How to Manage Your Credit Cards

How to Manage Your Credit Cards

We make many financial decisions in life- some are big, some are of lesser importance. Credit card accounts and how they are managed impacts your future more than you may realize. Whether you reply to those offers you receive in the mail or if you succumb to the “instant credit” offered by the sales assistant in your favorite store, there are several things to consider when opening these accounts.

Let’s start with the good news first. There are some positives to having a credit card. To be perfectly honest, in this day and age, a credit card is pretty much a necessity. Many times it is required to have a credit card to make a reservation for a hotel or to book a flight. Having a credit card can also be a lifesaver in an emergency. A prime example of this would be car repairs. Ideally, this is an expense that should come out of savings, however, if the money isn’t in savings, the car still has to be fixed. It’s not an option to wait and save up to pay for the repairs. Also, initially having a reasonable spending limit on a credit account and utilizing this wisely will allow for the establishment of a credit history. Managing credit by paying bills on time every month will help achieve a good credit score.

Another advantage to having a credit card is that are some rewards or points systems attached to certain cards. Points acquired through the use of a particular credit card can be redeemed in exchange for airline tickets, merchandise, or even gift cards. Finally, there are special offers on big ticket items that are only valid when purchased with a specified credit card. There are lots of retailers who advertise zero interest for promotional periods on a specified minimum purchase made with their store’s credit card. These offers may be for 90 days to 24 months. There are even furniture retailers who have offered as much as 48 month interest free as long as the purchase is made with their store card. These are wonderful deals on higher cost things as long as all the payments are made on time and within the specified period set to pay off the debt.

Unfortunately, there is a down side to having a credit card. There are more than a few horror stories and it is worth avoiding the pitfalls that come with managing credit. It has been said, although not nearly enough, that when we have to reach in our pockets for cash, we tend to think a little harder about whether or not we really need to spend that money. With plastic it is easy to overspend without thinking because not being able to afford something is not usually considered. The second thing to note is the interest charged with a revolving credit account. When this is factored into the cost of the items purchased with credit, the items easily double or even triple in cost from their original price tags.

Overuse of credit cards can quickly create a situation where more is owed in monthly bills than is being earned as income. It creates a worrisome debt-to-income ratio which can cause most reputable creditors to shy away from approving additional credit. This excess of monthly obligations can begin to affect one’s ability to pay things like utility bills on time which in turn negatively impacts the credit score. In addition, this lower credit score resulting from late payments or nonpayment can affect employability. Many employers as well as landlords now conduct a credit check along with a criminal background check prior to hiring or renting to an individual. These days bad credit can literally prevent you from getting a job or an apartment. Also, the lower the credit score, the higher the interest rate charged for new loans or credit accounts. Chronic misuse of credit cards can lead to years of trying to get out from under the yoke of debt or even ultimately, to bankruptcy. Having to go into bankruptcy may alleviate some of the burden or at least make it more manageable, but it will destroy a person’s credit for about seven years. No one likes having to go back to square one.

It seems harsh to describe credit cards as a necessary evil. They are more like a necessary temptation in our fast paced lives. Credit cards, managed properly, can help build a high credit score which leads to the opportunity for home ownership and being able to replace vehicles when the time comes. This is a good thing considering that most people have to finance such large purchases. Credit accounts that are mismanaged and overused create enormous hardship to those card holders. The resulting low credit scores and high debt-to-income ratio, can make personal finances a nightmare.

What is the Right of Rescission Notice for a Mortgage Refinance?

What is the Right of Rescission Notice for a Mortgage Refinance?

Currently interest rates for mortgages are at an all time low which is enticing a lot of homeowners to refinance their loan. There are a lot of good deals out there. After signing all of the paperwork a borrower is most likely going to have a lot of paperwork to look over. Some where buried within all of that paperwork is the right of rescission notice.

Whenever someone refinances their mortgage loan they are by law given three business days to look over all of their paperwork, including the terms and agreements to see if they want to go through with this particular loan agreement. The rescission period starts the day after the loan documents have been signed and it extends for three business days with Saturday counting as a business day but not Sunday. Therefore if someone signs mortgage documents on Friday, the rescission period starts on Saturday and ends on midnight of the third business day, which in this case is Tuesday. The first day of the rescission period is Saturday and the next is Monday and finally Tuesday.

If they decide they do not want to refinance then they have to sign the right of rescission notice at the bottom and return it to the lender prior no later than the third business day by midnight. If the rescission notice is not received then the loan becomes official and the bank or financial institution will send the mortgage deed or document to the country recorders office to be filed. They new terms and agreements will go into affect and the old terms and agreements will become null and void.

You have to understand that every single mortgage transaction is not subject to a right of rescission notice. If you are refinancing your mortgage there is a right of rescission notice but as the owner you must be living in that home that is being refinanced. Others who have investment properties that they wish to refinance don’t have the luxury of a rescission notice. Even if you are purchasing your home there is no 3 day rescission period but later on if you decide that you want to refinance and you are the owner living in that property then this option will be available for you.

If someone has a home equity line there is a three day rescission period for the amount of cash that the borrower is receiving but not for the entire loan or the entire credit line. The rescission can apply to the home equity loan entire credit line if, once again, the owner of the property is living in that home.