Penny Cash asked:




Getting a foot on the first rung of the housing ladder is a priority for most young people, but these days getting a first mortgage is more challenging than ever. If you are thinking about taking those first tentative steps you will have more than a few questions that need answers. Hopefully this concise guide can point you in the right direction.

Type of Ownership
You may find that joining one of the council-run schemes in your area which offer shared ownership will make buying your first home easier. Another option is to club together with friends or to have your family help you. Remember to always consult a solicitor to get the details sorted out.

Getting a Mortgage
A first time buyer mortgage will require a deposit of at least five to ten per cent of your desired property’s value. For this reason, many first time buyers stick to homes which are of a lower value, such as flats or smaller terraced properties. You will need to approach your bank with details of your work situation and income. It is unlikely you will be offered a first mortgage at more than three times your annual salary. If all is well, your bank will give you a mortgage in principle, at which point you can start looking for your dream home.

Other expenses
Unfortunately, it isn’t just the cost of your deposit which you need to be prepared for. In addition, you will have to pay stamp duty (if required), surveyor fees, lender fees, land registry fees and your total moving costs.

Once you have settled into your new property, the process of applying for a first time buyer mortgage will be put behind you, meaning you can enjoy your new life in your brand new home.

Franklin

Tom Billmore asked:




Mortgage Life Insurance is a kind of insurance that gives the policy holder a risk cover for his mortgage repayments. This means in short that, were the policy holder to die during the term of the policy, and if the policy is in force, then all his unpaid balance towards the mortgage repayments will be paid by the insurance company.

It is to be noted that, at the time of taking out such a policy, in addition to the mortgage disability insurance, the risk cover offered by the insurance company must be equal to the entire balance amount in the mortgage. The annual premium payable towards this coverage will be computed on this outstanding balance. Besides, the policy term in the Mortgage Life Insurance must be the same as the period in the mortgage insurance, even though the mortgage disability insurance is still running. As the policy holder continues repayment, the balance in the mortgage loan also keeps on decreasing. Likewise, even the annual premiums are reduced in tandem.

Sometimes, Mortgage Life Insurance offers a rider that can be attached to the policy. A rider is simply an addition to the main policy, adding an extra insurance coverage at a premium that is much lower than what it would be, were it taken separately. The mortgage disability insurance is not a rider at all. One common rider that is offered is a critical illness rider. If you are to buy a separate policy for critical illness, you will have to pay out more as premium. But if you take it as a rider, the premium is somewhat less. If the policy holder is diagnosed with a critical or terminal illness, then the cost of the treatment, to the extent of the sum assured, is taken care of by the rider.

Of late, insurance companies have modified the terms in Mortgage Life Insurance and are now offering return of premiums paid if you outlive the policy term. In such cases, there is no reduction in the premium amount or in the sum assured. Even as your balance in the mortgage loan goes on reducing, your annual premium and the amount for which you are covered, remains the same.

Allen

Juling Gabas asked:




For most people, their biggest question when planning to calculate a mortgage is a mathematical mortgage formula . And the biggest reason for this is for these homebuyers to have an idea of what will be their monthly payments. But one thing they forget is how to qualify for a home loan. This formula can only give you a rough estimate or calculations of the basic possible monthly dues. So is the question of how much you can afford to borrow the real purpose you need a complex mathematical mortgage formula?

If you are really looking for the mathematical mortgage formula , then you need a good understanding of mathematics and equations. It is actually a complex set of equations before you can arrive at the solution. What you need is something more efficient and easy to understand for the layman. So when you are talking about mortgage formulas, you might as well use home loan calculators which are very easy to use. Most of the gadgets of calculator tables can easily be access through the internet and they are free to use.

It is not hard to find these calculators on the internet. Once you find one of these home loan calculators you can start putting your assumptions. Meaning all you need to do is trying different scenarios based o the figures you are qualified for. You can make assumptions of the interest rates and the amount of the property as well as the number of years you want to pay off the home loan. A lot of people who as many assumptions as they can to have a better idea of what is the best that will suit their budget and circumstances. It is very important to stay within what you really can afford otherwise you will find yourself in an awkward predicament if things go for the worst.

A very simple mathematical mortgage formula will require you to determine first what the current prevailing average mortgage rate is. What you can do is simply gather the lenders different rates, add all of them and the sum will be divided by the number of lenders rates. For instance, you inquired from three lenders and their rates are 3, 4, 5, add all these numbers which will be 12, then you divide it by three and comes to 4 percent. That means your average rate will be four percent. You can use your ordinary digital calculator at home especially when dealing with decimal points.

Then now you have to apply it the amount of property you are looking to purchase. For example you planning to purchase a 500,000 dollar house, this is how it will look like;
500,000 times 4 percent equals 20,000, and then you divide 20,000 by 12 months which would equal to 1,666.67 which will be your monthly payments. This is if you are doing it manually, but the best thing for you to do is to go online and search amongst the many mortgage calculators that can easily provide you with the answers.

A real mathematical mortgage formula is actually a complex type of formula and it will not be ideal for the ordinary people. It involves equations that are better left with the mathematicians. So the easiest way to do is to use mortgage calculators online which are a lot faster and easier to use. It would make your life a lot easier and will not be stress out calculating it manually. An online calculator will do the calculations for you.

Margaret

Gregory McTaggart asked:




If you’re purchasing a home or thinking about doing so, knowing what your lender is talking about can alleviate a lot of the stress. You may have heard something about an escrow account that needs to be set up, but you may not know exactly what it means and how they work for your home purchase.

An escrow account is a special account set up when you get a mortgage. The money, collected from you, will pay for your property taxes, homeowners insurance, or other charges related to the property. A third party is responsible for collecting, holding and disbursing the money. At closing, you have to begin paying into the account so there will be enough money to pay the taxes and insurance. The rest of the money will be collected with your mortgage payment and be deposited in the account on a monthly basis. Escrow accounts protect the lender by insuring that the taxes and insurance premiums will be paid on time.

The Real Estate Settlement Procedures Act has set limits on the amount that a lender can require you to put into the account. By law, the account should not have more than one-sixth of your total insurance and tax bills. The lender reviews it every year to determine if there is a shortage or excess.

FYI

Ø Check your mortgage statement each month to determine if you’re paying too much into the escrow. Don’t hesitate to contact your lender about it.
Ø If your down payment is at least 20%, you may not be required to set up an escrow account. Likewise, when you have paid off at least 20% of your mortgage, you may be able to eliminate the escrow and pay your taxes and insurance on your own.
Ø If your have an FHA or VA loan, an escrow account is required.

It’s a good idea to verify if your taxes and insurance have been paid on time by contacting your lender. As a consumer, you have the right to review your escrow account at any time.

Kathryn

Lee Van asked:




You may be familiar with a plan-vanilla mortgage, so what’s a second mortgage? It’s simply another mortgage on your home – a loan secured against the property. The term “second” indicates that the loan does not have priority on your home in case you default. Instead, your first mortgage has priority and would be paid before any funds go towards the second mortgage.

Whether you need some extra cash to pay off some credit card debts, or to make some home improvements, home equity lines of credit or second mortgages can be great ways to get started.
A lot of people cannot come out on their wages and find that the money is gone before the month or fortnight has. They live from one pay day to another. The last few days before being paid are the worst. There is no more money to survive and they look around where they can borrow a little cash just to tide them over until the day they get paid.

A number of money lending agencies have jumped on to the band wagon and started lending very small loans over a very short period of time. The duration of the loans are from one day of payment to the next, this is how these loans got their name, payday loans.
This sounds as though it would be the ideal solution for the people who cannot get through the month with their wages. The problem is the lending agencies are too greedy. Instead of being satisfied with nominal loaning fees they are charging unrealistic fees. In fact the fees they charge have been known to go up to over eight hundred percent of the loan. It is ridiculous that this is allowed to happen. There should be laws against such practices.

The borrowers are not aware of what they are letting themselves in for. They borrow a small loan with full intention of paying it back on the next day they receive their wages, but now that the interest or loan fee is added the amount might just be too much to come out of the budget all at once. If the loan cannot be paid the correct day, it has to roll over for the following time the borrower receives his wages. Each time the loan rolls over the same amount of interest is added for the extension period. This amount just increases every time the loan rolls over.

Courtney