How Interest Affects Your Money

March 08, 2012

Interest rates affect your moneyWith all the excitement about the historically low mortgage rates, it is important to remember just what

mortgage rates are: interest. Interest is a key factor in economics and is very important if you are beginning your home buying search. The Equifax Personal Finance Blog has a great post about it titled “

Are You Paying Interest Or Saving Money?

Interest is a fee paid to the lender for the privilege of borrowing money. Interest is a cost of doing business, particularly if you need to make large loans. For instance, you pay interest on loans such as credit card balances and mortgages.

It’s easy to add up all the interest you pay on credit cards, mortgages, auto loans and student loans and think about how you could be spending it. However, you have to realize that for lenders the amount you pay in interest combined with your

credit score is what allowed you to obtain the loan to make the original purchase.

It is very important to consider the interest costs of loans to see if immediate access to the capital provided by the loan is really worth the cost in the long term. Some great tools for helping determine if loans are worth it are amortization tables and loan calculators, widely available online.

The cost in interest is also a reason to make additional payments toward principle on a loan. Try to focus on payment plans so you avoid paying more interest. Make sure you avoid loans that have pre-payment penalties, as some institutions include these to prohibit you from

paying off debt quickly.

The full article has more about interest, and you can check the Equifax Personal Finance Blog for expert advice about credit, taxes, retirement, real estate and everything money-related.

About The Author

Read All Stories By Mitch Levinson

Mitch Levinson is the author of “Internet Marketing: The Key to Increased New Home Sales” published by BuilderBooks. He is an Internet marketing expert with expertise in search engine optimization, website development, email marketing, social media and CRM consulting services. He is known for creating effective programs that can be tracked through analytics to prove effectiveness and ROI. Mitch is founder and president of MLC New Home Marketing and MLC FlatFee Realty, as well as managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Chicago and Atlanta. He currently leads the Chicago team. A Multi-Million Dollar Sales Producer who earned an MBA in Computer Information Systems and eCommerce, he brings a unique perspective and experience to the field of real estate communications. Mitch combines the two interests in order to help home builders and developers gain a competitive advantage through the Internet and technology. When he isn’t behind a computer, he enjoys participating in sports and coaching his kids’ teams. Mitch resides in Arlington Heights, Ill., a northwest suburb of Chicago, with his family, which includes two rambunctious labs. Visit my Google+ profile.

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