Tag Archives: credit utilization

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Breakdown Of Your Monthly Mortgage Payments

We discussed PITI Payments are. In short it is the total payments due on your mortgage.  To recap:

PITI Payments is the components of a mortgage payment.

PPrincipal is the money used to pay down the balance of the loan

IInterest is the charge you pay to the lender for the privilege of borrowing the money

TTaxes refer to the property taxes you pay as a homeowner

I – Insurance refers to both your property insurance and your private mortgage insurance  and homeowners association fees if applicable.

Just bought your house?

What does my mortgage bill look like?

Your mortgage bill will include all of these numbers. You will be making one payment to your bank and they will make the Taxes and Insurance payments for you.

How does that work?

What happens is your bank opens an escrow account for you. Every time that you make your monthly payments, it goes into escrow. Lets make up some numbers.

Mortgage $400,000 @ 4% will equal monthly to ~ $1,900 ($1,909.66, based off of $576.33 in principle and $1,333.33 in interest)

Taxes $12,000 will equal monthly to $1,000

Insurance $1,200 will equal monthly to $100

When your bill arrives all of these charges will be consolidated into one charge of $3,000. When you pay the bill the bank will keep $1,900 of the money and put the other $1,100 into your escrow account. Then would then pay the property taxes quarterly. so after 3 months of collecting your $1,000 taxes they would then ship off $3,000 to your county to cover the property taxes on your home.

The same is true with the insurance on the house. The bank collects the insurance payments from you, and then pays the insurance company the monthly premiums. This setup is great in my opinion. instead of needing to worry about every payment on the house, the bank takes care of it for you.

So, when you hear your friend saying he has a $3,000 mortgage you know that only $575 is actually going to pay off his house and building equity. Pretty depressing if you think about it!

View our home buying series here: Mortgages, Home Loans, Refinance, and Interest

And don’t forget to follow us on Twitter to be entered into our $50 Giveaway!

In Summary

PITI Payments is all the payments lumped together into one monthly obligation.

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Mortgages, Home Loans, Refinance, and Interest

We will begin a new series today on Home loans. We will cover many topics from what to look for in buying a house through the home buying experience all the way to refinancing years later.

Here are some of the topics we will discuss. Bookmark this page as we will link back to all these topics once they are written.


And many more topics. Stay tuned!

And don’t forget to follow us on Twitter to be entered into our $50 Giveaway!

In Summary

Stay tuned to learn more about buying a home.

 

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Why You Should Have More Then One Credit Card

Having credit cards is very important. I hate when people tell me they don’t have credit cards because all it does is make them debt. There is an easy solution, apply for the card and cut it up. Having a credit card is important even if you don’t use it. As a matter of fact your credit score likes when you have a low credit utilization. Get those credit cards!

Why is having credit cards so important?

Credit cards build a health relationship with your bank. Did you ever call a bank? They always say thank you for being with us. True, that is what their customer service department told them to say, but the bank knows you as a customer if you were to need their services at a later date.

Why should I get more then one?

I have 1 credit card, do I need more? The answer is yes. I was looking into mortgage options the other day, seeing the rates, costs and other factors that may affect home buying. One of the loan officers asked me if I have 3 lines of credit. He wanted to make sure that I had more then one credit card under my name. This is very important for getting a mortgage. You will need more then one credit card. (Too much utilization is no good, but credit is good). Besides, credit cards without annual fees are free. Why wouldn’t you get more then one?

Meeting with a Loan Officer

Image HT: The Nest

Read these other great topics!

Business Card Benefits: How A Business Card Impacts Your Credit Score

Credit Score: How To Fix A Poor Credit Score

FACO Credit Score FICO Score: What’s The Difference?

And don’t forget to follow us on Twitter to be entered into our $50 Giveaway!

In Summary:

Have more then one credit card in you pocket, it will help you get a mortgage.

 

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Business Credit Cards: Facts And Myths

With the rumor of the 70k Chase Ink card only 5 days away, we wanted to educate our readership regarding the benefits of a business credit card. There is much talk about the benefits of the business credit cards, but not everything you hear is true. Let’s discuss some of the Facts and Myths.

Advertising Disclosure: Some of the links in this post may contain an affiliate commission.

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“You need an EIN in order to obtain a business credit card”

Myth!

A business credit card can be opened under a social security number. Look at the image below, it is a screen shot from the Chase INK Plus application.

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There is a small question mark next to Tax Identification Number. If you hover your mouse over that question mark it will state “If you do not have a EIN then you can enter your social security number here”. You are able to use your social security number and NOT a EIN.

“Business Credit Cards don’t affect your credit”

Fact!

One of the most important parts of your credit report is your CREDIT UTILIZATION. What percentage of your credit you are using. For example if you have $10,000 credit line and you spent $5,000 you have used 50% of your credit. Credit used on Business cards do not reflected on your personal credit score.

Business cards can play an important role on your credit report. Getting a business card can reduce your credit utilization. Business cards are also harder to get then personal cards.

“Business Credit Cards Are harder to get approved”

Fact!

The banks are looking to make sure the business are valid business. Many credit cards out there are targeted for “Fair” or “Good” credit. Business credit cards require Excellent credit. Only apply for a business credit card if you have excellent credit.“Business Credit Cards Get Higher Credit limits”

Myth!

Although in reality it makes sense that business need larger credit lines there is no conclusive data to this effect. Credit limits are reflected on each individuals spending habits. A new business can receive a small credit limit of only $10,000, where a 50 year old man can have a $50,000 credit limit on his personal card.

Read more about Business Cards here.

And don’t forget to follow us on Twitter to be entered into our $50 Giveaway!

In Summary:

Getting a business card requires excellent credit, not necessarily will you receive a higher credit line and you can apply using a social security number.

Did you have a business credit card question that you were unsure if it was a fact or myth, ask us in the comments!

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Business Card Benefits: How A Business Card Impacts Your Credit Score

Recently there has been a bang in Business credit card signup offers. There was a 150k Targeted Platinum Card, as wells as a 100k offer. Currently there is a 40k American Express Platinum card offer. There has also been, as well as still available the  Chase Ink cards, now at 60k instead of 50k. The question everyone has is, “how does a business card effect my credit score”?

Can I get a business card without a EIN number?

Yes. You are able to use your social security number instead, just  indicate that it is a sole proprietorship.

Do I need to own a business to get a Business Credit Card?

This borders a fine line of ethics. Some say if you don’t have a business then you cannot open a business card. Others maintain that as long as you are doing business then you can open a business card. They go further and say that even selling a few items on eBay would be a valid business.

We maintain that applying for a business credit card without operating a business is fraud. We do not advise to open a business credit card if you do not have one.

Business cards have a very big benefit over personal cards. A business cards spending doesn’t get reported to the credit bureau. Your credit utilization will be lower.

What are the benefits of a Business Credit Card?

  1. Many business cards offers employee cards. This gives a separate card number for each card holder. Tracking employee spending is a breeze. In your account, there will be a separate tab for each employee.
  2. Keep your personal and business expense separate. When you have only one  credit card all of your purchases get mixed together. Having an exclusive card for business purchases separates it.
  3.   Organized financial statements. Banks tend to give out quarterly notices, and reports.
  4. Business card have extra bonuses in categorizes that consumer cards never have. Some examples are the 5X in office stores, or on advertising.
  5. Extra signup bonuses!

Is that all?

NO! The biggest benefit is the effect, or lack of effect on your credit score. The credit utilization on a business card doesn’t effect your personal score. You want to keep your credit utilization low, as we discussed here.

In Summary:

A business card has many benefits. It will impact  your credit score and make it better, by lowering your credit utilization, additionally give better rewards, and make employee spending easy to track.

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