Finance Times

Mortgage Length – Calculating Which Is Best

info — Fri, 19 May 2006 21:14:58 +0000

For many people, purchasing a home is one of the largest and most important investments they will make after their education. It is important to make sure you choose the right mortgage, one you will be able to pay off within a reasonable amount of time. You also want to make sure you choose a mortgage which has the right length of time.

The length of your mortgage should depend on your financial circumstances. It should also depend on your future goals. How much can you afford to pay each month on a mortgage while still maintaining a healthy amount of savings? Being able to save a reasonable amount of money each month will protect you in the event of an emergency. You will also want to save money for the education of your children and your retirement. These are things you will want to take into consideration when choosing the length of your mortgage.

Common Mortgage Terms

Most mortgages have a length of 15 or 30 years. While some companies do offer 20 year mortgages, the interest rates for 15 and 30 year mortgages are fixed. Because of this they are used more often than mortgages which last 20 years. If you choose to take a 15 year mortgage, your monthly payments will be much higher. This will mean that you will have less income available to save. A 30 year mortgage will give you lower monthly payments, and will allow you to save more money than you would save with a shorter mortgage.

Weighing Up Your Options

It is important to weigh the advantages and disadvantages of both options before making a decision. Long term loans will give your more disposable income to spend on whatever you wish. They are flexible, and will also allow you to invest money. You can pay more money on the mortgage when you have it available so that the total amount can be reduced. You are also given tax benefits by the government because you are paying interest for a long period of time. These loans are also the easiest to be approved for.

Getting A Cheaper Rate

At the same time, long term mortgages also have higher interest rates. Because you are paying a large amount on the interest, you will pay more money in the long term. It also takes a long time to build up equity in the home. Long term loans also require long term commitments. You will want to make sure you have stable employment.

How To Pay Less For Your Loan

Short term mortgages are able to be paid off much faster. They have much lower interest rates and equity can be built up very quickly. Because the interest rate is low you will pay less over the long term when compared to a long term mortgage. At the same time, your purchasing power will be low and you will not have many tax benefits. Short term mortgage loans are also hard to get approved for. These loans tend to have higher monthly payments.

Whether you decide to get a short term loan or a long term one, you will be able to refinance to change the length of the mortgage. If you decide a few years after setting up a 30 year mortgage that you earn enough to pay it off much faster, you can refinance the mortgage for a shorter length of time. If you have a short term loan and it is difficult to make the monthly payments, you can refinance it to a 30 year mortgage.

Choose the Best Deal

The most important thing is to sit down and figure out which option suits you best. You should look at your current income, how stable it is, and how much you will have left over after paying the mortgage every month. You should choose a home which evenly matches your level of income.

Joseph Kenny writes for various sites including http://www.ukpersonalloanstore.co.uk/ who offer secured loans comparison online.

Tips on Bringing Mortgage Interest Rates Down

info — Fri, 19 May 2006 21:14:35 +0000

A mortgage rate is the cost that you will be charged, in addition to the principle amount which you will be borrowing to pay for your home. Purchasing a home has become an easier dream to realise because interest rates on home loans are very low these days. Yet, will the interest rates keep that low? And, what other factors influences the overall cost of the loan? There are several factors that influence interest rates, but you can easily prioritise them and have the best options for lowering the cost of your mortgage.

The first thing that influences the Home Mortgage Rate is the prime rate. This is the rate declared by the UK government to help improve the economy. The prime rate is the guideline that most banks use when providing mortgage loans. This also acts as a benchmark in deciding interest rates on savings accounts and other investment products. Some lenders do offer mortgage loans at sub prime rates. But this hardly comes as it may mean fee increase in other circumstances.

Secondly, the mortgage rate may change from one loan to another. The longer the loan term is, the lower the interest rate will be on them. Yet, when you consider how much you will be paying in the length of the loan, this is not really a savings at all.

The more risk you pose to the lender, the more costly your mortgage loan will be. If you have an adverse credit history, you will be charged a higher amount of interest on your home purchase. You should always check your credit history by taking a copy of your credit report from any credit rating agency. To improve it or to keep your credit score high, make sure to pay your loans and credit bills on time. The higher your score is, the lower your interest is likely to be.

To know about the interest rates you qualify for, simply log on to the websites of various lenders and request for a no obligation loan quote. This will give you a good understanding of what your chances are as well as helps you to compare one lender to the next. A difference of few points can cost you in thousands; therefore it makes sense to look for the lender who can offer you the most ideal mortgage loan.

About The Author: The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in Business Administration and is currently assisting Adverse-Credit-Buy-To-Let-Mortgages as a finance specialist.

For more information please visit http://www.adverse-credit-buy-to-let-mortgages.co.uk

Consider a Reverse Mortgage - as Your Last Option

info — Fri, 19 May 2006 21:14:10 +0000

Home buyers often save rigorously for their home, forgoing expenditures and making sacrifices to pay down the mortgage and save for retirement. At retirement they get to enjoy their dream home debt-free. The only problem with this scenario for a lot of retirees is that they live on a fixed, and often not very large, income.

One option is to take a reverse mortgage - a loan against the home, which brings you money while you still live in your home. You can usually borrow between 10 to 40 percent of the value of your home depending on your age. A reverse mortgage loan requires no repayment for as long as you live in your home and you will never owe more than the value of your home.

This loan is different from a traditional mortgage in two ways. In order to qualify for a traditional mortgage, the bank checks your income to see how much you can afford to repay each month, but with a reverse mortgage there are no monthly repayments. With most loans, if you fail to make your repayments, you are in trouble. With a reverse mortgage, you don’t have any repayments. Thus, the debt grows larger as you keep getting cash advances and the interest is added to the amount you owe. This is why a reverse mortgage is called a “rising debt, falling equity” loan. As the amount you owe (your debt) grows larger, your equity (the value of your home less debt) is getting smaller.

You can receive income from your reverse mortgage in two ways. You can take the loan and invest it in an annuity. In turn, this annuity will provide you with income until your death. The second alternative is to receive monthly income from your reverse mortgage provider. Here you simply increase the size of your loan on a regular basis in order to receive income.

There is one big downside to all of this - you still owe money on your home. The total amount you will owe at the end of the loan will equal the loan plus all the interest accrued. All the interest can be a substantial amount of money.

Before you apply for a reverse mortgage, discuss your options with your family. Remember that a reverse mortgage will reduce the size of your final estate.

About the author: Tony Reed is the author of “Consider a reverse mortgage - as your last option“, please visit his website Loans, Mortgage & Credit for more information.

3 Reasons Creating and Selling a Private Mortgage Note Makes Sense

info — Fri, 19 May 2006 21:13:38 +0000

Private mortgage notes, also referred to as owner financed mortgage notes, have become more prevalent because they offer three distinct advantages. Conversely, as the situation changes there are three very powerful reason to sell a note.

There are three primary reason that a private mortgage note is established:

1. The buyer was not able to obtain traditional financing.

A little more than half of all applicants, and the numbers is going up, do not qualify for the full amount of the loan that they seek.

2. The owner wants to save time and money.

Utilizing owner financing the owner and buyer can save on the extraneous fees associated with the closing, such as origination fees, closing cost and survey fees.

3. An investment opportunity for the seller.

Depending on the sellers circumstances, it may make sense to self-finance for tax purposes.

After the note has seasoned the seller’s motives may have changed, resulting in the desire to sell the note. For whatever reason, the seller may want to sell the note for a lump-sum payment. This is very common and these types of transactions occur daily.

Transaction like these are available for residential notes, business notes and vacant land notes. But not all funding sources support all three. One can visit www.divergentgroup.com to find more information about selling a private mortgage note.

The benefits of selling a private mortgage note are numerous but the top three are:

1. It provides immediate cash;
2. The seller no longer has to collect payments on the note;
3. The seller no longer has the risk of non-payment.

Divergent Capital Group represents over 200 institutional investors that purchase private mortgage notes for immediate cash. This creates competition, allowing the most competitive deals available. Visit http://www.divergentgroup.com for more information.

Greg Meares is the principal of Divergent Capital Group and a certified cash flow consultant. Helping others achieve their goals, get out of an adverse financial situation or just trade in payments for a lump-sum is good business. Divergent Capital Group facilitates (no cost to you) the best deal for your situation. Over 200 funding groups are utilized and they compete for your business. Other helpful information regarding private mortgage notes can be found at: http://www.divergentgroup.com

Finding The Perfect Mortgage

info — Fri, 19 May 2006 21:13:16 +0000

Today, it seems as if everyone is offering a mortgage to those that are looking to purchase a home. There are mortgage lenders here and there, offering the ‘lowest rates’ the ‘best financing’ and the “best terms” but what is the truth to all of this? Many times, people find themselves lured into advertising and that is probably one of the worst things that you can do. Instead, when looking for a home loan, carefully think about what you are getting in the loan first.

There are several aspects that should be carefully considered when looking at a mortgage offered by any of the lenders there. Everyone should take the time to carefully consider these things as they will determine just how much money they will ultimately pay for their home as well as the experience they will have.

Interest rates are by far the most important aspect of the home loan. This is the charge, the cost of doing business with the financial lender. This dollar amount is going to cost a different amount of money from each lender as most will offer a different rate from each other. What is important to consider is the difference that is evident from one lender to the next. Often, cutting down the rate just slightly can save thousands of dollars in the long run.
The terms of the loan are also an important feature. The longer the loan is, the more interest will be charged to it and the more costly it will become. What many people think about though is the cost of the home’s monthly mortgage payment. The longer the terms of the loan are, the lower the monthly payment amount will be. Carefully find the best terms here so that you can make your monthly payments but that you can pay off your loan as quickly as possible too.
Customer service and experience is very important as well. If you do all of your banking on the web, you’ll want to make sure that this lender will offer that option to you as well. If you call the company to get a quote, they should provide you with the best of service. If they do not do it now (or you have to stay on hold for excessive time) then that is what you will get later on too.

The home loan that you select should have the best combination of these features. The better your interest rate is the lower the amount of money that you pay for your home is. There are many other things to consider as well, but this is the ideal topic that you need to know to get started with. Use the tools that are provided to you, such as a loan calculator to help you to determine what the loan will ultimately cost you. With so many lenders out there, looking for your business, you should provide your business to those that can offer you the best rates, the best terms and the overall best options to consider. A mortgage can be very costly if you do not pay attention to these details.

Maksim Fisher is a freelance writer, specialising in finance subjects such as loans, banking, mortgage, etc. He recommends use of a mortgage calculator for calculations at http://www.mortgagecalculatorplus.com.

How Ginnie Mae and Mortgage-Backed Securities Help You Get in a Home

info — Fri, 19 May 2006 21:12:33 +0000

Ginnie Mae is a government guaranteed business that is responsible for helping people finance homes. Ginnie Mae has highly trained and knowledgeable work force working in the best interest of the families and mortgage lenders they help.

Ginnie Mae works with mortgage backed securities to help make housing affordable for millions of low and moderate income families in the United States. Ginnie Mae does this by putting global capital into the nation’s housing markets.

The Ginnie Mae guaranty allows mortgage lenders to obtain a better price for the mortgage loans in the secondary market. This allows the mortgage lenders to take the money they make and put it towards more mortgage loans that are available to more people. It is a way to increasing the amount of cash flow so that more mortgages are available for more families. In turn, this allows more people and families to own homes, otherwise they may have never considered.

Ginnie Mae does not actually buy, sell, or issue mortgage-backed securities loans. Ginnie Mae is responsible for housing investors that use their money for guaranteeing mortgage loans to the mortgage lenders. Ginnie Mae securities are the only mortgage-backed securities that are completely carried in full faith and credit guaranty by the United States government. Ginnie Mae is one of the safest investments for investors because of this reason. No matter the current financial and economic environment, this investment is a solid one.

Ginnie Mae guarantees investors timely payments of both principal and interest on mortgage-backed securities that are supported by federally insured or guaranteed loans. This mainly includes loans that are insured by the Department of Veteran’s Affairs and the Federal Housing Administration. Other guarantors or issuers of loans eligible as collateral for the mortgage-backed securities are The Department of Housing and Urban Development’s Office of Public and Indian Housing and the Department of Agriculture’s Rural Housing Service.

Ginnie Mae simultaneously helps families into homes and assists investors in getting guaranteed returns. Ginnie Mae investors get a share of all resulting cash flows, after of course the servicing and guaranty fees have been taken out.

So what exactly are mortgage-backed securities? Mortgage-backed securities are pools of mortgages used as collateral for the issuance of securities in the secondary market. MBS are commonly referred to as “pass-through” certificates because the principal and interest of the underlying loans is “passed through” to investors. The interest rate of the security is lower than the interest rate of the underlying loan to allow for payment of servicing and guaranty fees. Ginnie Mae MBS are fully modified pass-through securities guaranteed by the full faith and credit of the United States government. Regardless of whether the mortgage payment is made, investors in Ginnie Mae MBS will receive full and timely payment of principal as well as interest.

Ginnie Mae’s mission is to expand affordable housing in America by linking global capital markets to the nation’s housing markets. If you feel you can either benefit from their services, or would like to be an investor, contact the nearest location or check them out online. It could be just what you are looking for to get into a home or invest your money with other smart investors in large portfolios.

John R Blakefield is a mortgage and real estate specialist. For more information, articles, news, tools and valuable resources on home mortgages or investment loans, refinancing, debt solutions, visit this site: http://www.scourtheweb.com/mortgage/

Mortgage Refinance: What You Need to Know

info — Fri, 19 May 2006 21:12:09 +0000

If you are considering refinancing and want to know if refinancing will be worth it, consider if your interest rate is at least 2% higher than the going rate you will be saving money. Remember there are expenses involved with refinancing; less than 2% and it might be a while before you break even.

There are of course other reasons to refinance; cashing out equity in your home is one such reason.

You may be sitting on the fence when it comes to refinancing your mortgage because of a possible move in less than five years. It does not make sense to commit to a 30 year mortgage if you have to turn around and sell in five years right? If you think a move might be coming up in your future you can still take advantage of low interest rates by using a hybrid mortgage loan.

A 5:1 hybrid mortgage for example offers a low fixed interest rate for the first five years. After 5 years the interest rate becomes adjustable and your lender will adjust the interest rate every year after that. Find a lender that does not have prepayment penalties and you can sell the home after 5 years and still benefit from lower interest rates.

If you are refinancing for the long term you might want to consider prepaying points in exchange for a lower interest rate. Points or “discount points” as they are often called, represent 1% of the loan amount and are paid at closing in exchange for a lower interest rate. Many lenders require points; however, you can use points as a bargaining chip with lenders that do not in exchange for better a better interest rate or even more favorable terms. To learn more helpful tips that could save you thousands on your mortgage loan, sign up for a free guidebook to mortgages and mortgage refinancing using the links below.

savannah mortgage refinance

Louie Latour has twenty years of experience in the mortgage industry as a mortgage broker.

He is the owner of Mortgages Refinance Advisor, a mortgage help site devoted to saving homeowners money with a free guidebook Mortgage Refinance: What You Need to Know.

Mortgage Costs and How to Reduce Them

info — Fri, 19 May 2006 21:11:48 +0000

Few people will ever pay more for anything than they do for their home. The prices of housing are continually escalating; the median price of a house in the United States is now more than $215,000. Adding to the expense is the mortgage interest. Over the life of the loan, most homeowners will pay approximately twice the cost of the house in interest alone.

Taking interest into account, the cost of the average American house now costs more than $500,000. But while everyone wants to own a house, few people relish the though of paying nearly one third of a million dollars in interest to their lender. And yet, many people do, seemingly unaware that there are things they can do to reduce the cost of buying a house.

Here are some things that you can do that may help reduce the total cost of buying a home:

Eliminate your private mortgage insurance (PMI) – If you are making a down payment of less than 20%, your lender will require that you pay private mortgage insurance every month. This protects the lender against default, but it doesn’t help you one bit. If the value of your house increases or if you pay down a portion of your mortgage, your equity may exceed 20% of the home’s value. In that case, you can ask your lender to drop the PMI. The lender won’t automatically do it; you must ask. You will also need to submit the results of a formal appraisal to prove the home’s value. Should your lender drop your PMI, you can simply add the amount you were paying to your mortgage payment each month. The extra sum will help reduce your interest costs and will help you pay off your loan sooner.

Add to your payment – You can pay more than the listed amount each month. Any extra you add to your payment should be applied to your loan principal, which will contribute to paying off your loan sooner. Every little bit helps; even $10 or $20 per month would probably save a few thousand dollars over the life of the mortgage.

Refinance your loan – If interest rates take a drop to one or two points below the interest rate on your loan, it would probably be worthwhile to refinance. The costs of refinancing can usually be recovered through lower payments within a few years. Depending on the interest rate and the size of your loan, you could save tens of thousands of dollars over the life of your mortgage.

These are but a few of the ways that you can reduce the cost of buying a home. While there isn’t much you can do about the price of the house itself, you can certainly do a number of things to reduce the amount that you pay in interest over the years. Every penny counts.

Copyright 2006 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including HomeEquityHelp.net, a site devoted to information regarding mortgages and home equity loans.

What You Need to Know About the Rates, Points and Fees on Your Mortgage

info — Fri, 19 May 2006 21:11:14 +0000

When you first apply for a mortgage loan, three of the most of things you want to entertain are the interest rates, points and fees that are associated with each specific mortgage you are considering. These three things can greatly affect the amount of money you have to pay in turn for borrowing the money to purchase your house.

Depending on your credit history, income, expenses and long term debt, you can either qualify for either a prime or sub-prime loan. A prime loan means you have a decent financial situation and can qualify for a large amount of money, at a good interest rate, with the normal points or fees. A sub-prime loan is for those with not such a good financial situation. Often, sub-prime loans come along with higher interest rates and more points and fees that are paid in turn for the lender having to take on a higher risk client.

The interest rate is what is charged in turn for the lender allowing you to borrow the money. It is determined by starting with a base index rate, and on top of this are percentages that represent certain risks, such as default and inflation.

The APR or annual percentage rate is the total amount multiplied by the principal to determine the interest amount paid every month. Obviously, the lower the APR, the less money you have to pay in interest. Every month, you pay some money towards the principal, or the actual amount you borrow, and some towards interest. As the principal decreases, you pay less in interest, because the principal amount is less.

Points are usually one time fees that you pay to the lender or broker for the mortgage. It is usually a percentage of the total principal amount borrowed. The more points you pay upfront, the lower the interest rate usually is. You have to be careful, however, and always do the calculations for each scenario because even though you are paying a lower interest rate, you could pay more money with the points than the interest rate a little higher.

Additional fees may include application fee, loan processing fee, appraisal fee, underwriter fee, lender fee, attorney fees, broker fees, credit report fee, document preparation fee, and all other fees that may have been included with the specific mortgage. Your specific mortgage may not include any of these, but you must ask your broker or lender exactly what fees are included in the mortgage.

Expect to get a detailed itemized report of all the breakdowns of the rates, points and fees. This way you know exactly where your money is going and why. This is the best way to avoid loan fraud. If there is an item you don’t understand what the service is, or why it is there, you have a right to ask and get an explanation. Do not agree to anything that you are not clear on.

By understanding all the terms of the mortgage loan, you can see exactly how much the mortgage will cost you. Be careful of being charged too many fees and points that are necessary for your situation, especially if your credit history is average or above. Work with lenders and brokers you have gotten referrals from and believer are working in your best interest. Use these tips to get the best mortgage rate you can!

Be Aware of Low Rate Mortgages Advertised

info — Fri, 19 May 2006 21:10:45 +0000

You see every where rates advertised for low mortgages. Banks, private lenders, brokers, mortgage companies and other institutions advertise their lowest rates to bring interested buyers in to the store, or call, or go online to see what that particular lender has to offer.

While these low rates are not false, more often than not the rates advertised are for those with great credit history and a steady income. The average person may not be able to take advantage of these low rates because their credit history is not as good and they have way too much long term debt. In that case, there are rates, often higher, that are for those with not as clean credit.

Another thing to look out for is the low rate advertised might be just the base rate. An interest rate is made up of a base index, then added to it are percentages that represent the risk that the lender is taking on by loaning you the money. Some risk that is included would be default risk and inflation.

If you are drawn into a situation where you wish to take advantage of the low rate advertised, be sure to talk to the lender in depth and see what the real deal is with the rate. Don’t rush into a deal where you are thinking you are getting the advertised terms, and really you are getting the terms that better represent your credit history.

In order to avoid this happening, have a clear understanding of your financial environment. You can do this by getting a credit report and making sure all the items are correct. It is common to have mistakes on your credit report, so make sure all financial responsibilities are your own. It can be detrimental for your credit score if you have a false item on your report, and you don’t even know!

Another thing you can do is do a basic income and expenses of your household. Literally go item by item and determine your total income versus your total expenses. Also, check out your long term debt. You should be able to determine if you are capable of handling a mortgage payment over the life of the term.

When you approach the lender, whether it be by phone, in office, or online, be prepared with all this information that you have. Make sure the terms you get are representative of the information you have to give to them.

Don’t fall for the advertised interest rate, and never sign or agree to anything you have not looked over very carefully and understand all the terms, fees, rates, and conditions. The advertised interest rate is meant to do just that, advertise to get people to come to the lender.

Bottom line, don’t expect to get the advertised rate. Always double check to see if there are other percentages added to it. Many times they are advertising just the base rate. Cover all your basis and be prepared to ask questions. Do not fall for smooth salesmanship and a quick, persuasive tongue. Be prepared and go in with confidence.