Having The Basic Concept Of A Mortgage
No commentsBy Dustin Hines
If you are new to borrowing and are just looking for your first home, then you probably are unsure about how mortgages work, and what the various types of mortgages are. If you are about to get your first mortgage, then you need to know the basics of what mortgages are and their various features. Here is some useful advice on the basics of mortgage lending:
What is a mortgage?
A mortgage is the loan that you take out to pay for a property. The loan is split into the capital and interest. The capital is the amount you have actually borrowed to buy the property, and the interest is the amount the lender charges you for the privilege of borrowing. There are various types of mortgages, but in general the two main types are repayment mortgages and interest only mortgages. Repayment mortgages are ones that require you to pay back the capital and interest each month. Interest only mortgages require you to pay just the interest each month and then the final capital amount at the end of the mortgage term. Whatever type of mortgage you are looking for, there are a number of features you should consider:
Interest rate
The interest rate of the mortgage is very important, because the lower the interest rate, the less you will pay back over the loan term. Mortgage rates are lower than most other types of loans, at around 5 or 6%. However, you should shop around for the best interest rate, as even .5% difference can mean a lot more to pay back over 20 or 30 years.
Exit fees
When you take out a mortgage, you agree a length of time over which you will repay the loan, known as the mortgage term. Mortgage terms usually range from 15-25 years. However, during this long period of time you might find a better deal or want to change your mortgage terms. If you leave during the mortgage term to use another lender, then the current lender will often charge exit fees to allow you to leave. This amount can be quite high, and is usually a percentage of the amount you still owe. You want a mortgage with low interest rates, but also make sure that you are fairly free to change lenders if required.
Insurance
As with all loans, you will be offered insurance on your mortgage, in case you are ill, out of work or die and cannot make the payments on the mortgage. If you die, then having insurance will allow your family to continue to pay the mortgage even without your income. When getting mortgage insurance, make sure that you are not paying too much for it and that your other insurance policies do not already cover you. If you aren’t covered, then getting mortgage insurance is a good idea.
How do you get a mortgage?
Mortgages can be obtained from banks, specialist mortgage lenders and online lenders. If you are looking for a mortgage, you should shop around for the best deals before committing to one lender. In order to get the mortgage, you need to show proof of income, and how much the property you want to buy is worth. The lender will then determine how much they can afford to lend you. It is often a good idea to discuss the amount you can borrow before looking at property, because then you will have a maximum budget when looking for your new home.
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Advantages Of Having A Reverse Mortgage
By Dustin Hines
In recent years property values have soared, while investment returns have been modest. This has created a situation where a lot of seniors are finding themselves in the position of being house rich and cash poor. These cash strapped seniors are looking for ways to increase their retirement income while continuing to live in their homes. These retirees find that their options are limited, and in most cases require them to risk their home. Enter the reverse mortgage, which can provide many advantages over these other less desirable options.
No Payments With Reverse Mortgages
The biggest advantage of a reverse mortgages is not having to make payments as long as you continue living in your home. In fact, this is the number one reason that seniors choose to borrow reverse mortgages. Almost 80% of reverse mortgage borrowers use a reverse mortgage to pay off their current loans in order to eliminate their house payments. Let’s say you owe $50,000 on your first mortgage and borrow $80,000 with a reverse mortgage. This would pay off and eliminate the payment on the first mortgage and provide you with $30,000 to use as you please.
Live in Your Home as Long as You Like
The second advantage of reverse mortgages is the ability to live in your house as long as you like. The great thing about this is the amount you owe on the reverse mortgage can never be more than the house is worth. Let’s say you live to 115 and have selected to recieve a $300 a month payments for life from the reverse mortgage. The amount received from the reverse mortgage payments could be substantially higher than the value of your home, yet the amount owed will still only be the value of the home. In this situation, FHA insurance will cover the difference.
Reverse Mortgage Withdrawal Options
Another advantage of reverse mortgages is the different withdrawal options that a you are able to choose. These options include lump sum distributions, line of credit, monthly payments, or any combination of these three. So if you were eligible to borrow $100,000 on a reverse mortgage you could select to receive $30,000 up front to cover current expenses, and hold the rest as a line of credit that you can use whenever you need it. This flexibility of reverse mortgages can significantly improve you financial independence during retirement.
Tax-Free Nature of Reverse Mortgages
Another advantage of reverse mortgage is the tax-free nature of the loan proceeds. The American Bar Association guide to reverse mortgages advises that generally the IRS does not consider loan advances to be income. This means that all the money from the proceeds of the reverse mortgage end up in your pocket.
With these features, reverse mortgage are definitely an option to consider if you are looking for ways to supplement your current income. As with any financial decision, you should seek the advice of a trained professional, a reverse mortgage counselor, to evaluate and determine if a reverse mortgage is right for your situation.
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Benefits Of Having A Christian Mortgages
By Dustin Hines
The Christian Mortgage concept is built on the basis of Christian faith and principle. Various institutions around the world follow Christian Mortgage principles to shape their terms and conditions.
According to Catholic social teaching a mortgage is the provision under which people is permitted to utilize the merchandise of the globe. It signifies that no one is bestowed with the illogical right of private property while others in the world suffer from lack of it.
There are seven basic components that are found to be most attractive in choosing a Christian Mortgage.
Seven Benefits of Christian Mortgage: -
Benefits of Christian Mortgage #1 - Refinance to get a better rate: There are two types of mortgage loans in consideration of interest rates available - (a) Fixed Rate Mortgages (FRMs) and (b) Adjustable Rate Mortgages (ARMs). When you have cash down your credit at certain amount, it would be wise to opt for an ARM in exchange of a FRM. Christian Mortgage institutions often offer this opportunity to refinance. Moreover, Christian Mortgage institutions offer remarkably low rates in comparison to other institutions.
Benefits of Christian Mortgage #2 -Second Mortgages to consolidate debt or for other purposes: Christian Mortgage many times offers a second mortgage to a single person. By this way, one can get a second mortgage on a single property, after the first mortgage payment is cleared; or on the other hand, one can identify another property to mortgage when they are still paying a mortgage debt.
Benefits of Christian Mortgage #3 -Lower monthly payments: A very important benefit from a Christian Mortgage is its lower monthly payment. A monthly payment comprises of a basic payment with some interest rate. Christian Mortgages by providing you with a low interest rate cuts down your monthly payments and thereby your monthly expenses to a large extent.
Benefits of Christian Mortgage #4 -Cash Out Equity: Another benefit of Christian Mortgage is cash-out equity. When a person recognizes that the value of her/his asset has increased, or that the principal has been paid down to a particular amount, then she or he can re-borrow on that principal. The homeowner may “cash out” this equity in the home. By this way one can get some extra fund as cash. Christian Mortgage offers this Cash out Equity system to be used as extra cash for other beneficial purposes.
Benefits of Christian Mortgage #5 -Large tax Benefits: Christian Mortgages always fall under release of tax amount. As the basis of Christian Mortgages is social welfare and as Christian Mortgage offers genuine help to the needy people, governmental tax decreases upon this mortgage. Thus it offers a large tax benefit with it.
Benefits of Christian Mortgage #6 -Short Duration of Payment in few cases: Christian Mortgage in general offers short payment duration depending on the amount of debt. But considering the other types, Christian Mortgage institutions always aims to shape their offer personally either on shorter payment period, or shorter monthly payment amount.
Benefits of Christian Mortgage #7 - Private Mortgage Insurance: PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home’s value. But in Christian Mortgage, the PMI starts at lower cash down limit, considering the borrowers’ financial status.
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