MortgagesZ

By: Agnes Powel

Having just settled in life, you are finding the rentals putting too much of a burden on your finances. Nevertheless, you continue the payments thinking that purchasing a home would be practically impossible. There are many expenses that one has to necessarily make in order to just make a bare subsistence. Though the list differs with each individual as each has a subjective concept of the necessities, it is difficult to accumulate enough savings to pay for a house.

The following characterises most of the first time buyers. However, a surprise awaits them in the form of first time buyer mortgages that accept first time buyers with their inherent characteristics of financial weakness.

It is wrong to believe that first time buyer mortgages are like any other mortgages, and have been so named by lenders to attract attention. A first time buyer mortgage is designed primarily for the people who are buying homes for the first time. The method combines the features of mortgage along with a lower rate of interest. This is known as the discounted rate of interest. Relief from paying at the standard rate for the initial few years makes these mortgages less onerous. Once the discount period ends, the borrower will have to pay at the normal rate that is prevailing in the market, go for the various schemes that lower the interest rate, or opt for a remortgage (this has been explained later).

First time buyer mortgages like the other mortgages are repayable in smaller instalments. Though one can repay the entire amount drawn in one single instance, it will be advisable to spread the payment. The amount thus saved can be used for other purposes. This amount can be used for registration and other documentation that require a hefty payment. The amount can also be used to pay for the furnishings.

However, borrowers may get attractive deals if a certain percentage of the amount is offered as a deposit. Lenders may offer 100% mortgages to those borrowers who are unable to arrange a deposit. Nevertheless, the deals offered to the person offering a deposit will be unmatched. Since the borrowers are offering a part of the mortgage, lenders view this as a favourable aspect. The borrower will be at as much risk as the lender; thus, they will think twice before defaulting on the mortgage. The amount of deposit will differ with lenders, the customs prevailing in a particular region, and of-course the rules related to these mortgages.

Normally 70-80% of the price of the house is offered to the borrowers. The amount to be offered may be calculated according to a lenders policy. The salary or any other source of income is the basis of calculation of amount to be offered. Normally 3.25 times the salary of a person or 2.25 times the salary of couple is offered.

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By: Tom Koziol

I fully realize if it sounds too good to be true, it probably is and There Ain’t No Such Thing As A Free Lunch (TANSTAAFL) immediately jumped into your head when you read the title of this article. However, if you are 62 or over, you may have just found the goose that laid the golden egg.

A reverse mortgage is exactly what the name implies. Rather than you paying a monthly sum of money to a mortgage company, a mortgage company pays you. There are three types of reverse mortgages and all have the same eligibility requirements.

You must be at least 62, live in, and own, your home and sign a contract. You must also have equity in your home and the inherent interest rate is based on what the lender is currently charging (more about this later) on non-reverse mortgages. The lender, by the way, will also have your property appraised for which you may or may not be charged.

There are no income restrictions such as those imposed by Social Security and most are tax free since they do not involve additional features such as an attached annuity. They also do not affect your social security benefits nor your Medicare entitlements.

This article discusses only those mortgages without additional features. Should you wish to know more about reverse mortgages with additional features, consult with a competent tax professional to reduce the chances of running afoul of tax laws.

The FTC’s website, http://www.ftc.gov/bcp/online/pubs/homes/rms.htm has an excellent article on reverse mortgages but it also does not discuss mortgages with additional features. Another reason to consult with a tax professional.

This tool called reverse mortgage is actually a loan, hence an interest rate, which allows senior citizens, or as some say, the elderly, to convert part of their equity into cash without having to sell their home. Because it is a loan “in reverse” you are receiving a monthly sum and not paying a monthly amount while you live in your home.

However, this loan must be repaid and repaid with interest should you sell, die, no longer live their as your principal residence or reach the end of the pre-selected loan period. You remain responsible to pay real estate taxes, insurance and all attendant maintenance expenses which, of course, you would have to pay with, or without, a reverse mortgage.

With this explanation, the picture becomes more focused, right? You enjoy a monthly sum, tax free and non-repayable until a date sometime in the future, while remaining in your home. As close to a win-win situation as one can get in this day and age.

It doesn’t take a rocket scientist to realize anyone who is cash poor but house rich should at least investigate this tool. However, like any other instrument involving your signature on the dotted line involving financial obligation, you must have some preliminary information.

I mentioned there are three types of reverse mortgages. The first is the single purpose reverse mortgage. These are offered by some sate and local government agencies and nonprofit organizations.

They may not be available in your area. Call your county’s Department of Senior Services. Their phone number is in the white pages under the listing for your county.

Single purpose means exactly that. The proceeds may be used for only the purpose specified by the lender and generally are only made to people with low or moderate incomes. If you call your county, be sure to ask if their reverse mortgage is a single purpose and what are the limits.

The second type of reverse mortgage is called a Home Equity Conversion Mortgage (HECM). The federal government insures these mortgages and they are backed by the Department of Housing and Urban Development (HUD). The up front costs are generally high especially if you plan on staying in your home for a short period of time but they carry no income or medical restrictions and can be used for any purpose.

HECMs also require all applicants to meet with a counselor from an independent government approved housing counseling agency. The FTC says, “The counselor must explain the loan’s costs, financial implications, and alternatives. For example, counselors should tell you about government or nonprofit programs for which you may qualify, and any single-purpose or proprietary reverse mortgages available in your area.”

An additional benefit of an HECM mortgage is the nursing home clause. Should a borrower have to move out of her home and into a nursing home or other medical facility, she has up to 12 months before the loan becomes due. This enhances financial planning.

The third type is called a proprietary reverse mortgage. These are private loans backed by the companies offering them. In other words, they are NOT government insured. Like HECMs, the upfront cost could be high for a proprietary reverse mortgage.

A reverse mortgage, cost wise, is like a non-reverse mortgage. The lender usually charges loan origination fees, closing costs, insurance premiums (for insured loans) and service fees which are all set by the lender.

Fortunately, like non-reverse mortgages, the federal Truth In Lending Act (TILA) applies to reverse mortgages. This means the lender MUST disclose the costs and terms of the reverse mortgage you are considering.

The annual percentage rate (APR) and payment terms must be prominently displayed and not in the fine print. If you choose a credit line as your loan, lenders must tell you the charges related to not only opening but using this credit account.

Another word about the interest rate since it too mirrors the non-reverse mortgage. Just as with a non-reverse mortgage, an interest rate can be fixed or variable with variable rates tied to a financial index. This means the rate will change as the index changes.

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By: John Mussi

A mortgage is a loan that is guaranteed by a property. At its most simple that means, if you can’t pay back your loan the lender can force you to sell your home so they can get their money back.

Typically you can borrow three to three and a half times your income, or two and a half to three times the joint income of you and your partner. These are known as income multiples.

The amount you can borrow will also depend on the value of your home. Most lenders will allow you to borrow up to 95% of the value of a property. The loan rate is set by the lender, and is called the standard variable rate (SVR).

Always shop around for the best rates. However you must be careful to ensure you are comparing like with like. To do this check the annual percentage rate (APR) of the loan. You also need to bear in mind that the interest payments in respect of fixed rate mortgages can rise steeply once the initial ‘fixed’ period ends. Therefore your planning should always include the possibility of sharp changes to future interest payments.

There are two basic species of mortgage, repayment and interest-only. The option you choose is determined by the way you want to repay your loan. Depending on the type of mortgage you choose, your monthly repayments will be made up of either capital and interest or interest only.

A repayment mortgage requires you to pay back both interest and loan capital, so at the end of your mortgage period there is no money owing. With a repayment mortgage you make the repayments monthly for an agreed period (the ‘term’) until you’ve paid back all the loan and the interest. A typical term is initially 25 years, although it can be any amount of time – the shorter the term the higher your monthly payments but the less you’ll pay overall.
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By: Chris Smith

Planning to take the first mortgage or the nth mortgage of your life? Being complacent in the process can be dangerous. The fact that you hushed up as a triviality, may become the Achilles’ heel.

Strict vigilance will be necessary to ward away any untoward repercussions on the future. Mortgage is a legal term with a heavy impact on the finances of the borrower. Ignorance of law is no excuse. There are frequent changes in the mortgage market with constant additions and deletions in the rules governing the mortgages. The rules that were prevalent a few decades ago may have become outdated now.

Expecting the borrowers to be conversant in the rules related to mortgages will be unjustifiable. They are already burdened with their jobs. Trying to gain knowledge of the mortgages may divert their energies to tasks other than their core areas of operations.

However, a basic knowledge of the mortgages will be necessary in order to save oneself from the hands of scheming lenders.

Independent financial advisors provide vital information about the mortgages. The advice provided by them is unbiased and not inclining towards any particular lender. Independent financial advisors provide advice on general mortgages as well as specific mortgages to deal with specific requirements. Association of Independent Financial Advisors, representing independent financial advisors all over the UK helps borrowers find a local advisor.

Many a times lending organizations offer valuable advice in the form of the term of repayment, method of charging interest, etc. However the borrower must have the knack of differentiating between valuable advice and marketing products.

Perplexity for those taking mortgages further increases because of the vast multitude of terms associated with them. Mortgages are available for practically every purpose and for different classes of people. The people who are buying homes for the first time can have a first time buyer mortgage. Those planning to benefit from the equity in ones home but not repay the amount received, can take a reverse mortgage. Right to buy mortgages caters to the council tenants only, who are planning to buy their council homes.

The next decision to be made is regarding the amount of mortgage. The amount of mortgage will differ with the lenders and the type of mortgage taken. The risk involved in a mortgage deal will also decide the amount of mortgage allowed to the borrower. Mortgagors or borrowers have to extend a certain percentage of the mortgage to the lender as a deposit. More is the deposit, more is the amount tendered as the mortgage. Before the mortgage process is initiated, the amount to be rendered as deposit must be arranged. Those who are unable to arrange deposits can take a 100% mortgage, where no deposit is required.
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By: Charles Essmeier

Buying a home, especially for the first time, can be a daunting experience. There are endless credit checks, bank checks, employment checks, appraisals and more paperwork than seems to make sense. Adding to the angst associated with buying a home is the endless list of fees that are added to the cost of the mortgage. In addition to the interest rate quoted for the loan itself, lenders add other items to the closing costs, including appraisal fees, loan origination fees, credit report fees, document preparation fees, postage fees and all manner of other items that are often not even mentioned by the lender until closing time. The borrower often ends up suffering from a form of “sticker shock” at closing time, as the costs associated with closing on the loan are often substantially higher than expected. That may change, however, as several banks are about to introduce so-called “no fee” mortgages.
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By: Cheryl Lind

I don’t know what the mortgage situation is around the world but here in England the mortgage industry is a constant point of debate. It used to be that everyone aspired to having a mortgage on a nice home – you know the kind of house with enough rooms to cater for the average family with 2.4 children. I was no different myself when I first wanted to get on the first rung of the housing ladder ten years ago.

At the time I was living in a council flat (a government housing apartment) with my husband and our baby daughter. The apartment was a fairly decent size but I had gone back to work and my partner was working long hours so we thought that we wanted to stop renting and take out a mortgage to buy our own house.

I felt quite strongly that I wanted to have a mortgage so that we were not paying ‘dead money’ in rent. We looked around the area we were in for suitable house, nothing too fancy, just a comfortable two-bedroom property with a small garden for our daughter to play in safely as she grew older. We narrowed down our choices to get an idea of what size of mortgage we required. The next step was to approach a number of mortgage providers to see who offered the best rate for our needs.

It was rare to be able to obtain a mortgage that covered 100% of the property’s purchase price but we were lucky in the fact that a member of my family was happy to make up the shortfall for our deposit. After a few weeks we had our mortgage set up and put in our offer for the house we both loved. All that was left then was to wait to see if the house seller would accept our bid. That was one of the longest waits I had ever had, up to that point! Finally, we received the call that told us that the house was ours! The paperwork was all exchanged and the money from our mortgage transferred into the buyer’s account. Now we could make arrangements to move in and look forward to a long and happy life in our new home or that was the hope at the time.
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By: Norman Fleming

A Second Mortgage is a Property Lien placed behind a First Mortgage

A second mortgage is a loan that you take against the equity that you have already built into your home by paying off some of the principal balance on your first mortgage loan.

Historically the total amount of debt from the first and second mortgage combined could not be more than 80% of the total market value of the home. However, record low interest rates and a competitive lenders marketplace have created a lending environment where some lenders are approving second mortgages that, when combined with first mortgage balance, is totaling as high as 130% of the home value.

However, financial advisors will tell you that carrying that much debt on your home is never a good idea.

Because a second mortgage is a property lien that is placed behind the first mortgage, this means that in the event of a default, after the property is sold the first mortgage gets paid in its entirety, including any legal costs and other costs of the sale, before the second mortgage can be paid. If there is not enough money from the sale of the home, the second mortgage does not get paid.
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By: Michael Sanford

Everybody wants to own a house because it is something that portrays your success in life. Some people make some ways on how to own one by considering a lot of things including borrowing money from banks, lending offices and finance institutions. A great option for people who really wants to have an investment is to engage in mortgage. Mortgage is an important thing in having loans. It is essential if you are planning to build a business and have some investments but your budget can’t reach the exact amount you need.

There are many questions that need to have answers before deciding on risky thing like borrowing money. Yeah, it is risky knowing the fact that you have to pay mortgage monthly obligation. But anyway, this is a good thing to consider. All you have to do is know what is a mortgage broker, or mortgage company, their roles in the business and industry and how they implement things. Mortgage brokers are the professionals who specialize in real estate financing and good mortgage brokers are the people to whom you should come. Having mortgage is not just risky but a serious undertaking. A mortgage is more than just a series of payments that you make. Mortgage is a way of putting your money somewhere that you can still reach.

Knowing the mortgage details and information from the company is an essential thing that a borrower should do. A person should know something about the finance company and how they treat the mortgagees and the mortgager. Since mortgage is actually a loan to finance something, a business perhaps or a new house and lot. There are people who are now engage in purchasing a real state and the only way to do that is to have some loans from the lending agencies. But to secure that you will be able to pay the agency with the right interest rate in the time frame given to you, you have to present collateral.
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By: Charles Essmeier

Home prices have reached record levels, and in many parts of the country, homes have become nearly unaffordable. Real estate has replaced the tech stocks of the late 1990’s as the hot investment, and everyone has sold their stocks and jumped into investment property. Real estate prices have increased at a far greater rate than salaries, and the lending industry has attempted to solve this problem by introducing a tremendous number of mortgage options for borrowers who barely capable of purchasing a home. Most of these loan types feature adjustable interest rates and minimum down payments. One of these, the option ARM, is the most dangerous type of loan ever introduced. Borrowers who are considering an option ARM should be aware that this loan could leave them with a loan that is worth far more than the home it’s used to buy and with a loan that he or she cannot afford to pay. The option ARM is not for the squeamish.

So what, exactly, is an option ARM? An option ARM is a mortgage with an adjustable interest rate that typically gives the borrower four different payment choices each month. The first choice is based on a 30-year amortization table; the second on a 15-year amortization table. These would correspond to payments for adjustable-rate 30 and 15 year mortgages, respectively. The third choice is an interest-only payment, which pays the interest that accrues during the month but pays nothing towards reducing the loan amount. The fourth choice, the one that makes this loan so dangerous, is called the “minimum payment.” The minimum payment is calculated upon the first month’s interest rate, which is usually a very low “teaser” rate that can be as low as 1-2%. Most borrowers with an option ARM opt to pay the minimum payment each month, and that’s where the trouble comes in.

The loan carries and adjustable interest rate, and this rate can adjust as often as every month. If the borrower is paying only the minimum payment, then he or she isn’t even paying enough to cover that month’s interest on the loan. What happens then? The unpaid interest that has accrued is added to the loan principal. The principal can actually grow larger, and as interest due is calculated on the loan principal, the interest due will increase, as well. Interest rates are currently near all-time lows and are sure to increase. A buyer who continues to make minimum payments on an option ARM will find that the principal on the loan is actually increasing over time! This is known as negative amortization.

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By: Michael Sanford

Everybody wants to own a house because it is something that portrays your success in life. Some people make some ways on how to own one by considering a lot of things including borrowing money from banks, lending offices and finance institutions. A great option for people who really wants to have an investment is to engage in mortgage. Mortgage is an important thing in having loans. It is essential if you are planning to build a business and have some investments but your budget can’t reach the exact amount you need.

There are many questions that need to have answers before deciding on risky thing like borrowing money. Yeah, it is risky knowing the fact that you have to pay mortgage monthly obligation. But anyway, this is a good thing to consider. All you have to do is know what is a mortgage broker, or mortgage company, their roles in the business and industry and how they implement things. Mortgage brokers are the professionals who specialize in real estate financing and good mortgage brokers are the people to whom you should come. Having mortgage is not just risky but a serious undertaking. A mortgage is more than just a series of payments that you make. Mortgage is a way of putting your money somewhere that you can still reach.

Knowing the mortgage details and information from the company is an essential thing that a borrower should do. A person should know something about the finance company and how they treat the mortgagees and the mortgager. Since mortgage is actually a loan to finance something, a business perhaps or a new house and lot. There are people who are now engage in purchasing a real state and the only way to do that is to have some loans from the lending agencies. But to secure that you will be able to pay the agency with the right interest rate in the time frame given to you, you have to present collateral.

If you are decided to have this loan, a help or an advice from the professionals who handles this kind of situations are a great help for you to know the things that you should and not do. Seeking for an advice from a professional adviser will not make you less a man. It will back up your decision of having mortgage and it will help you secure the possible things in home and business financing. With the help of the person that has experience in lending and borrowing, you will be able to have knowledge on different kinds of lenders, loan programs and other things that involves money and mortgage matters. Although having mortgage means monthly payments, you can gain benefits from that. Just consider comparing your monthly bills on something not that important plus your house rentals if ever you are renting. It is more practical if you go on and have you payments every month on important things like your new house.

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