Author Archive
March 11, 2008
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Find out how second mortgages work, and whether a second mortgage might be a good choice for you.
Sometimes, you need extra money for things like repairing your home, making an addition, or just remodeling. In other cases, you might want to have some money to take a nice vacation, or pay for your child’s schooling. If you own your own home, there are some second mortgage choices available to you so you can get the money you need.
The most common of the second mortgage choices is the home equity loan. This loan is based on the equity you’ve already earned in your home. Basically, you’re borrowing money that you’ve earned just by your house’s value appreciating. A basic appraisal and some forms are needed, and small closing costs are involved, but the money is then yours to use as you see fit. It is then repaid in monthly payments just like your regular mortgage or other loans. Remember that second mortgage choices often have a higher interest rate than the first because this is considered a higher risk mortgage. The bank will always collect on the first mortgage first in the event of default.
Typically, second mortgage choices are an excellent choice for responsible borrowers who know how to manage their money. Most of these types of mortgages have similar terms as the first, but can range anywhere from fifteen to twenty year terms. Be aware that the second mortgage terms often depend on the amount of the loan, and some can actually have a term period as short as one year. Shop around for the various second mortgage choices available to you, and remember that you don’t have to stick with the same lender as your original mortgage. Be sure you also get a good appraisal amount so you can get the most out of your home. Second mortgage choices are a great way to have extra cash for the larger projects you have or the things you need to enjoy life—just be sure that you have a way to stay on top of the payments.
March 5, 2008
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Questions to ask lenders if you’re thinking of taking out an interest-only loan.
Interest only mortgages can be a great choice for the first time home buyer who may not have a large income, but predict that their income will increase over time. Essentially, an interest only mortgage pays off the interest only for the first few years of the loan. This term period can range anywhere from five to ten years, depending on the loan terms. During this time, absolutely no principal is applied to the mortgage, which can be disadvantageous to the home owner, as paying down principal means the mortgage will be paid off faster.
On the other hand, most loans allow the home owner to pay extra each month if they choose, which would go towards the principal amount of the loan. When shopping for interest only mortgages, be sure ask if there is something called a prepayment penalty for cases such as this. If not, you can pay down as much principal as you like each month.
There are several positive elements of an interest-only mortgage. The most obvious are the lower monthly payments. Initially on this type of loan, the borrower only pays the interest, which is much less expensive than paying interest and principal together. These types of loans are great for younger borrowers who are starting out their careers and predict that they will see a pay increase over time, and once the interest only period expires, they will be able to pay both principal and interest together.
The downside is that borrowers must be ready when the expiration period comes. Lenders should make home buyers aware of the projected new payments after the interest only time is up, so they can decide whether or not this loan type will be right for them. Enjoying lower house payments initially is the real bonus of an interest only loan, while the delay of principal repayment can be considered a negative. Weigh all of your options before deciding if this type of mortgage is right for you.
February 29, 2008
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Reasons to consider mortgage life insurance
If you have a large family, if you’re a newlywed, or if you are elderly and still owe on your home, you may want to think about purchasing mortgage life insurance. This form of insurance helps to repay your mortgage in the unfortunate event of your death. It prevents you from leaving your loved ones with the house debt that you may leave behind. A good policy will not decrease the amount of insurance over time. In other words, as you get older and continue to pay on the policy, the coverage amount should remain the same, so when you do pass on, the debt is still covered at what it was listed at originally. This is a type of term life insurance policy. When you apply for this kind of insurance, you can usually do so with your homeowner’s insurance company at the same time. Rates are generally not too much more than your regular policy, and they will differ due to various factors.
Some of the things that will determine your mortgage life insurance rates include age and whether or not you are a smoker. Some companies will send a representative to your home and take a blood sample and your blood pressure. You can opt to choose the term of this kind of insurance, and it can usually be purchased in ten year increments. Of course, you can always renew it when it is about to expire. This type of insurance is a great source of peace of mind. Depending on the type you get and your lender, part of it may be repaid to your estate at the time of your death (although typically this type of insurance is much more expensive, and may not be a good option.) Shop around for quotes and coverage amounts, and compare the fine print on several different policies. This way, you can give yourself and your family the gift of security in knowing your home will be paid for in times of need.
February 25, 2008
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A marketing statement that defines the value of a house added to the consumer once it is used or bought. This statement should give enough reasons to convince consumes to buy products. Value proposition presents the added value that the product can bring that will separate itself from other products. An effective value proposition should clearly define the advantages of the product that can help develop customer intimacy.
February 15, 2008
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Seeing a mortgage payment table can help you plan finances, especially for certain types of loans.
Repaying a mortgage soon becomes another monthly bill for many people. What they may not be aware of are the actual calculations that go into a mortgage repayment. There are many sources where homeowners can look at mortgage payment tables which are designed to help them determine things like the total cost of a loan, interest paid, and the time it will take to repay the loan, to name a few. In order to use a mortgage payment table, you need to have certain data ready to enter. First, you’ll need to know the term of the loan. The term refers to the number of years it will take to repay the loan, such as 15 or 30. Next, you’ll need to know the exact interest rate for your mortgage, followed by the initial payment date. Finally, you will want to enter the total loan amount. When all of this is entered, you should be able to calculate your monthly payment with a breakdown of the interest versus principal. This breakdown is called an amortization table. The amortization table is there to serve as a guide of progress towards paying down the mortgage.
When entering information into mortgage payment tables, you will also need to take into account the type of loan. For example, if you have an interest-only loan, the amortization table should only show you the amount of interest you’re paying each month. You may notice that the total, or principal, will not change until the interest only period expires. Of course, this can vary if you choose to pay more each month and lower the principal separately. A payment table is a great way to help you get a better picture of how your monthly payments are broken down, and how you will progress towards paying off your home. A payment table can also help you plan your finances out five, ten, or thirty years down the road.
February 8, 2008
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A typical mortgage lasts about 30 years. Many people envision themselves paying off their homes for the rest of their lives, but you can actually pay off your mortgage early, which can offer a great sense of security to home owners. There are several strategies that can help you with paying off your mortgage early, such as making bi-weekly payments instead of only paying it down once per month.
By paying your mortgage twice per month, you are greatly reducing the amount of interest you’re paying overall, which can not only save you thousands of dollars, but can also help get that mortgage paid off much earlier. Many larger mortgage companies can set you up on a bi-weekly payment plan. It may cost a few dollars extra (for instance, a $2 service payment), but the savings will really add up. Be sure when attempting to pay any mortgage off early that there is not a prepayment penalty. Some mortgages will charge borrowers this penalty for paying off the mortgage early, so find out if you have one, and how much it costs.
Remember when you are trying to accomplish an early mortgage pay off, that sometimes it’s best to invest that money in other areas, such as paying down credit card debt. Most homes appreciate in value over time, so you are paying down a secured debt that will probably pay off or give you a profit in the long run. Credit cards, however, typically accumulate interest and can take years to repay, so if you do have extra money, it may be wise to pay them down first. Take a good look at your personal finances and be sure you’re putting your money towards something that will give you a nice return, like your home. Paying it off early is a great way to get added financial security, and save a significant amount of money in interest accrual.
February 7, 2008
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Everyone should have a right to affordable and safe housing. Unfortunately, criminals have made this more difficult by defrauding our financial institutions, causing millions of dollars in lost revenue per year. Mortgage fraud is a serious crime, yet people still attempt it every year. There are several forms of mortgage fraud, but they are all essentially the same since they involve defrauding banks, innocent people, and in some cases, the US government.
Surprisingly, the FBI has found that a large percentage of mortgage fraud is actually committed by industry insiders. This is disturbing news for consumers. The most important thing we as consumers can do is be aware and educated about the most common mortgage fraud schemes.
House flipping is a common practice, where a buyer purchases a run-down home for a very inexpensive price. Often, those committing fraud will do cosmetic repairs, making the home look brand new, and charge a buyer triple or more for the home, while it is not structurally sound or has other serious problems. All the while, the seller makes false claims stating the home has been rebuilt and remodeled, when in reality they have made a few “cheap” upgrades to make it look good.
More common types of mortgage fraud include things such as simple misrepresentation, like overstating income or assets just to get a home loan. Hiding liabilities to improve one’s debt to income ratio is another example. This type of mortgage fraud isn’t limited to borrowers; sometimes, brokers have been known to tweak numbers to ensure that borrowers can get loans for which they may not otherwise be qualified. Fortunately, stricter lending practices have been put in place to help ensure that borrowers are providing accurate information.
Larger scams include mortgage fraud rings, where a “straw borrower” provides a credit report, an appraiser who overstates the home’s value, an attorney who is in on the whole scam, and an “owner” who signs off the overly large loan. All parties take part in the loan process, and receive funds for a home which is worth much less, then take the money and disappear. Committing identity theft in order to get a home loan is another example.
Mortgage fraud has serious repercussions for all involved. It behooves every home buyer to be completely honest about finances, to read all fine print carefully, and to choose trustworthy professionals who can offer disinterested advice on matters such as a potential home’s state of repair and loan financing.
February 3, 2008
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The rate of money transfer from one transaction to another. This measure gives investor an idea of how robust an economy is. Money velocity is dependent on the supply of money, the relative income of households, and consequently the strength of the economy as measured via GNP. The velocity of money is also a measure of the “temperature” of the economy. Velocity of money is also influenced by interest rates.
February 2, 2008
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When shopping for a new home, the process can seem a little daunting at times. Choosing the right mortgage is the most important part of the entire experience, so knowing what a good deal looks like is essential. The most vital part of the mortgage process is finding a broker or loan office you can trust. A good mortgage broker will help walk you through everything from pre-approval to closing, and will always be easy to reach whenever you have questions. They will explain everything fully so you’re never unsure. Shopping around for a good mortgage broker—someone trustworthy—can be the best source of mortgage advice you may find. Seek out the opinions of family, friends, online reviews, and local financial professionals for recommendations.
There are many mortgage products available today, so do your homework and read about each program before you decide which one will be right for you. The traditional thirty-year fixed mortgage is good, but there are many other types that might suit your payment needs better, so ask your lender or broker what else is out there. Paying special attention to interest rates so you know what a good, low rate looks like is also important.
Before you apply for a mortgage, you should already be familiar with your credit. Check your FICO score and have it ready. Look at your credit report in depth and be sure it is free and clear of any mistakes or errors, and get them corrected before you submit a mortgage application. You might also want to sit down and draft up a budget, so you know ahead of time what kind of monthly mortgage payments you think you’ll be able to afford. Don’t forget to consider other expenses like the electricity bill, water bill, and property taxes, just to name a few. Many new homeowners don’t take the extra expenses into account and can get in over their heads. It’s a good idea to track your expenses for a month (or make it a regular habit) and really get a good grasp on your budgetary needs.
By being better prepared ahead of time, you can walk into the mortgage process with confidence and enjoy your home buying experience.
January 27, 2008
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A bank deposit account that cannot be withdrawn until a specified period of time. This savings account cannot be usually withdrawn in advance unless the account holder provides a written notice. The maturity of time deposits can range from seven days to seven years or longer. Even then, the time deposit can be carried for another term. A variant of time deposit is a certificate of deposit such as NCDs where the account can be sold before maturity.
