When it Comes to Paying Off Your Debt, Interest Rate Doesn"t Matter
If you were looking to refinance or consolidate your debt, the first question that you are going to ask is, "What is my interest rate?" The lower the interest rate, the more money you save, right? That depends on how you are going to pay off your loan.
If you were to pay the minimum amount, the actual cost of the loan may cost you more than what you bargain for.
But if you were to pay more than the minimum, you will get yourself out of debt faster and save money on the total interest of the loan.
What does interest rate really do for you? Its one of the factors in determining the monthly payment, but interest rate does nothing for you.
It generates profits for the company, but for you, all you do is pay for it.
When it comes to getting out of debt, you should be asking yourself what is the total cost of the loan and when will you be out of debt? I have refinance many mortgages and majority of my clients never refinance again.
Many people who refinance only do it because they need to lower their monthly payment, but find themselves refinancing a few years down the road again.
Why? Its because majority of companies don't provide a game plan to get you out of debt.
When you refinance, you consolidate your mortgage and other debts you may have into one monthly bill.
This lowers your monthly payment.
What also happens, in most cases, is that each time you refinance, you stretch your loan term back to 30 years.
At the company I work at, they tackle the debt issue.
Please note that the company I work for has always offer fixed rate loans all the time.
They never got involved with Adjustable Rates or Interest Only or Balloon or Option ARMS or any type of loans where monthly payment and interest rate isn't fix.
Their loans are unique by the fact they use simple interest calculation instead of the traditional schedule interest that the rest of the industry uses.
There's other unique features of the loan, which I'm not going to discuss because other companies may steal it and use it in their loans.
What is the difference between simple interest and schedule interest? With schedule interest, your interest rate is calculated monthly.
That means you pay interest for 30 days.
It doesn't matter if you pay your bill early, on time, or just a little bit late or even bi-weekly.
Your payment is applied to your loan once a month.
With simple interest, your interest rate is calculated daily.
Once the company receives your payment, a new billing cycle.
That means, your payment is applied immediately instead of once a month.
The company I work for is the only company that uses simple interest method in their refinance loans.
By using the simple interest method, you pay the principal a little bit faster than the schedule interest method.
When you refinance, you lower your monthly payment, hence saving you money.
What do most people do with the save money? Spend it or put it in the bank.
Instead of doing that, I show people alternative ways on what to do with the save money.
I recommend they apply some or all of the save money back toward the principal.
By aggressively attacking the principal, my clients get out of debt faster by few years and save tens of thousands of dollars from the total interest.
What ever is left over, I recommend they invest it for retirement.
As you can see what I did, I help the client get out of debt faster and save money on the total cost of the loan.
I didn't even say anything about interest rate because it does not matter when it comes to getting out of debt.
Its the rate at which you pay that matters.
Most companies don't even do what I do for my clients.
They let their clients guess on what to do with the save money.
They don't say it, but they rather keep you in debt forever than to pay it off early.
If many companies were able to do what my company does, America's consumer debt would not be in trillions of dollars.
The sad fact is that consumer debt continues to rise every day and its only a matter of time until it explodes in our face and put another dent in the economy.
So remember, always ask yourself these 2 questions when you are thinking about refinance or consolidating your debt: 1) What is the total cost? 2) When will I be out of debt?
If you were to pay the minimum amount, the actual cost of the loan may cost you more than what you bargain for.
But if you were to pay more than the minimum, you will get yourself out of debt faster and save money on the total interest of the loan.
What does interest rate really do for you? Its one of the factors in determining the monthly payment, but interest rate does nothing for you.
It generates profits for the company, but for you, all you do is pay for it.
When it comes to getting out of debt, you should be asking yourself what is the total cost of the loan and when will you be out of debt? I have refinance many mortgages and majority of my clients never refinance again.
Many people who refinance only do it because they need to lower their monthly payment, but find themselves refinancing a few years down the road again.
Why? Its because majority of companies don't provide a game plan to get you out of debt.
When you refinance, you consolidate your mortgage and other debts you may have into one monthly bill.
This lowers your monthly payment.
What also happens, in most cases, is that each time you refinance, you stretch your loan term back to 30 years.
At the company I work at, they tackle the debt issue.
Please note that the company I work for has always offer fixed rate loans all the time.
They never got involved with Adjustable Rates or Interest Only or Balloon or Option ARMS or any type of loans where monthly payment and interest rate isn't fix.
Their loans are unique by the fact they use simple interest calculation instead of the traditional schedule interest that the rest of the industry uses.
There's other unique features of the loan, which I'm not going to discuss because other companies may steal it and use it in their loans.
What is the difference between simple interest and schedule interest? With schedule interest, your interest rate is calculated monthly.
That means you pay interest for 30 days.
It doesn't matter if you pay your bill early, on time, or just a little bit late or even bi-weekly.
Your payment is applied to your loan once a month.
With simple interest, your interest rate is calculated daily.
Once the company receives your payment, a new billing cycle.
That means, your payment is applied immediately instead of once a month.
The company I work for is the only company that uses simple interest method in their refinance loans.
By using the simple interest method, you pay the principal a little bit faster than the schedule interest method.
When you refinance, you lower your monthly payment, hence saving you money.
What do most people do with the save money? Spend it or put it in the bank.
Instead of doing that, I show people alternative ways on what to do with the save money.
I recommend they apply some or all of the save money back toward the principal.
By aggressively attacking the principal, my clients get out of debt faster by few years and save tens of thousands of dollars from the total interest.
What ever is left over, I recommend they invest it for retirement.
As you can see what I did, I help the client get out of debt faster and save money on the total cost of the loan.
I didn't even say anything about interest rate because it does not matter when it comes to getting out of debt.
Its the rate at which you pay that matters.
Most companies don't even do what I do for my clients.
They let their clients guess on what to do with the save money.
They don't say it, but they rather keep you in debt forever than to pay it off early.
If many companies were able to do what my company does, America's consumer debt would not be in trillions of dollars.
The sad fact is that consumer debt continues to rise every day and its only a matter of time until it explodes in our face and put another dent in the economy.
So remember, always ask yourself these 2 questions when you are thinking about refinance or consolidating your debt: 1) What is the total cost? 2) When will I be out of debt?
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