Nov
27
Mortgage Loans
Filed Under New Car | Leave a Comment
Greg Smith asked:
With the real estate prices sky rocketing, mortgage loans are a boon when it comes to purchasing your dream home. You can opt for a mortgage loan as a first time home buyer, or to move up, or to refinance an old mortgage, or to access the equity blocked in the house. Whatever may be the reason, it is important to have a basic knowledge about mortgage loans and its types.
Mortgage loan refers to a loan that is secured by a mortgage on real property. Since these loans are secured, the value of the property reduces the risk factor involved. Thus mortgage loans may be available at lower interest rates as compared to other types of borrowing.
Mortgage loans are structured as long-term loans and the periodic payments for them are calculated according to time value of money. The payment is generally through Equated Monthly Installments (EMIs) paid over the term of the loan. Over the period, the principal amount borrowed, would be slowly paid off through amortization.
It is very important to choose the right type of mortgage loan, like it is important to choose the right lender. Doing a little bit of homework will help you understand what the loan officer speaks, who most of the time otherwise seems to be speaking in an alien language.
There are two basic types of amortized mortgage loans viz.
1.Fixed Rate Mortgage Loans: In fixed rate mortgages, the interest rate remains fixed for the entire term of loan. Thus they are more predictable than other types of mortgage loans. Fixed rate loans are generally up to 30, 20, 15 and 10 years. The longer the term of loan, larger is the amount of interest paid than the principle, this means larger tax deductions.
Since the interest rate remains fixed, you are saved from paying higher rates as per market fluctuations. At the same time you might loose the opportunity of borrowing at lower rates if market rates fall. If the fall in interest rate is 2 points or more, and you plan to reside in the same house for at least 18 months more, you can opt for mortgage refinancing.
2.Adjustable Rate Mortgage Loans: Also called floating rate or variable rate mortgage, these loans are popular because of the lower interest rates at the beginning. Adjustable rates are a little easier to obtain since some risk is transferred from the lender to borrower. Also lower interest rates may qualify the borrower for a larger loan amount.
In Floating rate mortgage loans interest rate is generally fixed for a period of time, after which it periodically adjusts to certain market indices. The most common market indices used are Prime Rate, London Interbank Offered Rate (LIBOR) and Treasury Index (T-bill). There is a cap on the margin that restricts the lender from charging interest rates higher than a certain point. This safeguards the interest of the borrower to a certain extent.
If you want to borrow money for your business purposes; you can opt for commercial mortgage loan. Commercial mortgage is similar to a residential mortgage, except that the collateral security given will be a commercial building or other business property and not a residential property.
All types of mortgage loans are generally non-recourse. This means that in case of default in payment, the lender can only seize the collateral security to recover the loan amount. Even if the collateral is insufficient to reimburse the loan in full, the lender has no further claim against the borrower.
DINO
With the real estate prices sky rocketing, mortgage loans are a boon when it comes to purchasing your dream home. You can opt for a mortgage loan as a first time home buyer, or to move up, or to refinance an old mortgage, or to access the equity blocked in the house. Whatever may be the reason, it is important to have a basic knowledge about mortgage loans and its types.
Mortgage loan refers to a loan that is secured by a mortgage on real property. Since these loans are secured, the value of the property reduces the risk factor involved. Thus mortgage loans may be available at lower interest rates as compared to other types of borrowing.
Mortgage loans are structured as long-term loans and the periodic payments for them are calculated according to time value of money. The payment is generally through Equated Monthly Installments (EMIs) paid over the term of the loan. Over the period, the principal amount borrowed, would be slowly paid off through amortization.
It is very important to choose the right type of mortgage loan, like it is important to choose the right lender. Doing a little bit of homework will help you understand what the loan officer speaks, who most of the time otherwise seems to be speaking in an alien language.
There are two basic types of amortized mortgage loans viz.
1.Fixed Rate Mortgage Loans: In fixed rate mortgages, the interest rate remains fixed for the entire term of loan. Thus they are more predictable than other types of mortgage loans. Fixed rate loans are generally up to 30, 20, 15 and 10 years. The longer the term of loan, larger is the amount of interest paid than the principle, this means larger tax deductions.
Since the interest rate remains fixed, you are saved from paying higher rates as per market fluctuations. At the same time you might loose the opportunity of borrowing at lower rates if market rates fall. If the fall in interest rate is 2 points or more, and you plan to reside in the same house for at least 18 months more, you can opt for mortgage refinancing.
2.Adjustable Rate Mortgage Loans: Also called floating rate or variable rate mortgage, these loans are popular because of the lower interest rates at the beginning. Adjustable rates are a little easier to obtain since some risk is transferred from the lender to borrower. Also lower interest rates may qualify the borrower for a larger loan amount.
In Floating rate mortgage loans interest rate is generally fixed for a period of time, after which it periodically adjusts to certain market indices. The most common market indices used are Prime Rate, London Interbank Offered Rate (LIBOR) and Treasury Index (T-bill). There is a cap on the margin that restricts the lender from charging interest rates higher than a certain point. This safeguards the interest of the borrower to a certain extent.
If you want to borrow money for your business purposes; you can opt for commercial mortgage loan. Commercial mortgage is similar to a residential mortgage, except that the collateral security given will be a commercial building or other business property and not a residential property.
All types of mortgage loans are generally non-recourse. This means that in case of default in payment, the lender can only seize the collateral security to recover the loan amount. Even if the collateral is insufficient to reimburse the loan in full, the lender has no further claim against the borrower.
DINO
Nov
22
Is a Reverse Mortgage a safe loan?
Filed Under Personal Finance | 3 Comments
MrStevens asked:
My neighbor told me about these reverse mortgage loans and I wanted to ask here if this a safe way to get some cash out of my home. I live in Ft. Lauderdale, Fl. and am retired 6 years now.
NATHAN
My neighbor told me about these reverse mortgage loans and I wanted to ask here if this a safe way to get some cash out of my home. I live in Ft. Lauderdale, Fl. and am retired 6 years now.
NATHAN
Nov
19
Heidi B asked:
we were told at signing if we made pmts on time for a yr we could drop co signer.now they say no unless we refinance.is there any way to get her off the loan?
ARMAND
we were told at signing if we made pmts on time for a yr we could drop co signer.now they say no unless we refinance.is there any way to get her off the loan?
ARMAND
Nov
19
N. Sai asked:
The home mortgage might be biggest personal financial commitment of a borrower in his or her lifetime. Hence, it becomes very important to choose the right kind of home mortgage to save money as well as save from headaches which might crop up in the future. Mortgage is a kind of a pledge or guarantee made by the home purchaser or borrower to repay the loan to the lender. A right home mortgage loan can save thousands of dollars in the long run. Hence, it becomes very important and crucial to the borrower.
Important factors to be considered while selecting the right kind of mortgage loans:
The purpose for the borrower should be solved:
The home mortgage selected should fit the purpose of the home buyer. If the home purchaser intends to live in the house he has purchased then the most suitable will be the home mortgage loan while an investor will need a residential investment loan.
The loan structure:
The loan structure or the type of loan should suit the interests of the borrower. It depends on the fact whether the borrower is interested in the flexible paying option or whether he is interested to pay at regular intervals, or whether he is interested to go for a variable interest rate or a fixed interest rate, or requires an additional credit option for home improvements or for purchasing a car etc. The term of the loan should also be suitable for the borrower in selecting the right kind of mortgage loans.
Loan features too need to be considered by selecting the right kind of mortgage loans:
To find out the features of the loans enough homework has to be done to analyze each and every feature of the loan, for making the right selection of mortgage loans.
Features of many loan products are listed below for selecting the right mortgage loans:
Some loans offer credit facilities which can be used for home improvements and furnishings by increasing the credit limit of the current loan. This avoids the need to go to another lender for borrowing money.
Certain loans allow additional repayments through which the borrower can pay from their year end bonuses. This option saves thousands of dollars for the borrower and also reduces the loan period considerably.
Accounts consolidation option helps to merge all the transactions. It simplifies the banking, saves money paid as interest towards the loan making every penny working for the benefit of the borrower.
The option of income transferred to the loan account helps the borrower to save interest calculated on the mortgage, while allowing to access cash or allows to pay bills by making automatic transfers set into another transaction account.
Linking the mortgage with the borrower’s transaction account enables every single dollar in the transaction account to offset the interest calculated on the mortgage.
Parental leave option helps to reduce the repayments up to 50% for nearly six months time which is again subject to certain conditions and terms.
Redraw option allows to get access to additional money paid over and above the normal schedule of repayments. Refix option allows to get into another fixed interest loan at the end of the present fixed interest rate term period.
PERCY
The home mortgage might be biggest personal financial commitment of a borrower in his or her lifetime. Hence, it becomes very important to choose the right kind of home mortgage to save money as well as save from headaches which might crop up in the future. Mortgage is a kind of a pledge or guarantee made by the home purchaser or borrower to repay the loan to the lender. A right home mortgage loan can save thousands of dollars in the long run. Hence, it becomes very important and crucial to the borrower.
Important factors to be considered while selecting the right kind of mortgage loans:
The purpose for the borrower should be solved:
The home mortgage selected should fit the purpose of the home buyer. If the home purchaser intends to live in the house he has purchased then the most suitable will be the home mortgage loan while an investor will need a residential investment loan.
The loan structure:
The loan structure or the type of loan should suit the interests of the borrower. It depends on the fact whether the borrower is interested in the flexible paying option or whether he is interested to pay at regular intervals, or whether he is interested to go for a variable interest rate or a fixed interest rate, or requires an additional credit option for home improvements or for purchasing a car etc. The term of the loan should also be suitable for the borrower in selecting the right kind of mortgage loans.
Loan features too need to be considered by selecting the right kind of mortgage loans:
To find out the features of the loans enough homework has to be done to analyze each and every feature of the loan, for making the right selection of mortgage loans.
Features of many loan products are listed below for selecting the right mortgage loans:
Some loans offer credit facilities which can be used for home improvements and furnishings by increasing the credit limit of the current loan. This avoids the need to go to another lender for borrowing money.
Certain loans allow additional repayments through which the borrower can pay from their year end bonuses. This option saves thousands of dollars for the borrower and also reduces the loan period considerably.
Accounts consolidation option helps to merge all the transactions. It simplifies the banking, saves money paid as interest towards the loan making every penny working for the benefit of the borrower.
The option of income transferred to the loan account helps the borrower to save interest calculated on the mortgage, while allowing to access cash or allows to pay bills by making automatic transfers set into another transaction account.
Linking the mortgage with the borrower’s transaction account enables every single dollar in the transaction account to offset the interest calculated on the mortgage.
Parental leave option helps to reduce the repayments up to 50% for nearly six months time which is again subject to certain conditions and terms.
Redraw option allows to get access to additional money paid over and above the normal schedule of repayments. Refix option allows to get into another fixed interest loan at the end of the present fixed interest rate term period.
PERCY
Nov
4
Does anyone know how to get a mortgage loan without employment verification? ?
Filed Under Renting & Real Estate | 5 Comments
katerina8282 asked:
I happen to have some money aside from a trustfund and I do not wish to work right now, but I do want to buy a house. All banks require me to work in order to do that. What can I do instead?
GUY
I happen to have some money aside from a trustfund and I do not wish to work right now, but I do want to buy a house. All banks require me to work in order to do that. What can I do instead?
GUY