will still become a burden if not approached correctly.

Credit card debt has become a serious concerns for more and more people who fail to manage credit card spending properly. Credit cards should always be viewed as replacement for cash but still having enough in savings to pay for the debt. It should never be used to buy goods and services if a cardholder doesn’t have enough reserved funds to liquidate the charges being incurred.

Choosing the Right Mortgage Lender

Mortgages are becoming necessities as more people and families prefer to own their own home rather than rent or live with other members of their families. But like any other loan, careful planning and debt management is required. And with the same approach that you did with choosing your house or property that you want to buy, make sure you choose and shop for the right mortgage lender that can help you.

Mortgage lenders offer certain benefits that will make them better than the others. Without carefully checking on the mortgage lender, this can lead to a more difficult process of purchasing the house and repaying the amount loaned.

Here are some points that need to be remembered when shopping for a mortgage lender:

  • Check every lender and get the information regarding the loan

It is important that you review each lender’s information on their offer. Always remember that a mortgage is a long-term loan where you will need to form a relationship with your creditor. Knowing the information of the loan will also help you compare the benefits that each lender can give you. Knowing what the benefits are will help you choose a lender that can help you maximize your loan.

  • Compare deals and choose the best one that can help you

Deals can vary from lender to lender. A deal that one lender may offer may not be a deal that you would want or would be beneficial to you. It is important that you choose a deal that helps you maximize your loan and totally benefit from it.

  • Identify all current and future cost

When you choose a mortgagor, you need to identify the costs involved in partnering with them to purchase your new home. There are several costs that may be present during the loan period and fees that may arise from default in the agreement. Knowing these costs will help you compare your mortgagor and help you choose which one can help you better with less problems in the future.

Choosing the right mortgagor is very important. It is the same as choosing the right doctor for the problems you are encountering. With the right partner, you can make the most out of your mortgage loan.

Business Credit Cards and their Advantage

Credit cards nowadays are becoming more and more of a necessity including business operations. It allows a business convenience in paying services fees and purchasing goods from suppliers. Credit cards help greatly in a business operation in the form of rolling credit that can be used to finance small company payments. Here are a few of the features a business credit card has that can be used as an advantage.

  1. Business credit cards often come with accounting features. We all know that proper books maintenance is very important for a business to properly operate. Most business credit cards come with a software tool that tracks the charges and payments and maintains the books regarding the credit card usage. It is an aspect that businesses may use to their advantage especially on making decisions to increase credit and/or maintaining the credit card.
  2. As businesses keep on using the credit card, the high usage brings in accumulated reward points that may be used by the business. It can be used for rebates, discounts and other financial benefits the credit card can offer. A business always accumulates these points at a fast pace because of the high usage that business have on credit cards. Business credit cards offer special reward programs that is different from personal credit cards.
  3. Credit cards that are extended to its employees also bring benefits. All credit cards that are issued to its employees earn reward points on their purchases and are applied to the main account holder which is business entity itself. These points accumulate much faster as the spending is multiplied through employee usage.
  4. Business credit cards use are required to be reported to a business credit bureau to keep track of the credit score of the business. It allows the separation of credit scoring between a personal and a business credit card. If you are an owner, partner or director who owns both a personal credit card and a business credit card, the report for your business credit card is separate from your personal credit score.

Ensuring proper use of a business credit card can bring much benefits to owning an account for the business.

Advantages and Disadvantages of a Business Loan

Business loans have been known to make or break the success of a company. Properly evaluating what a business loan can bring and what business loans can cause will help in planning the business decision to be made in applying for this type of loan. Business loan are great ways to bring funds an existing company or a startup. It can help in expansion or its solvency. Below are advantages and disadvantages of acquiring a business loan to properly plan and make the decision:

Advantages:

  • Ownership – expanding or growing a company requires funds to purchase equipment, property, materials and even expand existing inventory. There are different ways of getting these funds and a business loan is a best way if the intention is to maintain the shares of its current owners. This is in contrast of seeking a funding from an equity investor, the current owners may have to give up the right to a portion of its current shares.
  • Collateral – there are two types of business loans, secured and unsecured, which can be granted by a financial institution. Often, a business loan is granted without a collateral depending on the size and tenure of the business. Lenders consider granting a loan to long tenured companies with good credit standing. Lenders are confident that non-payment of the loan will allow them to go after the business.
  • Flexibility – Lending institutions grant flexibility on the types of loan being granted to a business. Unlike other types of loan, a lender may consider the goal of the business and custom fit the terms of the loan to its borrower.

Disadvantages:

  • Loan Repayment – like all types of loan, paying back the money that was borrowed is a must. A lender will always be able to get the money back in part or in full. If the business is forced out of bankruptcy, a lender will get paid first before owners can claim on remaining equity.
  • Interest Rates – higher rates are applied against a business loan because of being unsecured. Like other unsecured loans, lenders try to avert the risk by charging a higher interest rate to ensure that they recover the amount borrowed as soon as possible.