MINI ROW. asked:


I’ve been hearing a lot about the “benefits” of interest only mortgages, but I’m not 100% convinced that this is the way to go. They say that people should get interest only loans and put the remainder of what you would normally pay (on the mortgage) in some type of investment. Should you use your mortgage like this, or should you pay the mortgage off quickly???

shawn thomas asked:


If you are just about to buy a house, one of your most important decisions, almost as important as which home you buy, is what type of mortgage to take out. You basically have two choices; a fixed rate mortgage (FRM) or an adjustable rate mortgage (ARM) Choosing a mortgage that best fits your specific needs can potentially either save or cost you a great deal of money over the term of the mortgage.

Around 70% of homebuyers today choose a fixed rate mortgage, rather than an adjustable rate mortgage. A fixed rate mortgage is exactly what it sounds like. The interest rate on the loan doesn’t change, regardless of whether interest rates in general go up or down. An adjustable rate mortgage may go up or down, depending on the interest rate at the time. Your decision may be influenced by your overall financial situation, the present state of the economy and the cost of your house.

The overall amount that you end up paying for your home can be greatly influenced by even a small change in the interest rate. A lowering of the interest rate by just one point can mean that a homeowner with a 30 year mortgage can enjoy average savings of around $50,000 over the term of their mortgage. An increase in the interest rate of just one or two percent can mean monthly payments that are between $50 and $250 higher, depending on how much you paid for your home. Whether you are taking out a 15 or 30 year mortgage may also influence your decision to take out an adjustable rate or fixed rate mortgage.

The biggest benefit of a fixed rate mortgage is the peace of mind that comes with knowing that regardless of how bad the economy is the rate on your mortgage loan won’t increase; neither will your monthly payment amounts. In fact, the terms and conditions of a fixed rate mortgage are protected by law. A fixed rate mortgage is an ideal option for those buyers who just don’t want to take a risk, or consider themselves the cautious type when it comes to finances.

Another benefit of a fixed rate mortgage is that it makes it easier for the homeowner to budget the expense. Your mortgage payment is probably your single biggest expense and you always know exactly how much the monthly payment will be. Some buyers believe that this makes it a little bit easier to plan and budget for some of life’s other big expenses. Certain things like college funds and retirement for example. With a fixed rate mortgage, the amount of the monthly payment will only increase if there is an increase in the amount of insurance rates or property taxes.

A fixed rate mortgage is not affected by inflation or the cost of living. Supposing you have a monthly mortgage payment of $700; this amount will still be the same after five, ten, and twenty years have gone by. Even though everything else has increased in cost, your mortgage payment will stay the same. One way to offset this is to consider the possibilities in the future. Chances are you could have a more disposable income as time passes. You could be earning a higher salary, but still paying the same every month for your home.

If you prefer the safer option of the fixed rate mortgage, one solution would be to take out a fixed rate mortgage and then refinance your loan if and when interest rates are lowered. This approach keeps your options open. If interest rates go down sufficiently to justify the cost of refinancing, you can do just that; if rates stay where they are or go up you will be glad you have the fixed rate mortgage.  Some financial experts advise that it is only worth refinancing if the interest rate will be at least 2% lower than your current rate, although that decision entirely is up to you.

Another strategy that can be applied towards either a fixed rate or adjustable mortgage is to pay an extra amount each month towards the principal. By doing this regularly, you can potentially save a large amount in interest charges. It can also make the term of the mortgage shorter and you may be able to own your home sooner. Make sure that you specify that any extra amount that you pay is going towards the principal and not the interest. By doing this, if you have a fixed rate mortgage and the rate is not as low as it could be, you are getting ahead a little bit.

Ultimately the decision of whether to take a fixed rate mortgage or an adjustable rate mortgage is yours. Although several factors may influence your decision, one of the biggest questions to ask yourself is how much of a risk you want to take.

Aileene Woul asked:


Mortgage is the most widespread industry that offered to loan borrowers with real estate as collateral. Mortgage has so many innovations and opportunities that a loan borrower can exploit them for their own benefit. You must have heard and read it elsewhere that mortgage rates are at an all time low. That is true. With growing competition in the mortgage industry getting lowest rates for mortgage in UK is not that difficult.

Yes that is true, but how does one find lowest mortgage rates in UK. Many borrowers are practically clueless the criteria to decide on whether the mortgage rates are lowest or not. When you are looking for Lowest mortgage rates in UK, you will see that there is not any one single rate. There is a list of rates. And when you go to different loan lenders for rates, they will give to you several mortgage rates list, sometimes identical sometimes different. “What is going on”? – You think in your mind. Is there any thing as lowest mortgage rates in UK? Yes, there is.

You will come across this message everywhere – ‘go look around lowest mortgage rates’. Look around how? – nobody tells you that. It is like standing on the start line not knowing this way you have to run. Calling loan lenders and asking for lowest interest will be practically useless. Also calling for lowest mortgage rates at different days will give you different rates for mortgage rates are changing everyday.

Who is responsible for getting you lowest rate for your mortgage in UK? Economy? President? Government? Inflation? Discard all the high words! It is you and you are one of the most fundamental factor responsible for finding lowest interest rate on your mortgage. With mortgage borrowers absolutely flooding the market place, mortgage lenders are lowering the mortgage rates to attract more and more customers. How can one attract customers for mortgage? By offering lowest interest rates.

However, it is not that easy. Every homeowner wants lowest interest rates for its mortgage in UK. Lowest rates on mortgage in UK are subject to a borrower’s personal financial condition. Therefore, different mortgage borrowers will have different lowest rate for mortgage. One way to figure it out is to apply for mortgage quotes at different loan lenders. But are these quotes really consistent keeping in mind the fact that mortgage rates are continually changing. Most loan lenders will give you a correct quote for mortgage. A mortgage borrower looking for lowest rate should use APR to compare rates. APR will enable you to know true interest rates on mortgage including the interest, discounts, mortgage insurance and other related fees. This will enable you to get a true quote without any hidden fee which the lender might be concealing behind the lowest mortgage rate claim.

Prequalification is a way of discovering whether for mortgage will also enable you to know whether you are getting lowest interest rates or not. A lender will see your present current income, debt and basic credit history situation in order to qualify you for a maximum mortgage amount. When you find lowest interest rate for mortgage in UK, you can lock in your interest rate. A lock means the lender will lock in the lowest interest rate and points for a specific period of time that is usually the time during which the loan application is processed.

Lowest interest rates in UK are possible if you have good credit history. A good credit history has innumerable benefits in the loan market. Also lowest interest rates are possible adjustable rate mortgage. Adjustable interest rate mortgage in UK have interest rates lower than traditional mortgage. Also loan term of a mortgage should be lesser. A 15 year mortgage will mean lower rate of interest than a 30 year mortgage. A shorter loan term will always save money.

No other single factor has so much effect on your mortgage as mortgage rates. Getting a mortgage in UK at lowest rates will mean that you have agreed to all those who asked you to get the “best mortgage deal”. A little decrease in interest rates would mean big in terms of savings. There is loads of information available on internet to know how the market is currently fairing. Don’t settle for the first mortgage rate you stumble upon because they seem lowest. Go to different mortgage lenders. And then decide. Lowest rate for mortgage is not the only factor to look out while mortgaging for but it certainly is one of the deciding factors.

So while you are jumping frantically from one site to another in order to get lowest interest rate, you forget that it will need some patience and hard work. Like all good things it won’t come easily. Lowest rates for mortgage in UK won’t be served on a platter. No way. If you had enjoyed doing homework in school, looking for lowest interest rate won’t be a problem. Look around, study research, read and you will find mortgage rates not only lowest but surpassing your own mortgage rate arithmetic.

If finding the right loan was easy, Aileen Woul would not have been writing articles. Read her articles to take advantage of her expertise for your advantage.He works for mortgage web site cheapest mortgage uk.To find a cheapest mortgage,adverse credit mortgage,residential mortgage that best suits your need please visit http://www.cheapestmortgageuk.co.uk

Michael Challiner asked:


PR – This stands for Annual Percentage Rate. It enables you to compare the full cost of the mortgage. Rather than just being an interest rate, it includes up front and ongoing costs of taking out a mortgage. The formula for calculating APR is set by Government Regulations and therefore enables direct comparison of the cost of mortgages.

Capital and Interest Mortgage – This is when part of your monthly payment contributes to paying off the outstanding mortgage in addition to paying the interest on the mortgage. The payments are structured so that at the end of the term, your mortgage will have been completely paid off. For this reason this type of mortgage is also called a Repayment Mortgage.

Capped Rate – This is a mortgage where the lender agrees that the interest charged will never exceed a specific percentage. This deal lasts for a set period of years. After the set period, the rate usually reverts to the lenders standard variable rate. During the capped period, the interest charges can move up and down with the lenders interest rate – but cannot exceed the capped rate.

Cashback – An amount, either fixed or a percentage of a mortgage, which you can opt to receive when you complete your mortgage. The lender may well claw back this money through a higher interest rate.

CAT marks/standards – CAT stands for Fair Charges, Easy Access and decent Terms. They were created by the Government in an attempt to provide consumers with simple, clear financial products with straightforward, easy to understand terms. A CAT mortgage will have no arrangement fees, no redemption fees and will have interest calculated daily. It will also have a minimum loan of just £5000, offer you repayment flexibility and the mortgage should be portable should you move home. Finally, you will not have to buy the lender’s insurance products and there will be no penalties should you find yourself in arrears but can subsequently catch up.

Completion – This is end of the house buying process, when the funds are transferred and the keys are handed over. Happy moving!

Contract – A contract is a binding agreement between the buyer and seller. In the context of house buying, after the contract is signed by both the buyer and the seller it is then ‘exchanged’ between the respective solicitors for a set completion date. At that point, the contract is legally binding on both parties.

Conveyancing – This is the legal process in which property is bought and sold. You can do it yourself or hire a solicitor or specialised conveyancer to perform the tasks for you. The buying of a freehold is much less complicated than the buying of a leasehold.

Discounted Rate – This is where the lender makes a guaranteed reduction off the standard variable rate for an agreed period of time. After the discounted period ends, the mortgage usually moves to the lenders’ standard variable rate. Watch out for redemption penalties that overhang the initial discount period.

Early Redemption Charges – Redemption is when the borrower pays off the capital and the interest on the mortgage and thus owns the property outright. Early redemption fees are the charges incurred for paying off the mortgage early, either to buy the house outright, move or re-mortgage. Always ask about early redemption charges before you agree a mortgage.

Endowment – Endowments are life assurance policies with an investment element designed to pay off the outstanding capital on an interest-only mortgage. There are a few types of endowments, such as ‘with profits’, ‘unitised with profits’ and ‘unit-linked’. In the 1980s, these were sold by salesman who seemly suggested that these policies were “guaranteed” to pay off the mortgage at the end of the term. However, the investment returns on these policies have fallen to below what was previously considered to be the norm. Consequently, many policies are not worth what was originally forecast and may not fully repay the money borrowed at the end of the mortgages’ term.

Equity – In housing terminology, equity is the difference between the value of the property and the money owed on the property. So if the property is valued at £200,000 and you owe £150,000 on the mortgage, you have equity of £50,000. If you sold at that moment, you would receive £50,000. Should the value of the home be less than the mortgage outstanding then you have negative equity.

Freehold – Owning the freehold means that you own the total rights to the property and the land on which it is built.

HLC – This is the Higher Lending Charge (it was previously known as a Mortgage Indemnity Guarantee). It is levied by around three quarters of all lenders on clients who cannot afford to put down a deposit of 10% of the price of the property. In practice it is a type of insurance aimed at protecting the lender should you default on your mortgage when the value of your home is less than the capital you borrowed. The insurance only provides cover for the lender, not you, and typically costs £1,500.

Homebuyers Report – A property survey aimed at providing more information than a mortgage valuation but less information than a full structural survey. It will help the borrower to decide whether to purchase and help the lender to decide how much to lend.

Interest Only Mortgage – This is a mortgage where your monthly repayments only pay the interest on the mortgage. Therefore, at the end of the mortgage you still have to repay the full sum you borrowed. You are advised to have a separate investment vehicle into which you make payments aimed at building up a fund capable of paying off the mortgage capital at the end of the term. Typical investments include ISA’s, a pension or an endowment policy.

IFAs – Stands for Independent Financial Advisor. These advisors are regulated by the Financial Services Authority. To be classified as “independent” they have to be able to offer you the full range of products from all financial product providers. They are not entitled to describe themselves as “independent” if they can only offer products from a restricted panel of financial companies. A Financial Advisor can be one man band or work for very large companies. Before they make any recommendation, an IFA must carry out a detailed fact find so they fully understand your financial circumstances. They can then make their recommendations to suit your personal circumstances.

ISA – An ISA is an Individual Savings Account, which is a tax-free method of owning shares, building up a cash savings account or a life assurance policy. You can use an ISA to build up a capital sum to repay an interest only mortgage.

Leasehold – If your property is leasehold, ownership of the property reverts to the Freeholder at a set date. Many houses were originally sold on 999 year leases which means that 999 years after the initial date of the Leasehold, ownership of the property reverts to the Freeholder. Building in multiple occupation such as apartments, are always sold on a leasehold and usually have a much shorter leasehold period – 100 and 125 years is quite common. Often, with a block of apartments, the apartment owners individually own the leaseholds whilst a management company, in which they hold shares, owns the freehold. These days, however, leaseholders who live in the property have the legal right to buy their freehold under terms laid down by UK law.

Life Insurance – This can also be called Term Insurance or, when specifically linked to proprty purchase, as Mortgage Protection Insurance. It is designed to pay a tax free lump sum in the event of your death to enable your mortgage to be repaid in full. There are a number of variants such as Level Term Life Insurance and Decreasing Term Life Insurance. At the outset you take out insurance for the full sum you have borrowed from your mortgage lender and for the same number of years as you have agreed on your mortgage. These insurance policies do not have any investment or surrender value. The premiums are based on a number of factors – the main ones being the amount of cover you need, your age, health and how many years you want to be insured for.

Lock-In Period – This is the minimum period you have agreed to stay with the lender. Depending on the deal, it could be as low as six months up to the whole of the term. Should you wish to repay the mortgage or remortgage during the lock-in period, you will invariably have to pay redemption penalties. Always make sure you know how long you are locked in for with your mortgage.

LTV – Literally means Loan to Value. This is a measurement of the mortgage amount against the value of the property or the price that you are actually paying. A £157,500 mortgage on a property for which you paid £175,000 would be a LTV of 90%. Lenders tend to charge a Mortgage Indemnity Premium on mortgages with a loan to value of anything about 75%. Some don’t so ask about this.

MIG – This has now changed its name to HLC. See above.

Mortgage – A mortgage is a long-term loan taken out in order to buy a property with repayment secured on that property. So if you don’t keep to the repayment terms, the lender can repossess the property, sell it and retain the money they are owed. Any balance is then paid to you. If the property is sold for less than you owe your lender, you still remain liable to repay the shortfall.

Mortgage Advisor - On October 31st 2004 the selling of mortgages in the UK came under the remit of the City watchdog, The Financial Services Authority (FSA). As from that date any person providing mortgage advice had to be registered with the FSA and abide by its rules of conduct, methods of operating and training programmes etc. The objective has been to improve life for the consumer by offering better protection, clear information and access to redress for poor advice.

Negative Equity – Negative equity is when the value of your home is less than the amount that you owe on your mortgage plus any other loans secured against it. It can happen very easily if you take out a 100% mortgage or if property prices fall. (Also see Higher Lending Charge)

Portable – This is a measure of how easy it is to move a mortgage from one property to another should a property move be required. This is vital if you are moving during your lock-in-period and wish to avoid redemption penalties.

Repayment Mortgage - This is the same as a Capital and Interest mortgage – see above.

Searches – During the conveyancing process, the buyer has to be sure that the seller has title to the property and identify any matters may affect the prospective owners ownership of the property. For example, whether the property is affected by any proposed road building, whether there are preservation orders affecting the property, is it a listed building and has it been built in accordance with planning conditions and building regulations. Searches will also show whether there are mines under or close by the property. This information is obtained by the person undertaking the conveyancing from HM Land Registry and the relevant Local Authority. These investigations are collectively known as “Searches”.

Self-Certification – Should you have difficulty in providing documentation that “proves” your income to a prospective mortgage lender, you may need a self-certification mortgage. In essence you personally certify what your full income is. If you receive high bonuses, or work seasonally or on commission, or are self-employed this may be your best option. You declare your income plus some evidence that your declaration is reasonable. Ideally lenders want to see as much guaranteed income as possible. To compensate the lender for the increased risk they are taking on a self-certified mortgage, they will charge you a higher rate interest, typically 1% over their standard variable rate.

Stamp Duty Land Tax (commonly known simply as Stamp Duty) – You pay Stamp Duty Land Tax on property like houses, flats, other buildings and land. If the purchase price is £120,000 or less, you don’t pay any Stamp Duty Land Tax. If the price is more than £120,000, you pay between one and four per cent of the whole purchase price, on a sliding scale.

Upto £120,000 – No duty payable

£120,001 to £250,000 – 1% duty payable*
£250,001 to £500,000 – 3% duty payable
£500,001 and over – 4% duty payable

*If you’re buying a property an area designated by the government as ‘disadvantaged’, you don’t pay any Stamp Duty Land Tax if the purchase price is £150,000 or less.

Did you know? Stamp Duty was originally introduced by William of Orange when he was King of England.

Structural Survey – The most thorough report you can get on the condition of the property you are considering to buy. The surveyor will look in detail at the inside and outside of the property and will tell you if the property is structurally sound. All major and minor defects in the building will also be listed and should tell you what maintenance work may be needed either now or in the future. You should make sure the scope of the survey is agreed in writing before you commission it. Should the survey identify problems, use them to negotiate a reduction in the price before you exchange contracts.

Variable Rate – This is when the interest rate you pay on your mortgage can go up or down depending on changes to the lender’s standard variable rate. If you have a variable rate mortgage your monthly mortgage payments will change whenever the lender changes the interest rate.

Valuation – This is where a valuer appointed by your proposed lender, visits the property in order to estimate its current value. This value is then used by the lender as a basis for its security and to calculate its Loan to Value Ratio. The borrower never sees the valuation. With some mortgage deals the lender absorbs the cost of the valuation but in many cases the borrower has to pay upfront.

Bloomberg asked:

An interview with Shaun Donovan, Secretary of Housing and Urban Development talking about refinancing business of President Obama and if there still hope for homeowners. (Bloomberg News)

twit273 asked:

bush speech 2002 encouraging freddie mac and fanny may

simsonc asked:

Take advantage of the low interest rate. 1) Refinance your current mortgage 2) Consolidate your high interest loan Make sure you are aware of the penalty and extra cost when refinancing. Finally, pick the right mortgage package that is suitable for you. Visit My Blog at simsonchu.blogspot.com or my web at www.simsonchu.com

ehowfinance asked:

The AARP offers life insurance and mortgage refinancing over their Web site for senior citizens. AARP life insurance will often cover funeral expenses. Their mortgage refinancing program can be difficult to interpret and requires research. Learn more about the financial services offered by the AARP with information from an insurance broker in this free video on insurance. Expert: John Pinelli Bio: John Pinelli is a financial service broker for Northwestern Mutual Insurance. Filmmaker: Bing Hu…

Jerry Figueroa Lee asked:


Buying a home and arranging a mortgage is said to be one of the most stressful experiences we can have in live, yet it doesn’t need to be. No matter whether you are a First Time Buyer or moving home, the step by step guide that follows will help ensure that your mortgage application runs smoothly.

Step 1 – Contact an independent mortgage adviser

Buying a home can be one of the most exciting experiences as well as one of the most daunting. With thousands of fixed, tracker, discount and variable rate mortgage products in the market, and so many different factors to take into consideration, how do you now which is the best mortgage product to meet your needs both now and in the future. Making a mistake can proof to be costly and so seeking professional independent mortgage advice is one of the most important steps you can take.

An independent mortgage adviser will complete a detailed fact find of your current circumstances and future expectations, and will analyse what mortgage products are available based on your income, age, credit history and attitude to risk. This analysis will highlight the most suitable products for which Key Facts illustrations will be provided.

Independent mortgage advice need not cost a fortune either. In most cases a broker fee will be good value for money, and will often be offset by the exclusive rates normally available via brokers. In a growing number of cases, Independent Mortgage Advice is provided free of charge with the mortgage adviser being paid for the introduction by the lender on completion of the mortgage.

Step 2 – Mortgage Promise or Initial Agreement in Principle

Once you have selected the best mortgage deal for your requirements, it is well worth applying for the lenders initial agreement in principle, also known as a mortgage promise. This is something that can be arranged on-line or over the phone by your mortgage adviser, with the lenders acceptance decision being available within minutes of submission. The initial agreement in principle will produce a certificate of confirmation that can be shown to prospective sellers to reassure them that mortgage finance is agreed, and that you are serious about buying.

A mortgage agreement in principle can always be arranged prior to knowing what property you will be purchasing or even before you have decided on the best type of mortgage product. The certificate will normally remain valid for 3 months, and speed up the process later when you make a formal application.

Applying for an initial mortgage agreement from several lenders is absolutely fine, but unless you expect the lender to have a problem in agreeing to the mortgage amount required, you are best advised to restrict the number of credit checks that you authorize to be carried out, as too many credit checks in a short period of time can adversely affect your eventual credit score.

What if your initial application is refused?

Agreements in principle are often declined and in most cases for one of the following reasons.

- An adverse credit history has been picked up when the lender has undertaken their credit checks and credit scoring.

- The lenders lending criteria has not been met such as being too young or too old, not in employment for long enough.

When these circumstances arise your mortgage adviser is ideally placed to discuss matters with the lender, and where no resolution can be found, to advise you of other lenders and their products where the criteria does fit.

Step 3 – Complete the mortgage application

Once you have received notification that your mortgage is agreed in principle, the full application can then be submitted. To submit the full application, full details about your circumstances will be required by the lender. These details will include the details of the property, how much you want to borrow and where the rest of the money (your deposit) is coming from. Accurate and honest information provided at this stage when completing the form, can help tremendously towards the avoidance of delays in the application process later on.

There are many benefits of using a mortgage advisers services when submitting the full mortgage application, with the main benefit being that the adviser will have years of experience of the individual lenders underwriting practices, and can advise you of the best way to package and submit the application.

Bear in mind that exclusive mortgage rates, which can not be obtained direct from the lender are often available through an Independent Mortgage Adviser.

As well as completing the application form, some documentation will be required to back up the details given. Exactly what, will depend on the type of mortgage applied for and the lender involved. In the case of a self certification mortgage, the documents required can be as little as proof of your identity and proof of residence.

Typically when borrowing 75% – 90% of the property value, the lender will require the following:

- Pay slips (often for the last three months)

- P60

- If self employed copies of two or three years accounts will be required.

- Bank details for the Direct Debit mandate.

- Proof of identity such as a passport.

- Proof of address such as a recent utilities bill. or bank statement.

- Proof of the last 12 months mortgage payments or a tenancy reference if renting.

Where documentation is required in support of the application, any delay in providing it will delay the lender issuing the mortgage offer. Dealing with an independent mortgage adviser ensures that you will be informed about any documentary requirements quicker than if dealing direct with the lenders.

Step 4 – Instruction of the property valuation

Once the mortgage application is submitted and agreed, the lender will instruct a valuer to inspect the property. The cost of the valuation is born by you unless the mortgage you are applying for includes an incentive such as a free valuation fee.

The mortgage valuation allows the lender to confirm the value of the property and agree to the lending required. In addition to the basic valuation for mortgage purposes, you can ask the lender to carry out a more detailed survey of the property (which is advisable) such as a homebuyer’s report.

The homebuyer report is in a standard format and is designed specifically as an economical survey and an effective way to minimize risk. The homebuyer report ensures that any defects or problems that could effect the value of the property, are picked up highlighting any that are urgent. As part of the Homebuyer’s report an integrated valuation for mortgage purposes is included, unlike a structural survey.

Step 5 – Instruct a Solicitor

It’s the solicitor’s job to review the Home Information Pack (HIP) which includes an Energy Performance Certificate, an index of contents, a sale statement, evidence of title, searches and leasehold documents, when you are buying.As well as negotiating and exchanging contracts the solicitor’s job is also to receive funds from the lender for transfer to the sellers solicitor as well as updating the title deeds. Once contracts have been signed and returned the solicitor will agree a date for completion. On the day of completion, funds will be exchanged between solicitors at which point keys can be collected to your new home.

If using an independent mortgage adviser, check to see if a fixed legal fee package is available, as this can often save time and money, and can result in using a solicitor where the adviser has some leverage to make things happen quickly.

RIKA FURY asked:


I have bad credit and I just bought an almost new car (It only had 4,000 miles on it) at 15% APR. How soon can I apply for refinancing with another finance company? Do I have to wait a year?