Five Awesome Questions From You: Mortgage, Credit Cards and Retirement

Summary: We haven’t done a five questions episode for awhile. Here are five awesome questions from you about mortgages, credit cards, and retirement.<br> Your questions about mortgage rates, side hustles, rental properties, and analyzing individual stocks.<br> Question One<br> Hey guys,<br> It’s your long time Canadian fan Tina. I know most of your stuff is based out of the States (last time I emailed about an alternative to betterment for Canadians) but what are your thoughts on fixed vs.variable mortgage rates in Canada? My boyfriend and I have just secured a purchase on our first home. The bank has offered us a 1.97% variable rate for a 5 year term. Our mortgage would be for $400,000.<br> I keep reading that the prime rates are expected to go up and so it might be a better idea to go with a fixed rate while the rates are still relatively low but haven’t this been the word on the street for like ever? I mean, for the next 5 years at least, do you think we should keep with the variable or should we go ahead with a fixed rate now? <br> Kinda sucks that the fixed mortgage rates have now already gone up but if we’re looking at the big picture would it still be more favorable to go with a fixed rate? Any thoughts and/or insight you could share with me would be much appreciated :)<br> There are a few options. If you are buying <a href="https://www.listenmoneymatters.com/owning-rental-property/">rental property,</a> fixed rate is best because you base your purchasing decision on your predicted returns and having a variable rate mortgage makes it impossible to calculate that number since you don’t know what the variable rate will change to.<br> If you plan to stay in the home for less than five years, a variable rate is better. You can pay the low “teaser rate” for whatever period of time it’s set for, usually between one to five years, and then sell the house before the rate is set to rise.<br> You can also do a mix of the two; start with a variable rate mortgage and then if the rate goes higher than you want to pay, you can <a href="https://www.listenmoneymatters.com/refinancing-with-benefits-a-chat-with-dan-macklin-from-sofi/">refinance</a> to a fixed rate mortgage.<br> Question Two<br> YOU GUYS ROCK MY SOCKS OFF EVERYDAY!<br> I’m 26 with no credit card debt, no credit, and no school debt. I live with my boyfriend and together we make a decent amount of money for podunk Mississippi but, we are spending almost as much as we make each month.<br> My boyfriend has okay credit, but he isn’t building it in any way. We have payments we make on a computer and a car, but they are just paid out of his bank account. I know I could switch those to a credit card if he got one. I’m not sure what cards to go for tho. I’m really liking USAA’s cards. Do you guys have any experience with those? What are other cards great for beginners?<br> He wants to buy a house and I’ve talked him into waiting for about a year so we can both build credit and save up a down payment. What would strategies for that you guys recommend? I will be signing us both up for Betterment very soon.<br> Thanks!<br><br> Kat<br> We have more experience with Capital One cards for those trying to build credit. Those with limited, average, or fair credit can qualify for their Platinum card. If you can’t qualify for that, they have a secured card. You pay a deposit and that deposit is your credit limit. Once you have built or improved your score, you can transition to a traditional, non-secured card.<br> The biggest factor in your <a href="https://www.listenmoneymatters.com/highest-credit-score/">credit score </a>is on-time payments so the best way to improve your score is to make lots of on-time payments. You can do that by charging small, recurring charges like your Netflix or gym membership payments over a few cards.