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| Home Mortgage Makes Dreams Come True. By: Kostas Lagopodis |
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Getting a house of your own is a lifetime achievement and home mortgage helps you in achieving this milestone much earlier than it would otherwise have been possible. In fact, the first home mortgage is also filled with a lot of emotion. Home mortgage is really something that makes dreams come true. So let's start with understanding what a home mortgage actually is? Home mortgage is something that allows you to buy a house even if you don't have enough money to pay for it right away. This is made possible by borrowing money from someone and paying it back in monthly installments. The person who lends you money is called the home mortgage lender. The home mortgage lender lends you money for a specific period of time (up to 30 years) during which you are expected to pay back the money in monthly installments. There are certain terms and conditions associated with the home mortgage agreement and these terms and conditions govern the home mortgage throughout its tenure. Among others, the most important thing is the interest rate that the home mortgage lender charges you. Interest charges are the means through which the mortgage lenders earns on this financial transaction called home mortgage. Most home mortgage lenders offer various home mortgage schemes/options. The most important variation in these schemes is in terms of the interest rate and the calculations related to it. In fact, most home mortgage options are named after the type of interest rate used for that option. Broadly speaking, there are 2 types of home mortgage interest rates — FRM (fixed rate mortgage) and ARM (adjustable rate mortgage). For FRM, the interest rate is fixed for the entire tenure of the home mortgage loan. For ARM, as the name suggests, the home mortgage rate changes or adjusts throughout the tenure of the home mortgage. This change or adjustment of mortgage rates is based on a pre-selected financial index like treasury security (and also on the terms and conditions agreed between you and the mortgage lender). That is how mortgage works. No matter what type of home mortgage you go for, you always need to pay back the entire home mortgage loan (with interest) to the mortgage lender, failing which the mortgage lender can stake claim to your home and even auction it off to recover the dues. So, home mortgage is a wonderful means of getting into your dream home much earlier in your life. Without this concept, you would have to wait for a long time for getting into that dream home. Really, home mortgage is one of the best concepts from the world of finance. |
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About the Author: For more information and tips about Real estate investing please visit our web site: www.3arealestate.com |
Read More Articles at GiveMeArticles.com. |
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Important Questions To Ask When Considering A House Refinance By Terry Edwards |
Are you thinking of a house refinance? You are certainly not alone as millions of Americans have been refinancing their home mortgages for the past few years. But, before you begin searching for a lender to refinance your home here are 4 important questions to answer before making your decision. 1. What is your current mortgage interest rate? Obviously, you'll want to know what the current interest rate is that you are paying on your mortgage. If you are unsure of what it is, it may be included on your monthly statement. You can also get in touch with your lender to find out. 2. What will the new house refinance interest rate be and for how long? With the way that interest rates are fluctuating every month it's important to keep your eye on current trends to lock in the lowest rate possible. On a house refinance it is always a good idea to shorten the loan period if at all possible. A lower interest rate can mean the possibility of you being able to make the same payment amount that you currently are making, for a shorter period of time. This makes great financial sense. 3. What will the total home refinance costs be? Every bank and lender will have varying costs with any type of loan program. Other fees such as an appraisal fee can often vary as well. By asking and understanding what these fees will be is important in making sure you are getting the best deal. Keep in mind that if you end up paying far too much in house refinancing fees you may not be able to justify refinancing at all. 4. How long will you be living in your home? While that may seem like an odd question to ask, it's an important one for good reasons. Because of the fees and costs of refinancing, you need to be living in your home for a few years to recoup them. If you move out of your house within a couple of years then it would not make financial sense to refinance. By knowing the answers to these four questions you can be on your way to refinancing your house and saving a substantial amount of money in most cases. If it seems overwhelming at first don't worry. You can find all the information you need right online. There are numerous websites from various lenders that will help you in calculating your loan and helping you go through the entire house refinance process. All Rights Reserved Worldwide. Reprint Rights: This article may be freely reprinted or distributed in its entirety in any ezine, newsletter, blog or website as long as the author's name and all website links remain intact and be included with every reproduction. You can find out more about House Refinance as well as much more information on everything to do with home and mortgage refinancing at http://www.HomeRefinancingA-Z.com Article Source: http://EzineArticles.com/?expert=Terry_Edwards |
| Fixed
Rate Mortgages: Back To Basics By: Bill Wehr |
| In many sections of the country the home purchase market has slowed down. Prices of homes for sale seemed to go through the roof. Mortgage interest rates, while still low historically, are up from last year. During this volatile time the homebuyer can choose from a number of options. Fixed rate mortgages give the purchaser of a home a secure way to finance that home. Fixed rate mortgages allow for a more certain base from which to budget house payments for the future. Recently, much activity in home purchase loans has been in the category of conventional adjustable rate loans. Adjustable rate loans offer some really attractive features. One is a lower entry rate generally than a fixed rate mortgage. There is a designated period of time when the buyer is paying that lower rate. The risk element is that the payment more than likely go up when it starts adjusting. This could really disrupt your budget, since your property taxes and homeowners insurance will be going up also over a period of time. But, the amount of increases could be minimal. The money you save by getting that lower rate up front could result in some real savings. So the real benefit is getting into the house with lower payments thereby affording the new payments. Another popular way of getting into a home has been the interest only payment option. This can either be calculated on a fixed rate or adjustable rate mortgage. On the fixed rate mortgage program this interest only feature can last for as long as ten years. Then the mortgage payments are recast. If originally the loan was to amortize for thirty years it has to be paid off by the end of the thirty years. The way this happens is that the loan is recast so that the last twenty years of it includes enough to payoff the interest plus that entire deferred principal. This can result in a substantial increase in payments. On the adjustable rate mortgage the interest only option is in effect during the time the loan is in the fixed period time frame. As an example, if you have a 3-year, 5 year or 7-year period of time before your loan becomes an adjustable, the interest only portion covers that phase. When your loan starts adjusting, the deferred principal will be included in the new payments. As in the prior example: if the rates have gone up you will have higher payments. A variation of these prior themes is the potential negative amortization ARM. This offers a low start rate. The payment is fixed for a certain period usually a year. The interest rate though is not set with the payment. Usually the interest rate adjusts monthly. Therefore, the payment may not be enough to meet the necessary amount to amortize the loan over the 30-year period. If the payment is not enough to amortize the loan as the months go on, then the shortage is placed against the mortgage balance. The lender will allow this to go on only for a definite period of time before there is a recasting of the payment to allow for complete amortization. Let's say your payments have been in a shortfall by the end of each year. At the end of the first five years the loan will be recast so that the loan can be paid off in the 30-year period. This will result in not only the possibility of higher interest rates, but you having to include the deficient balance in the payback resulting in even higher payments. Between the asking price of homes these days, the costs to get into one, and the projected payments it will take to keep that house up, one could have sticker shock. Initially, the fixed rate mortgage loan may seem less attractive than an adjustable rate mortgage because of the somewhat higher payment. The adjustable rate and interest only mortgages may very well be the way to go, particularly if you looking to move into the next home in several years. But in looking at the overall picture, if you are going to be in the home for an extended period of time, the fixed rate mortgage will be what you are looking to for stability resulting in long term affordability. |
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About the Author: Bill Wehr publishes mortgage articles at http://www.mortgagejourney.com. Bill has an MBA and is the owner of Great Pacific Northwest Mortgage http://www.billwehr.com serving Oregon and Washington. For loans please complete a secure on-line application at http://www.portlandoregonmortgages.com. |
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| Choosing
The Right Mortgage For You By: John Carle & Sharon Gregresh |
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As you'll see, each type of mortgage has slightly different features which appeal to a variety of different preferences. For example, some home buyers take comfort in knowing that the amount of their mortgage payments will be the same throughout the entire term of their mortgage. Other home buyers may be willing to accept some fluctuation in the amount of their mortgage payments in exchange for the potential long-term savings or the change to pay off their mortgage faster. The right mortgage for you in the one that best matches your overall comfort level and fits with your income and lifestyle. Conventional or High Ratio A conventional mortgage is a loan for no more than 75% of the appraised value or purchase price of the property, whichever is less. The remaining amount required for a purchase (25%) comes from your resources and is referred to as the down payment. If you have to borrow more than 75% of the money you need, you'll be applying for what is called a "High-Ratio Mortgage". Here's how it works: You must have at least a 5% down payment when you buy a home. Any down payment between 5% and 24% is considered a high-ratio mortgage, and the mortgage must be insured by the Canadian Mortgage and Housing Corporation (CMHC) or GE Capital Mortgage Insurance Company (GEMICO). The insurer will charge a fee for this insurance. The amount of the fee will depend on the amount you are borrowing and the percentage of your own down payment. Typical fees range from 0.5% to 3.75% of the value of your home. This amount can be paid up front or added to the principal amount of your mortgage. A Mortgage Specialist or Mortgage Broker can help you determine the exact amount of the fee. Fixed Rate or Variable Rate Mortgage When you take out a fixed-rate mortgage, your interest rate will never change throughout the entire term of your mortgage. As a result, you will always know exactly how much your mortgage payments will be and how much of your mortgage will be paid off at the end of your term. With a variable rate mortgage, your rate will be set in relation to the lending institution's Mortgage Prime Rate at the beginning of each month. In other words, it will vary from month to month. Historically, variable-rate mortgages have tended to cost less than fixed-rate mortgages when interest rates are fairly stable. When rates change, your payment amount remains the same. However, the amount that is applied toward interest and principal will change depending upon the interest rate that month. If interest rates drop, more of your mortgage payment is applied to the principal balance owing. The can help pay off your mortgage faster. However, if interest rates rise, more of your monthly payment is taken up by your interest payment. Short-term or Long-term The "term" is the length of the current mortgage agreement. A mortgage typically has a term of six months to 5 years. Usually, the shorter the term, the lower the interest rate. A "short-term" mortgage is usually for two years of less. A "long-term" mortgage is generally for three years or more. Short-term mortgages are appropriate for buyers who believe interest rates will drop at renewal time. Long-term mortgages are suitable when current rates are reasonable and borrowers want the security of budgeting for the future. The key to choosing between short and long term is to feel comfortable with your mortgage payments. After a term expires, the balance of the principal owing on the mortgage can be repaid, or a new mortgage agreement can be established at the then-current rates. Open or Closed Open mortgages can be paid off at any time without penalty and are usually negotiated for very short terms, They are suited to homeowners who are planning to sell in the near future or those who want the flexibility to make large, lump-sum payments before the end of the term. A
closed mortgage has a locked-in interest rate for the full term of the
mortgage. Most first-time home buyers prefer a closed mortgage because
they want to enjoy the comfort of steady, predictable mortgage payments.
If you want to re-negotiate your interest rate, or pay off the balance,
you will need to wait until the maturity date or pay a penalty. |
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About the Author: John Carle & Sharon Gregresh are Realtors with Royal LePage - ArTeam in St. Albert, AB. They pride themselves on providing more than just real estate sales and listings. Their clients benefit from a much larger spectrum or real estate services. Contact them any time at information@workingtogether.ca or through their website at www.workingtogether.ca. They can be reached by phone at (780) 458-5595 |
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