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Loans, Mortgages and Credit Ratings

I have been writing a lot of material for a customer of mine about loans, mortgages, interest rates, and the impact that credit ratings have on what people pay of these financial items and whether they can even get a loan due to their credit rating. Mortgages and credit ratings play a huge part in everyone’s life, so why not write about this subject. It is time to write a general post about all of these issues here on my blog since it has such a huge impact on our personal life, our quality of life and even our jobs.

If it was not for the economic downturn that took place in 2008, we all would be writing about something else, because presumably life would be rosy, right. We think the answer is wrong, since it really comes down to personal accountability and whether you can pay your monthly bills or not, whether you can borrow money for a new car or a home or just put food on the table.

Mortgages and Credit Ratings – bottom line is the following:

You are going to pay higher interest rates if you have a bad credit rating
You are going to have a bad credit rating if you do not pay your bills on time all of the time.
Carry a balance on your credit card and you are going to pay huge interest charges each and every month
If you spend more than you earn, you are going into debt and if you do not repay this debt, your credit rating will fall
If not managed , it can be a downward financial spiral that does not end until bankruptcy

Sounds pretty bad and even negative, however if you pay attention to these details and manage your money properly with some discipline you just may find the following occurs:

Your credit rating is high
You can borrow money with loans and mortgages easily
Enjoy some of the most competitive interest rates on these loans and mortgages
You have money for some of the things you wish to buy
Your life style is enjoyable and you do not worry about money

Financial Recommendations Everywhere

There are literally thousands of articles out there on the net talking about this subject in various forms. This simple post summarizes it all and boils it down to a few simple lines which if followed will vastly improve your life style over time.

Too many people , especially the young want to have everything now. When kids get married today, they have the house, the car, the fancy clothes and the furniture to go with it. They also have a huge debt to go with all of that it is pretty tough for them because they are living paycheck to pay check. A friend of mind said a few days ago, there are many people in our neighborhood that are “two pay checks away from bankruptcy”. Scary but so true. If you lose your job you lose your home, your car and much more.

Financial Discipline

When we grew up we had to do without until we could afford it. As we saved and made enough money, then we began to add the homes , the furniture and the cars along with the fancy trips. If only the people in Canada and the US had followed this approach, perhaps the entire depression which started in 2008 would not have happened or at least have not been as bad as it was!

Comments welcome!

ernie

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admin says:

2012/08/06 at 5:54 am

it all sounds so confusing , mortgages , loans, credit cards and credit ratings. I just want to have one credit card and one loan for my car and that is it. my house is paid off and we do not need anything else. keep it simple i always say.