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The Basics of What Mortgages Are and Their Various Features

01-Mar-10

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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Knowing More About Secured Loans and Its Potential Dangers to Avoid

01-Mar-10

Secured loans maybe easier and faster to obtain than many other loans, but there are a number of potential dangers with getting secured loans. If you are in need of a loan, but are unsure if a secured loan is the right way to go, then this article can help you. Knowing more about secured loans and their dangers will help you to decide if secured loans are the sensible option.

What are secured loans?

Secured loans are loans that are granted because you put up some form of security behind the credit, usually in the form of your house. Amounts usually range from between ?3000 and ?50000, and repayment terms range from 3 to 25 years. The amount that you can borrow and the interest you pay will depend on how much equity you have in your property, which is the amount you have already paid towards your property?s value.

Are there any advantages?

There are many advantages to secured loans. One such advantage is that you can have the loan approved much more easily than other loans, especially if you have poor credit. This is because you are providing the lender with security in the form of your property should you not be able to make repayments. Secured loans also allow you to borrow more money over a longer period of time than you would be able to do with unsecured personal loans. If you know that you can make the repayments, then a secured loan will give you more favorable terms, which is always the aim when taking out any form of credit.

So what are the problems?

Despite their advantages, there are also many dangers with secured loans, most notably the danger of losing your home. If you cannot repay the loan, then the lender can recover the loan amount through the sale of your property. Although you may be able to make the repayments right now, if you become unemployed or your income decreases, then you may end up with serious financial problems. If you can, it may be better to get an unsecured loan, credit card or remortgage than to secure credit against your property. Financially overstretching yourself will lead problems, so it is important that you think carefully before taking out a secured loan.

Are they worth it?

Knowing whether or not you should get a secured loan really depends upon your situation. Secured loans are most suitable for debt consolidation or for making home improvements. They are also the best source of finance for people with poor credit. However, in most cases secured loans should only be used as a last resort, and other types of loans should be reviewed first to see if they could meet your needs. Whatever your situation, you should think carefully about your ability to repay the loan. If you do this, then using a secured loan will be much less problematic and will give you the credit that you need.

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Getting Top Priority for Your Invoices

10-Feb-10

Everyone is having trouble getting paid on time in this economy. If you’re a small business owner or a solo entrepreneur, you need to know the strategies that get your customers to make your invoices a top priority. It’s especially important to keep track of delinquent payments during this recession as they can be a signal that worse behavior is yet to come. Take a tip from banks that know how to give out business loans and get paid back on time, and document all the terms of payment in your contracts and invoices thoroughly.

Due Dates

Always let your customers know when they are expected to pay their bill. Some contractors try to reduce the risk of non-payment by spreading out a project into three payments. One is collected upfront to start the work, another is collected midway, and the final one is collected when the project is completed. This can work for companies with a great deal of prestige and social currency, but a small business owner may need offer different payment terms.

Typically, you can ask for payment at the end of a project or within a certain period after invoicing, 30 days maximum. Banks offer credit payments on a 30-day cycle, but you might want to make 15 days. Whatever you choose, be sure to spell out the terms of payment in the contract and in the invoice so that you know exactly when payment is due and when it is late.

Late Penalties and Fees

Next, you should put language in the contract describing the penalties and fees for non-payment. Just like banks might give you a $30-$40 late fee on a bill, or a late charge based on the percentage of the total bill due, you can do the same thing. By adding specific language into contract and the invoice, you will know when to start adding penalties and fees. When buyers become aware that they are penalized for late payments, they try to give your bill priority against those that do not have such language in their contracts, and thus aren’t subject to litigation for more monies. Be clear, and know what you want should a customer start to default on payments and convey that to the customer as best as you can for the best results.

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Your Financial Decision Can Affect Your Credit Score in Suprising Ways

25-Jan-10

Our financial decisions can affect your credit score in surprising ways. Two credit-scoring simulators can help consumers understand the potential impact.

The Fair Isaac Corporation, which puts out the industry-standard FICO scores, offers the myFICO simulator. A consumer with a score of 707 (considered good) and three credit cards would be likely to add or lose points from his score by making various financial moves. Following are some examples:

- By making timely payments on all his accounts over the next month or by paying off a third of the balance on his cards, he could add as many as 20 points.

- By failing to make this month’s payments on his loans, he could lose 75 to 125 points.

- By using all of the credit available on his three credit cards, he could lose 20 to 70 points.

- By getting a fourth card, depending on the status of his other debts, he could add or lose up to 10 points.

- By consolidating his credit card debt into a new card, also depending on other debts, he could add or lose 15 points.

The other simulator, the What-If, comes from CreditXpert, which designs credit management tools and puts out its own, similar credit score. A consumer with a score of 727 points (also considered good) would be likely to have her score change in the following ways:

- Every time she simply applied for a loan, whether a credit card, home mortgage or auto loan, she would lose five points. (An active appetite for credit, credit experts note, is considered a bad sign. For one thing, taking on new loans may make borrowers less likely to repay their current debts.)

- By getting a mortgage, she would lose two points.

- By getting an auto loan or a new credit card (assuming that she already has several cards) she would lose three points.

- If her new credit card had a credit limit of $20,000 or more, she would lose four points, instead of three. (For every $10,000 added to the limit, the score drops a point.)

- By simultaneously getting a new mortgage, auto loan and credit card, she would lose seven or eight points.

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Debt Reduction Worksheets Will Reduce Your Debt Effectively, Your Time, Energy and Stress

25-Jan-10

Debt reduction worksheets don’t just work to reduce your debt effectively, they reduce the time, energy and stress on any debtor trying to figure out their finances, or any other money situation like tax forms that can be mired with legal-ease and other terminology that will just give you a headache.

If you’re into debt reduction (and what debtor isn’t?) you should consider downloading worksheets from the internet with user-friendly forms.

Debt reduction forms come from various sources, including BBB-recognized debt reduction counseling firms to advise you on debt with worksheets provided to base their reduction consultation upon. Other sources include reliable sites on the internet, where you’ll find very reasonably priced software that confidentially shows the debtor how to reduce debt.

How’s This For A Bestseller – Your Debt Reduction Made Simple

That may not be the exact title, but it could definitely apply to your debt reduction! You will find any number of books and manuals available online, that make it a fair bit easier on you to reduce your debt load through reduction methods that the author and their family may have used to reduce their own debt.

Often, a trusted professional in the debt reduction or finance area can provide you with exactly the worksheets and forms needed to figure out debt reduction when you’re ready to reduce that mountain of debt.

Your choices are many, with computer software resembling user-friendly Microsoft Excel types of worksheets and forms, to financial manuals and money saving books, or the personable guidance of debt reduction pros ready to help remove your debt.

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