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Added on the 29/10/2020 17:06:03 - Copyright : Wochit
Especially in uncertain times like these, the dream of owning one's home free and clear is an enticing one. On the other hand, isn't saving for retirement, or college funds more important? According to Business Insider, if you have the opportunity to pay off your mortgage early, the deciding factor comes down to just one thing: interest rates. If the rate on your mortgage is higher than the rate you'd earn by investing cash in the stock market, pay down the debt first. But before you do that, run the numbers to see if refinancing your mortgage would make sense. If so, you can apply the freed-up cash towards your high-interest debt. Once that's cleared up, pay off the mortgage!
If you've never bought a home before, you may be surprised to learn that there's a lot to know about mortgages. In its simplest form, a mortgage is a type of loan. It's used for buying a home, and it's repaid in monthly installments--usually over 15 to 30 years. According to Business Insider, the payment you finally end up paying for your mortgage actually covers a number of things. The principal is the amount the lender gives you upfront. If you borrow $200,000 from the bank, then the principal is $200,000. A little of this is paid back each month. But you'll also pay interest--the cost of your loan. The interest is built into your monthly payment. You'll also pay property taxes, which are based on the assessed value of your home, and your mill levy--which varies depending on where you live. Homeowners insurance is mandatory, too, and is built into the payment. In 2017, the average annual policy cost $1,211. Finally, you'll also probably have to pay for private mortgage insurance, or PMI, costing from 0.2% to 2% of your loan principal per year.
If you've managed to get your bachelor's degree, congratulations! And if you're thinking about grad school, get your piggy bank out and start saving. According to Business Insider, getting a master's degree or Ph.D. in your chosen field can be a smart career move, but it can also be a financial time bomb. If you want to go to grad school five years from now, start saving. First, research schools, tuition, and determine your monthly and annual living expenses. Research any benefits your company may offer for free or subsidized tuition, and look into state programs and scholarships. Still paying on student loans from your undergrad degree? Refinance them now, when rates are low. Finally, if you have five years to save, consider using a 529 plan. If you want to start sooner, a high-yield savings account may be better.
European Central Bank President Christine Lagarde says the institution will freeze borrowing costs again on Thursday but warns that inflation could pick up again in the near term, in an apparent pushback against market hopes of early rate cuts in 2024. It is the second time in a row the central bank has held rates, following a run of historic hikes to tame runaway price rises. SOUNDBITE
The US Federal Reserve has voted to hold interest rates at a 22-year high for a second straight meeting. "Today we decided to leave our policy interest rate unchanged," announces Fed chair Jerome Powell. SOUNDBITE