Questions To Ask Yourself Before Getting A Mortgage

Easy Ways to Get a Good Mortgage Deal

First Published Date : July 26, 2009 ADawnJournal.com

Finding the right mortgage is something that is becoming increasingly important for property buyers in a world which is more unforgiving than it ever has been towards bad debtors. As far as getting the mortgage you want is concerned, it is vital to ask yourself some questions be sure that you are giving realistic answers. The most important questions are as follows:

 

– How much can I realistically afford to pay, per month, to my mortgage?

– How long can the amortization on the mortgage be – how much longer will I have the ability to make these payments?

– Do I have options if I lose my job/fall ill? Will insurance cover the payments, or can someone else meet them for me?

The above are the instant questions which require immediate answers before you can in all good conscience move forward with a mortgage application on a property. If, at any given time during the process, the answers do not line up for you, you will need to put your application on the back burner. As the questions above are sequenced, so your priorities must also be. Before anything else is taken into account, you have to be sure you can make the monthly payments. This requires sitting down, working out what you have coming in and going out every month, and seeing what you can save if you need to.

The above can be done manually, or equally it can easily be done online with one of the vast range of online mortgage calculators. These are generally extremely simple websites which have a series of boxes to fill in, allowing you to break down your income and expenditure. The more advanced online mortgage calculators will be attached to comparison sites which will take your details and show you which lender has the best mortgage for you. A few words of advice regarding their use, though – using one mortgage calculator and comparison site will leave you with one view on the matter, so it is better to use two or three to ensure that you are happy with the accuracy of the information. Additionally, be as honest and as realistic as you can with the figures you enter. Different lenders will give the best deals to different borrowers, and a lie or a miscalculation could set you back considerably.

One thing you should always keep in mind is that although the many online resources for mortgage borrowers can be extremely helpful, not all are 100% independent. It is more than possible to visit a website looking for mortgage advice and come away with the strong impression that a particular bank is by far and away the best one for your purposes. This may be true, or it may be a carefully created impression that was always going to emerge from any research carried out on that website. Companies are not beyond putting up sites that have no visible connection to them, in order to support their positions. The best way to avoid falling victim to this is by using a range of sites.

Avoid Making Your Mortgage A Wasteful Borrowing

Do Not Take Out The First Decent Loan You Are Offered

First Published Date : August 26, 2009 ADawnJournal.com

The fact that it is nigh-on impossible for most people to buy a house without borrowing at least some of the cost these days has hardened some of us to the question of debt. It would not be wrong to say that a large amount of the consumer debt which is strangling companies and individuals right now is a result of people saying “Well, we are all in debt these days anyway – what harm will it do to add a little bit more?”. We have become hardened to debt – and even those of us who seek to avoid debt altogether are conscious that this has happened. Just for clarification, becoming hardened to debt does not mean ignoring it altogether. Rather, it means that we accept it will exist and we try to live the best way we can while recognising the fact.

One consequence of becoming hardened to debt as a society is that there has been a certain amount of slippage where wastefulness is concerned. Being ready to accept debt – as we all must be, eventually – should not mean being wasteful. If we are debt conscious, we can minimise the damage done to our finances by debt. If we are wasteful, we run the risk of doing something which is essentially the equivalent of accepting that there will always be a little bit of mess in our house, and inviting a family of horses to live in our kitchen in recognition of the fact. Yes, you can live with debt. No, you cannot live indefinitely with several debts getting in the way of everything you do and making a mess of things.

It doesn’t even need to be the case that you regularly miss loan payments for you to qualify as wasteful – although the amount of extra cash you will need to pay to make up for that certainly qualifies. Another wasteful thing to do as regards credit accounts is to take out the first decent loan you are offered without doing a little bit of shopping around first. There are so many banks out there who offer mortgages, and other institutions besides who will loan money for the purpose of buying a house. Even when people take into account that the bank will own a stake in the house for the duration of the loan account, they are often still all too happy to settle for a “decent” mortgage, when a little bit of time spent researching would have freed them up to the tune of hundreds of dollars per month.

Being wasteful costs us a lot of money when we are young, and some people never really learn the lesson. Sure, it’s fun to let go every so often, but that’s what ball games, clubs and friends are for. A mortgage shouldn’t be a case of “yeah, this will do!”. It needs to be a matter of “yes, this is the right one”. You’ll be paying it off for a quarter of a century or more, most likely, so it requires some attention.

What Is A Mortgage?

Mortgage 101: Tips

First Published: June 24, 2009 ADawnJournal.com

You would be surprised indeed to know that a great many people do not really know what a mortgage is. If you are one of those people, don’t feel too bad about it. You’re in good company, and quite numerous company at that. For one reason or another, in early years we don’t learn that much about private finance. In school we’re busy learning reading, writing and arithmetic, then sciences, languages, history and so forth. Then it’s off to college where we specialize  in whatever we were really good at when we were at high school. After college we’re more concerned about finding a job than anything else, so by the time we get to actually dealing with buying a house we’re into our twenties and heading rapidly for our thirties.

It is therefore entirely possible to get to a certain stage in your life and all of a sudden realize that these “mortgages” of which so many of your contemporaries speak are actually an entirely foreign topic to you. You know they have something to do with houses and money, and you can probably assume that they are involved in making available the money to buy a house, but there is a whole lot more involved. Although you may well be fully aware that there is a lot more to mortgages than that, it may not be immediately clear to you what that “more” constitutes. Here are some of the basic, yet important, facts and details about mortgages.

· A mortgage is a loan taken out with the express purpose of buying real estate (see? The money-house thing was right.)

· The loan is usually paid back over a term of twenty five + years. Government plans and guidelines hint that they would prefer to make the maximum term somewhat shorter.

· Given the large amounts of money lent in a mortgage, and the extensive period of time over which they are paid back, the bank asks for security on the loan. This is almost always taken in the form of the property the mortgage is taken out to buy.

· As the above suggests, failure to maintain payments on a mortgage will possibly result in the bank taking ownership of the house via a “repossession” or foreclosure.

· The banks are then required to make the house ready for sale and take care of the sale themselves at a reduced price – therefore they prefer to look for a way of agreeing a reduced payment until the customer can pay the full amount.

At the end of the mortgage period, congratulations! You are the owner of the house you bought all those years ago. Prior to that it is part-owned between yourself and the bank, but as long as you choose a mortgage on which you can realistically keep up with payments there is no reason why you need worry. Common sense plays a huge part in picking the right mortgage, and as long as you apply your brain when choosing you should stand a good chance of keeping ahead of the game. Just make sure you have a fall-back if times get tough.

Joint Mortgages – The Positives And The Pitfalls

What Is A Joint Mortgage?

First Published: July 2, 2009 ADawnJournal.com

Taking out a mortgage is an almost indispensable part of buying a house for many individuals. Those of us who have been party to a windfall via inheritance, as a prize or a bonus may be able to pay directly by cash to own the house we want. The rest of us will need, as most people do, to find a mortgage that suits our needs and our means.

Mortgage borrowing is quite unlike any other kind of borrowing. The amounts are higher than any typical loan or credit line, and consequently the term of the loan will usually be longer. As the term is longer, this means the scope for default is consequently larger. With the larger scope for defaulting on a mortgage comes the need for banks to cover themselves before lending. The outcome of this is that if you cannot meet mortgage payments, your home is at risk.

With the higher level of commitment and its knock-on effect on just about everything you could possibly think of, the amount of thinking that needs to go into taking out a mortgage naturally will increase. Although all you really want is to buy a house, you need to stop and think about what the best way of going about things will be. Can you afford to take a mortgage that will secure you the house you really want? How sure are you that the payments you can make today will be affordable five years from now, or ten years, or twenty? If borrowing to buy a house will really over-stretch you, you may need to take a different angle.

The angle that people will traditionally take – if they find that their borrowing ability is not conducive to buying a house alone – is to look at taking a joint mortgage with someone else. If the house purchase is part of a couple, married or otherwise, trying to set up home together, then there may be an obvious situation. In some couples, though, only one is gainfully employed and eligible to get a good mortgage deal. In others, it may be that one of the partners has poor credit history, which will lead any lending institution to either decline the application or at the very least put restrictive terms on it.

Some people will choose to co-sign for a mortgage with a parent or other older relative. In these cases, assuming that the elder party is “young enough”, there is a lot of scope for a good deal. However, it is important to realize that although a joint mortgage brings in two different incomes, two different histories and two different brains, it also encompasses two different personalities – and if at any point those two personalities start to clash, there will be problems in the operation of the account that could make an individual look like the most secure borrower of all. If borrowing as joint mortgage account holders it is important to take account of this, and make sure the loan is flexible.

Why Different People Qualify For Different Mortgage Lending Rates?

Special Mortgage Rates, Special Terms and Conditions

First Published: September 28, 2009 ADawnJournal.com

In an ideal world, everyone would have an absolutely equal share of money, opportunity and health, and what they would have would be adequate to live on comfortably. However, the world is not ideal, and through one reason or another some people find themselves having to be satisfied with what they have. In order to equalise things somewhat, there has to be a range of different options which can be applied in situations that require them. What this means in practice is that individuals will be treated differently according to their situation – with the proviso that it must be sustainable. This is why we see different people qualifying for different rates in terms of mortgage lending.

To take a hypothetical situation, an individual – let’s call him Mr. X – may have been living happily for many years in a comfortable job which entitled him to a carefree life, with a credit card bill which he paid in full every month allowing him to avoid interest fees. Suddenly, one day, a company moved into his area doing the same thing that his company was doing, but for a considerable amount less, and business migrated to the newer company. Mr. X found himself earning less commission, and was unable to keep up payments on his credit card, forcing him into a situation where his credit record was less positive than it would have been three years prior. Three years ago he qualified for an excellent mortgage interest rate. Now, he has to accept a higher rate.

This is clearly far from an ideal situation. Through no real fault of his own, Mr. X finds himself in a negative position. Is his bank wrong to approach things this way? From a business point of view, the answer is “no”. His situation created a position whereby he was considered to be more of a credit risk. Banks need to judge risk based on the facts that they have available to them, and quantifiable data. Although Mr X was generally a good payer, he has found himself in the same position as other people who may have been less responsible with credit payments. If the bank were to make an exception for him, though, they would have to do it in other situations and their margin would be reduced.

The price we pay for having a system of credit and borrowing in our economy is that it will sometimes “unfairly” penalise people who have conducted their accounts generally rather well. This system may be imperfect, but as we mentioned at the start of the article, this is not an ideal world. In order to make the best of your situation, particularly if you are one of the many people whose credit record has suffered from circumstances beyond your control, it becomes all the more necessary to look at ways of getting the best deal. This entails shopping around, saving for a deposit and in some cases waiting for your continued efforts to make payments to your credit accounts to be reflected in your credit score. And in the meantime, realize that positive behaviour is, eventually, rewarded.