ABC’s of Debit Card

Debit card usageWhenever you go to open a bank account, you can find the bank is providing a card called Debit card, some call it check card. The debit card can provide you more flexibility while you are in a shopping mood.

Normally ATM (automated teller machine) cards are used to take out money or other transactions at an ATM. But in case of Debit card you can use it at the stores too to buy items. At the time of purchase, the money deducted directly from the bank account. There is no such provision like "pay later" that is available with credit card.

PIN based and Signature based Debit Card:

There are two different types of debit cards can be found in market,
1. PIN Based 2. Signature based.

1. PIN based Debit card :

Some debit cards require PIN or personal identification number to complete the transaction. The direct or PIN based debit card deducts the purchased amount instantly from the bank account. Normally these cards are accepted in the gas station, supermarket, superstores (e.g.-Wal-Mart) and at medical shops.

2. Signature based Debit card :

Signature based debit cards also known as deferred debit card. These cards typically have a Visa or MasterCard logo and can be used at any shops or stores where these cards are accepted. After the transaction the card holder has to sign in the bill copy and the purchase amount will be deducted within 2 or 3 days.

Some banks provide both types of facility in a single debit card. While swiping the card ,the card holder gets the option to choose either PIN based or Signature based.
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10 Mistakes to be avoided while Refinancing Your Home - Part 3

Refinance mistakes
7. Drawing money from Home Equity Lines of Credit (HELOC):

There must be minimum cash out waiting time before you take the cash out of your HELOC. Normally the lenders prefer it to be at least 6 months. A cash-out just before your refinancing can be a sign of your irresponsible credit usage. The lender can reject your loan application too.

8. Signing the refinance loan documents without proper checking:

Before signing in the loan documents, go through the terms & conditions in details. Request the lender to provide the papers in advance so that you can review it properly. At the time of closing it is not possible to check the minute details of the documents as everyone is in hurry.

9. Delays in providing essential document:

If you like you can avoid the unnecessary delay in time of closing. Provide necessary documents to your lender when it’s asked. Otherwise, your closing can be delayed and you can have to face higher mortgage rate and can results in drain of your hard earned money.

10. Giving money on Mortgage Insurance:

PMI or private mortgage insurance is to be paid when you found default on your mortgage. Sometime your mortgage payment increased due to PMI. When you have 80% equity stake in your house, then PMI cannot be demanded. If the refinance is less, then only you can have to pay hefty on private mortgage insurance.

Avoid these mistakes at the time of refinancing otherwise you can have to waste a huge amount of money just for your ignorance.

You can check the previous posts of this post - Part 1 & Part 2
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10 Mistakes to be Avoided while Refinancing Your Home - Part2

Refinance Home
Continuation from the previous post 10 Mistakes to be Avoided...Part 1

4. Having a verbal (not in written form) Rate Lock :-

Don’t go by the words. Have a written document about interest rate, closing cost, APR and all the fees related to the refinance. The loan officer can offer you a lower rate but this can change anytime, so better to have a written statement about the related costs for you home refinance. This is easily available as Rate Lock Commitment. Always ask for your copy and keep it as record.

5. Not having a Good Faith Estimate (GFE)

Within 3 business days of receiving your loan application, your lender must provide a GFE or Good Faith Estimate about the closing cost. This can trace you whether any hidden cost is being levied from you or not. This can save your lots of money and also keep you away from the problems. If you haven’t received the GFE, then rush to the lender to get it.

6. Paying for an appraisal despite the lower home value:

If you know that your appraised home value is low, then don’t agree to pay for appraisal. If you like you can request for a home valuation using the automated valuation model (AVM). In this model the lender and realtor carries a market analysis based on the price of the other houses in your locality. These comparisons can help to save a lot of your money when the realty prices are going down day by day.

Checkout for the rest 4 mistakes in the next post -
10 Mistakes...- Part 3

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10 Mistakes to be Avoided while Refinancing Your Home Part 1

refinance mistake
Many are there who are unhappy with their recent loans and like to refinance it to have more suitable loan or low interest rate. But before taking any decision they must be aware of the most common mistakes people while refinancing. A wrong step can lead you to sleepless night for rest of the life. Let’s have a look at the top 10 mistakes that people commit while refinancing.

1. Not checking the market for better option :-

Some people believe it is easy to deal with the current lender at the time of refinance. But the offer of the current lender may not be best in the market, so better to have a look at the options available at the market. Comparing the offers you can get the right choice. Some prefer stick with the present lender as you don’t have to re-qualify for getting the new loan. But it’s a misconception as whenever you apply for a refinance, the present lender will also verify your present financial situation and you have to qualify again. So it is better to shop around in the market.

2. Going with the assessed value of your property :-

Your loan amount doesn’t depend on the value of your property assessed by the tax assessor of your country. The loan amount depends on the appraised value that the real estate agent finds. Generally the appraised value determined through cost approach or the sales comparison approach.

3. Skipping the Break Even Analysis :-

To find the cost effectiveness of your refinance loan, try to check the total money that you are going to spend in getting the loan and how much you can save with lower monthly payment. You can calculate it by dividing the transaction cost by the monthly amount of money going to be saved by the new loan.
Just have an example: If your refinance cost is $1000 and monthly saving is $25. Then your Break Even point will be 1000/25 = 40 months. In this scenario you can opt for refinancing if you want to stay with the refinance loan for at least 40months.

For next part Check out 10 Mistakes to be Avoided...Part2
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