Mortgage Project

Stepping onto the property ladder and buying a home for the first time can seem like a really daunting prospect. You need to get the decision right because getting a mortgage is perhaps the biggest financial commitment you will ever make. Despite this, many people get a mortgage without really knowing a lot about the process. It pays to be clued up before stepping onto the property ladder. If you know about the mortgage buying process then you will get a better deal and find the right home for you.

The costs of a mortgage

Obviously the biggest cost of the mortgage is the lump sum that you want to borrow and the interest on top of this. However, there are many other charges that you need to think about when getting a mortgage. Arranging the mortgage will usually cost a few hundred pounds, as will legal fees. You also need to think about survey costs, land registry costs and stamp duty. There is also the amount of down payment you are going to make, all of which can add up to making the initial process of getting a mortgage expensive. Make sure that you have all of these funds in place before proceeding. You should be financially stable before even thinking about getting a mortgage.

Finding a lender

Once you have worked out the costs of getting a mortgage, you need to find the right lender for your needs. Shopping around to find the best deal is important, and looking at both online lenders and your local high street banks and mortgage providers is a good idea. You should look at lenders before you go house hunting, as you will have a better idea of how much you can afford to borrow and how much you will the lender will give you. That way you will have a budget to stick to when looking at properties. Some lenders will offer you a pre-approved amount, which can help to speed up the house buying process.

Finding a property

Once you have looked at lenders you should find a property that meets your needs and falls within your budget. Once you have done this you can get a survey done and exchange contracts.

Things to look out for

If you are new to mortgages, then there are a number of things you need to look out for. Most importantly, do not borrow more than you can afford. Although you may have seen the perfect house, that house will be taken away from you if you cannot meet the repayments. Do not be pressured into borrowing more than you can afford either. Remember that the lender can recover their money through repossession and know that lenders will get into other debts rather than default on their mortgage. Work out a strict budget and do not go over that amount. Also make sure that the mortgage terms you get are fair and that there are no hidden costs or services that you don’t need, like credit insurance.

Know the terms

The last key to finding a good first mortgage is to know the terms involved in the mortgage process. If you know what to look out for and the things that you really need, then you can get a mortgage that will suit your needs and not cost you too much money. All you have to do now is find the right house for your budget.

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In the last few years reverse mortgages have been growing in popularity among the elderly. While there are numerous advantages associated with reverse mortgages there are also disadvantages as well. Before you take out a reverse mortgage, be sure you have the whole story.

First, understand what is involved in a reverse mortgage. Basically, this type of mortgage allows you to transfer a portion of your equity into cash without the need to take on an additional monthly bill, as is the case with a regular home equity loan, or sell your home. With a reverse home mortgage, unlike a regular mortgage, you receive money for the equity in your home and are not obligated to pay it back until you are no longer living in your home. It should be understood that the money will need to be paid back; either when you sell your home, move to another principal residence or die. In the event that you have a lot of equity in your home but you’re having difficulty meeting your monthly financial obligations, this can be a good option. Other advantages include the fact that the money you receive from the reverse mortgage is typically tax-free because it will have to be repaid. In addition, depending on which lender you choose, there are typically no income restrictions.

There are regulations in order to qualify for a reverse mortgage. You must be at least 62 years of age and live in the home as your principal residence.

There are three basic types of reverse mortgages. These mortgages are single-purpose reverse mortgages, federally-insured reverse mortgages that are also known as Home Equity Conversion Mortgages or HECMs and proprietary reverse mortgages.

Single purpose reverse mortgages are offered by state and local government agencies as well as some non-profit organizations. One of the major advantages to this type of reverse mortgage is that it will not generally have high costs. Unfortunately, their availability is limited depending on where you live. In addition, there may be regulations specified by the lender regarding what you can use the proceeds of the loan for. The most common purposes include property taxes and home repairs and improvements. This type of loan may also have income restrictions; meaning you can’t make more than a certain amount of money in order to qualify.

A HECM will generally have higher cost than a single purpose mortgage and those costs are usually up front. On the flip side, they are more widely available and typically do not have income requirements. In addition, there are no purpose limitations. Because HECMs are backed by HUD you will be required to meet with a counselor from a housing counseling agency who will explain all the details regarding the loan to you. The amount of money you can borrow using a HECM will depend on your age, the value of your home, where you live and current interest rates. This type of loan can be quite flexible; providing options such as a line of credit as well as fixed monthly payments.

Because proprietary reverse mortgages are backed by private loan companies, the options with this type of loan can vary. Usually this type of loan will have a higher cost than a HECM.

Joe Kenny writes for the UK Loans Store where you will find information and reviews of the latest loans and offer more information on personal loans and other loan topics available on site.

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Are you feeling overwhelmed with the sheer number of different types of mortgage loans? Not sure which one will work best for your situation and needs? Read on for tips to help you compare the advantages and disadvantages to the most common types of mortgage loans.

First, it is important to understand the difference between a variable or adjustable interest rate mortgage and a fixed rate mortgage. With a fixed rate mortgage you gain the advantage of monthly mortgage payments that do not change; however, your interest rate may be slightly higher than what is offered with an ARM. With an adjustable rate mortgage while you will typically have a lower introductory interest rate, that rate may fluctuate over the duration of your loan. This can mean your monthly mortgage payments may become higher or lower, depending on whether interest rates are raised or lowered.

Beyond adjustable rate mortgages and fixed rate mortgages you also have other options in terms of how long you finance your home. The most common terms are 15, 25, 30, 40 and now even 50 year mortgages in some areas. Keep in mind the longer you finance your mortgage the less your payments will be per month but the more you will pay in interest over the duration of the loan.

There are also special types of loans offered which may offer certain advantages. These types of mortgages include FHA and VA home loans. A FHA home loan is often attractive to first time home buyers because it allows the purchase of a home with a lower down payment, in some cases as low as 3%. There are certain qualification regulations in order to be approved for a FHA home loan; however. You must have good credit history and enough income to cover the loan and your other financial obligations. Typically, all of your housing costs each month, including house note, property taxes and insurance cannot exceed 29% of your gross monthly income. In addition, your housing costs plus your other monthly long-term debt should not exceed 41% of your gross monthly income.

VA loans are made available to veterans of the U.S. armed services for the purchase of homes. With this type of loan you can purchase a single family home, condo, new construction or even a manufactured home. You should be aware that you’ll usually need to pay a 2% fee when the loan is closed. One of the best advantages to this type of loan is that 100% financing is available. In addition, you don’t have to worry about private mortgage insurance, which is required in certain cases when you are financing more than 80% of the home’s value. You may also be able to take advantage of a competitive interest rate.

Other options include balloon mortgages and hybrid mortgages. With a balloon mortgage you may be able to lower your monthly payments by agreeing to pay a portion of the mortgage in a lump sum at the end of the mortgage. The disadvantage to this is that you will have to come up with the money or try to extend the loan; which may or may not be available.

With a hybrid loan you can sometimes take advantage of a lower interest rate in the beginning of your mortgage, perhaps for three to five years, when you may be struggling more to make the payments. After this time period has passed, the interest rate will rise and you will be responsible for a higher monthly mortgage.

Joseph Kenny writes for the Loans Store who can offer cheap loans to UK residents and secured loans if you have a poor credit history.
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