Posts filed under 'Mortgage'
I have been familiar with the “Motley Fool” information services for some years, and they offer sound advice on a lot of financial topics. Mortgage information is one of the areas they offer especially helpful tools for consumers conducting online research into their personal finances and mortgage options in the process of making decisions.
Helpful articles and calculators guide those seeking mortgages to information that will help you make the best decision. For example, if you wish to know how much you can borrow, by entering you and your partner’s monthly income you can receive a general estimate. If you want to know how much a particular mortgage amount will cost, you can enter the mortgage amount, the term, and interest rate and see how much the interest will cost each month, and the amount of payment required for a repayment mortgage.
For consumers seeking mortgage quotes in the UK, the side-by-side comparison chart of current offers makes evaluating the various lenders easy. Initial interest rates and subsequent rates are calculated to form a cost comparison between lenders, including detailed relevant information regarding arrangement fees and early repayment charges as well as the maximum percentage value allowable for financing. Links allow the consumer to inquire of the listed lenders directly from the Motley Fool website. Various mortgage types have their own comparison list, such as buy to let mortgages, fixed rate, offset, and others, depending upon which will suit the particular consumer’s needs.
There are several principles to employ when managing accrued debt, and making plans to pay off debt. While these can be accomplished by filling out a plan on paper, some people prefer to use software to develop a plan to payoff debt legally. The benefits are that it is easily managed in your computer and it becomes much easier to view the overall picture, and ability to view the projected savings can be a good motivation to continue.
There are several factors to consider when developing your personal debt payoff plan. First, you need to honestly consider your current and potential earnings and your total monthly expense for your current debts. If you are behind on payments, or if your income doesn’t adequately cover your current obligations, it may be wiser to seek a debt consolidation loan. The goal of such a loan is to bundle high-interest debts together and lump them into a single loan of lower interest, thereby lowering the monthly payment so that it becomes more manageable. The danger is that the “extra money” each month is no longer going to reduce debts, and particularly if it creates the illusion of having more money to spend and lulls the consumer into acquiring more debt, the overall financial position becomes worse in the end. In the hands of responsible consumers and those who must reduce monthly payments in order to survive, it can be very beneficial.
If you are fortunate enough to have income sufficient to meet your current obligations, a better choice for overall financial health can be a debt stacking repayment plan. The benefits of debt stacking are that the overall amount spent on monthly payments does not increase, but the time needed to become debt free is reduced, along with a substantial savings in overall monies paid to debtors due to less interest being paid over those years you save.
The principle is to list all of your debts and the amounts being paid. Generally, you will list these in the order they will be paid off under your current monthly plan. It can be beneficial to adjust this to list debts with higher interest rates first, especially if they can be paid off within a reasonable amount of time. A caveat here … often credit card companies will require only a very small monthly payment relative to the overall debt owed, and usually charge the highest interest rates. These debts should be paid off as quickly as possible, so it is better to allocate more funds each month than the minimums required and most importantly, DO NOT further increase your debt by continuing to use those cards!
Any debt that can be paid off, particularly those with higher interest rates, should be concentrated on first (while of course making payments as required to all of the others). If any extra money is available, it is usually best applied this debt. If you use some money each month for investment or savings, it is usually a better return to apply this money to your debts instead, once you have a sufficient amount in your savings account to cover an emergency situation (usually about two months’ worth of expenses). The reason for this is that the interest you pay on your debts probably far exceeds the interest you receive on savings or the return on any investments.
Concentrate on paying off one debt at a time. As soon as that one is paid off, take all of the money you had been sending each month to that creditor, and add it to the payments you are sending to the second creditor, increasing the amount paid for the second debt. This will of course result in the second debt being paid off even sooner. When that one is repaid, take all of that money and add it to the amount being paid to the third creditor, and so on. By the time you reach your longest-term or lowest-interest bill (usually the home mortgage in both cases) you will be able to send considerably more than the regular monthly payment, and will pay down the principal much more quickly than with your regular payment schedule. Your mortgage (along with all of your other debts) should be paid off years sooner than it would otherwise be, saving you a substantial amount of interest.
You will then be debt-free, often in far less time than your mortgage was scheduled to run. The savings for each person will vary, of course, depending upon your personal debt profile, but for almost everyone the savings of both time and money will be significant. If it is possible for you to use a debt stacking plan, you can be debt free in much less time than with traditional repayment methods and save substantially on interest.
The purchase of a new home is, for many people, their primary source of investment. Over the life of the mortgage, you will be putting a considerable amount of money into your purchase and, should circumstances change in your life, your home represents an asset that may be sold and can possibly return a handsome profit as well.
It only makes sense to consider ALL of the relevant information when purchasing a new home. This can be much more difficult, however, if you are moving across the country and are not familiar with the neighborhoods, schools, etc. associated with the home you are seeking to buy.
This is where websites offering information to potential home buyers can be a good start in researching the relevant factors. For example, if you are planning a move to the Chicago area, you can first visit Illinois homes to view a variety of locally helpful data. Illinois rates for a variety of loan types are compared, showing the weekly change, along with a comparison to the national rates. You can view the city popularity below and see that Chicago is indeed a major market, which is likely to impact favorably on resale values. Visiting the Chicago page will provide further details, along with a list of nearby cities you may also wish to check out in case you don’t want to buy a home right in Chicago.
Each state has similar information available. You can, for example, visit the Indiana MLS and view such information as statewide demographic details, or choose the city where you wish to see the same information. Even small towns are well represented. I checked Franklin, a town where I lived as a child. The population is now 1,264. You can view full demographic details with information such as ethnicity, family income, price of a home, education level, family size, age range, and even the average commute time. Housing-specific details include the percentage of owned homes vs. rented and the percentage of vacancies. Local hospitals, medical centers, schools, colleges, churches, and more details are provided. All of these factors influence the potential resale value of a home, as well as give a snapshot of the local market.
Another useful feature of such websites are the ability to view foreclosures and other specific real estate deals. While in the state of Indiana, since I am familiar with the cities there, I also checked out Indianapolis foreclosures. The important relevant information was provided in a list form for almost 6,000 foreclosures in that city alone. Each entry shows an aerial photo view of the home, address, foreclosure amount, number of bedrooms and bathrooms, square footage, usually the year built, the foreclosure company, the date the home was listed, and the auction date. More details are available from the listing page, but you do have to sign up to receive that information.
Much more useful information is included, from the mortgage calculator tools to more detailed relevant information. When I searched for my high school among the school listing, I was able to view the full county records and statistics, including expenditure per student, classroom ratios, graduation rates, how many students received free or reduced price lunches, the ethnic demographics, and more.
Use online resources to gather as much information about your planned move as you can, an you will be prepared to purchase a home in a neighborhood that will help you retain your home’s value and protect your investment, should you ever wish to sell it.
Reverse mortgages are a special type of mortgage that allows older homeowners to borrow against the equity in their home with no repayment required as long as they continue to live in the home.
Proceeds are generally tax-free, and don’t usually affect Social Security or Medicare benefits. The borrower keeps the title to the home, and does not have to make any monthly payments as long as they live in the home. The home cannot be foreclosed due to missed mortgage payments, since none are due.
In some cases you can use the money for whatever you want (depending upon the type of reverse mortgage you apply for), and in many cases there are no income restrictions. One caveat is that they are generally more expensive than other mortgages to originate, so if you plan to remain in your home for only a short time, a reverse mortgage may not be your best choice.
There are several types of reverse mortgages available. Proprietary reverse mortgages are one kind, offered by private lenders and generally with fewer restrictions. This type of reverse mortgage can be especially suitable if your home is more valuable and you would like more cash up-front than may be available from other types of reverse mortgages.
Some states are becoming more competitive, with a greater percentage of seniors coupled with many valuable homes, such as the market for California reverse mortgages. Competition among lenders often means better terms for consumers of mortgages.
In such an environment as this, a mortgage broker can assess your situation and present you with a number of offers from different lenders in order to secure the best terms for your particular situation. Particularly if you are in the market for a CA reverse mortgage, or any other location where competition is keen among lenders, be sure to contact a broker to consider the offers from their lender’s network, even if you are considering a different type of reverse mortgage.
There are two types of mortgage suppliers a consumer may shop with when seeking a mortgage. One is a mortgage lender. The lender provides money to the borrower at closing, in exchange for the borrower’s promise to pay, and a lien on the property in case the loan is not repaid. Mortgage brokers, on the other hand, do not lend money. Instead, they work as an independent contractor and offer loans to the borrower from a number of different lenders. In general, the broker will solicit clients in the market for a mortgage and provide them with offers from different lenders and counsel them on the selection of a mortgage. They may also offer counseling to help the buyer qualify for a mortgage, will take the consumer’s application, and usually process the loan for the lender.
Consumers will usually receive better rates by dealing with a mortgage broker rather than a lender, because the broker will be able to offer the terms from a number of lenders, allowing the consumer to select the best deal available at that time. Also, they can specialize in helping consumers with particular needs, such as those with a poor credit history.
With internet access, this process has never been easier. For example, consumers can apply to get a loan with Centrro, a company with an online network of brokers and lenders, just by filling out a simple one-page form and submitting it, then waiting for several competing lenders to contact them.
This is similar to credit card comparison sites. In fact, some of the same loan networks carry different types of loans. You can also get a credit card with Centrro, and the company will soon be including personal loans in their service as well.
Speaking of blogs (as we did in our last post) we would also like to review another site that includes an informational blog along with their regular service. Mortgage Finders Network offers a variety of home refinance options, making it more likely that the consumer can find a mortgage that suits their particular needs. Along with this service, the helpful information provided in the blog can steer consumers in the right direction, whatever their current situation.
There are posts on a variety of topics suited to consumers in all areas of the housing market. Buyers may wish to know how to be able to purchase a home without making a down payment out of pocket, how to select the best mortgage and what all those terms mean anyway, how to avoid mortgage scams, how to decide how much house they can realistically afford, how to find the best house for their needs and how to negotiate the best deal on it. Outside links for buyers are listed with information on all aspects of purchasing a home.
Sellers will appreciate tips on selling their home, the seasons that affect sales and market prices, and information about having the home inspected for the buyer. There are links to outside resources for sellers as well that help with each phase of readying the property for sale and getting the best price for a home, and everything else along the way.
Homeowners who aren’t planning to sell can benefit from reading about securing a loan for home improvement, how to refinance their mortgage and save money in the process, refinances to avoid, and how to increase the value of their home (as well as mistakes to avoid that could potentially decrease its value).
And anyone can benefit by reading tips on how to start putting some of your money away in savings and the general money management tips offered within the blog posts.
If you are interested in refinancing though, that’s where the information is most helpful, since this is a mortgage finders service. Making the decision to refinance (or not) is covered with all of the details that may affect a particular consumer’s choice. Overall we have to say, there’s a lot of interesting reading here and it’s definitely worth a visit whether you are buying, selling, or considering a refinance or any other type of home loan.
First time home buyers can easily be overwhelmed by the choices of mortgages available, the unfamiliar terms used, and the factors that are under consideration by the mortgage company which can significantly impact the terms of their mortgage. It is important to secure the best financing available when purchasing a home, because it is probably the largest single type of purchase most people will ever make, and the interest and fees will often double or triple (or more!) the amount that must be repaid.
The first thing a potential home buyer should do is to honestly evaluate their credit history. Hopefully they have been responsible in the debt accumulation and repayment because credit scores are one of the most important factors affecting the availability of better mortgage terms. It might be necessary to postpone home ownership until the credit history can be improved, or alternatively, to expect to refinance within a short period after repairing the credit history.
The second major consideration will probably be whether to consider a fixed or an adjustable rate mortgage. Fixed rate mortgages are sold at a particular interest rate which will never change for the life of the mortgage. Adjustable rates will of course vary over time, based on several factors. The best choice depends on the individual’s situation, especially the current interest rate (and projected rates) and how long the purchaser intends to own the mortgage. If rates are currently high, and expected to drop, it can be better to purchase an adjustable rate and then refinance to a fixed rate when the interest rate drops. However, if the rate does not perform as expected, the costs for the purchaser can be higher than anticipated. An adjustable rate may also be favorable if the purchaser does not intend to own the mortgage for a long period, for example if they know they will be transferred in two years. Always consider the points to be paid, the interest rate, and any associated fees (as well as penalties for early repayment) when deciding between mortgages. It is well worth your time to become well-informed in order to make the best decision as effect upon overall repayment can be enormous.
Another major consideration is the repayment term. Interest rates are generally lower for shorter term loans, and when added to the fact that less time is involved, the effect on repayment totals (and thus the savings) is substantial. However, the monthly payments will be higher, and the consumer must make sure they will be able to afford the higher payments to avoid going into default or being forced to refinance (especially when a forced refinance often occurs after a period of struggling, which usually involves late payments that damage the credit rating and thus drive up rates for refinance). If the consumer is unsure of being able to afford the higher monthly payment, it is always possible to initiate a longer term loan (which of course will then incur a higher interest rate) but request a copy of an alternate payment schedule that will allow repayment within a shorter term. Payments can be made according to that schedule as much as possible, allowing the loan to be repaid sooner and allowing at least some of the savings that would have resulted from a shorter term without resulting in foreclosure if the consumer is faced with unexpected circumstances or for other reason is unable to repay at an accelerated rate.
These are just a few of the factors involved in mortgage selection, and the most basic ones. We will cover other types of mortgages and other alternatives in later posts.