Two Methods To Make A Huge Saving When Buying Your Home

March 16, 2009 by  
Filed under On Your Mortgage

There is no doubt that purchasing your first property is the most important and exciting business transaction you will ever make. Getting on that first rung of the ladder transports you into a whole new world of ownership and with it brings stark financial responsibility. Your mortgage can span anything up to 30 years depending on how much cash you can spare towards the initial endowment and your credit record must be as good as pristine.

Maybe you are reasonably well off or are struggling a bit, either way you still want to obtain the best deal you can and save money where possible. When buying your house there are two main methods that will increase your chances of saving money and effort, these are, owner financing and an assumable mortgage from the existing owner.

An assumable mortgage is where you have the opportunity to take over the existing mortgage of the previous owner along with the same interest rate they have. In most cases this interest rate will either be equal to or lower than the current rate helping you save. If your lender approves of the assumable mortgage then the mortgage is yours.

However, there can be a case where the entire cost of the house is not covered by the assumable mortgage where the seller is selling the house for a higher price than the mortgage. In this case, you, as the buyer will have to finance the additional sum either by taking a loan or paying in full. The lender may have different terms for the additional loan due to the current market conditions and your credit rating.

Moving on to the second method owner financing is dependent on two factors – that the buyer cannot obtain a mortgage loan and the owner is keen to sell the house as quickly as possible, however, it is probably a shrewd move for the buyer to investigate the reason for the hurried sale of the house.

This agreement includes the buyer paying monthly instalments to the seller of an agreed sum and often at a reduced rate compare to that of a traditional lender. There is no risk of loss to the seller if instalments are not made as the house itself stands as the security and should the buyer default the seller regains ownership of the home.

This method also gives benefits to both parties involved where the seller saves on capital gains tax and the buyer saves money on private mortgage insurance and other expensive lender fees.

When times are hard it is possible to draw upon other resources and methods for buying your house and avoid some of the heavy and costly load it brings. Lenders are happy to help you in your quest to buy your first home but they are also happy to give your wallet a spring clean.

Make Your Mortgage Points Carve Your Financial Success

March 15, 2009 by  
Filed under On Your Mortgage

If you are a first time buyer making your first tentative footsteps into the murky world of mortgage loans, it really pays to do your homework and learn about how the process works. This involves finding out what you must do to get the best possible loan rate and how your points can make or break your financial future..

The term “points” in mortgage lender jargon simply means the amount of fees paid to the lender which is interpreted in a points system. The interest is lowered in conjunction with the amount of points you pay for.

The secret of a long-term reasonably low-cost payment plan involves making the highest initial payment that you can afford. If you have the money to pay upfront, you can see it as an investment for your future. Sure, there may be other needs to be met if you are buying your first home, but they can be met slowly and with time. Once you have secured your affordable mortgage plan, you can feel comfortable in the knowledge that you monthly wage will not be eaten up by monthly repayments.

There are varying types of points, some of which are worth more to in terms of lowering interest rates. There is usually a charge of one point for the initial loan fee with more points added for loans which have a smaller interest rate than the market rate at that time. By paying the lender a cash payment up front you will receive a lower interest rate. Look around using newspapers or the internet to find out the current interest rate in conjunction with points.

In simple terms one point equates to one per cent of the loan so if you are borrowing 80,000, one point would equal $800. By paying more points you will reduce the overall interest.

There are other factors involved in the usefulness of you paying the points, such as how long you will be staying in the house. If you intend to live there for many years, you will reap the benefits of your initially paid points. Over five years is usually a good estimate for getting returns on your initial investment. If you do not intend to stay in the property for more than a couple of years, it might not affect you too much if you do not have the money to pay for points at the start.

You can ask your lender for an idea of roughly when the breaking even point would be. If you do have some extra cash at your disposal, putting it into the cost of you loan is a smart move and you will constantly be saving money throughout the term of your contract.

Make Mortgage Lenders Compete And Get The Best For Your Money

March 14, 2009 by  
Filed under On Your Mortgage

Taking your first step on the property ladder should be a well researched and informed one. This step will pave your future finances whether it is easy payable monthly instalments and a great investment or a nightmare that is that is costing you deep in the pocket.

When approaching a mortgage lender remember that hey are only too happy to do business with you and will also be willing to negotiate. It is a good idea to inform them that you are comparing prices and will take the best offer, they not only expect this but appreciate your honesty so they can strike up a potential deal.

Every little saving helps so if you can create a kind of bargaining situation you could end up with a very nice rate. The mortgage lender might be prepared to knock that tiny bit off the rate but it translates into huge savings over the years.

The more you know about the mortgage process the better deal you can obtain helping you save money. Learn everything there is to know about the subject and show that you mean business. There are 2 main types of loan being the Government and Conventional loans. Read up on them and select the most appropriate loan for you.

You will need to be in possession of your credit report. It is worth bearing in mind that these report often contain errors which could potentially cost you more for your loan and even be rejected from getting the loan completely. Carefully check through the report for errors and have them corrected.

Prior to your meeting with the mortgage lender run through your plans for the next few years and how that will impact on your payments. How much can you realistically pay per month? Do you have a suitably and steady income to maintain the payments and can you afford the down payment? Another important aspect that will have to be answered as accurately as possible is whether you intend to stay in the house for the foreseeable future or if you intend to move within a few years. In this case you should be asking about the assumability of the loan.

Keep an eye on mortgage rates and their oscillations, the more you know about figures and trends the more educated a choice you can make, resources for tracking rates include the Treasury Market. Some lenders may be offering seemingly better rates than others but may be more costly in other ways such as additional fees. Keep every variable in mind and test the waters, it doesn’t hurt to let a lender know about a fellow lender’s rates to let the haggling commence.

Once you have decided on a particular lender and are happy with all of the factors involved, request a temporary contract stating the agreed upon rates to guard against any changes being made due to increased interest rates. That is not to say all lenders will try to cooperate and keep the verbal agreement, however, it can pay to err on the side of caution.

Taking on a mortgage should not be entered lightly, there are many aspect that need prior examination. so that you come out with the optimum mortgage and give you the best possible start in life.

You Really Can Save Money On Your Mortgage By Paying More

March 13, 2009 by  
Filed under On Your Mortgage

Mortgage payments are a bind, there is no getting away from it. It is fantastic to own your home but the interest on a standard mortgage is frightening and means paying thousands of dollars more than the initial loan..

Why? Because mortgages would simply not exist if the lender did not receive the additional interest, no one is going to lend in excess of $100,000 free of charge. So, is there really a way to reduce the interest and pay off the mortgage years earlier, also saving on private mortgage insurance? Yes, and it goes something like this.

Firstly, a little planning and frugality have to be applied, the rest is plain sailing.
The mortgage requires to be paid faster meaning higher payments per month to reduce the overall interest being paid. One method that is being practiced by many is known as the bi-weekly mortgage payment scheme. It is ridiculously simple where the mortgage is paid for twice in one month.

If you have an initial loan of $80,000 on your house over 30 years with a 7% interest rate and pay the mortgage twice per month you will cut the interest payments by $25,000 and clear the debt years earlier. The saving increases exponentially, the higher the loan the bigger the savings. A shorter mortgage term will equate to the same amounts of savings, however this is more difficult to qualify for initially.

You are actually just paying one additional mortgage payment per year with the funds paying for the principal sum as opposed to the interest.

Firstly, you can speak to your lender and find out the terms and conditions of your contract. Look out for any penalties for paying your loan early, although it may still be financially viable. You can use a specially adapted calculator to find out how much you would need to pay and how soon the loan could be paid off.

Failing that, you can approach an appropriate company to set up the payment plan. There is usually a fee of a few hundred dollars or a charge for each extra payment made. Many financial organizations are only too happy to help those wishing to pay their mortgage faster and save money, it is simply a matter of taking the first step and finding out your options.

You might be wondering how on earth you will be able to come up with this amount. As stated a little budgeting on all household costs should start to see a marked increase on extra spending money. Shop at discount stores and look for special offers and two for one when food shopping, you will be laughing all the way to the bank when you start to rake in the savings.

Re-Financing Your Home-Cost-Effective Or Money Down The Drain?

March 12, 2009 by  
Filed under On Your Mortgage

Debts are becoming a sore point for many householders who just cannot find the extra cash to pay the mortgage. Maybe you are in this dilemma and are looking to find a way out. Refinancing your mortgage is an option many turn to but is it the right one?

Refinancing your home enables you to comfortably pay your monthly mortgage payments and essentially free up some of the capital of the worth of your home. However, with this additional loan and the interest which accompanies it, you are shelling out for a whole new set of interest fees. This means that you have to be sure to find a loan with a very minimal interest rate,

There are a variety of mortgages and some lend itself to the necessity of refinancing more than others. Such a mortgage is the ARM mortgage or adjustable rate mortgage with interest rates that rise on a consistent basis. Refinancing on this plan can allow you to begin a fixed rate and avoid increasing payments. Those with a fixed rate already in place can also refinance providing a lower rate of interest is attained.

It is not, however, a smart idea to extend the mortgage solely for the purpose of reducing monthly payments because in the long run, you will be paying excessively on interest.

If you are insistent on refinancing your home consider all the implications on the overall costs. Financial advice doesn’t come cheap and there are various fees involved n the process such as Private Mortgage Insurance and recording fees not to mention surveyor costs.

If you have other debts such as credit cards and overdrafts that are incurring high interest charges and fees eating up your available cash and cannot save money to pay for them, you may wish to apply for a loan known as the cash out financing agreement. This type of loan includes borrowing a higher amount you currently owe.

There are a few resources available online to calculate the viability of a refinancing loan taking all relevant factors into consideration, your lender may also allow you access to this resource.

If you intend to move home in the next five years, refinancing is probably not a viable option as you will take around this length of time to recover your costs.

Refinancing is a risky situation if there is a likelihood at some point, that you may not be able to repay your monthly payments. In this instance you may be at risk of foreclosure and lose your home. However, with the correct information and informed actions, you can release the stress and headache from your financial chaos and start living again.

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