Closing Costs With Your Mortgage
Posted by: admin in Real Estate, tags: Applying For A Mortgage, Appraisal Fees, Closing Costs, Escrow Fees, Escrow Instructions, Insurance, Money, Real Estate, Rest Of Your Life, Thousands Of Dollars
When applying for a mortgage, it is important to understand that you are going to be responsible for paying costs associated with it. The fees are known as closing costs and can add up quickly.
If you have never applied for a mortgage before, you may be under the impression that it is a simple scenario where a lender gives you a big chunk of change and then expects a monthly payment for the rest of your life. In fact, the lender is going to want some money paid up front. This money comes in the form of closing costs and they can accumulate pretty quickly. While closing costs vary from real estate deal to deal, here are the ones you can expect to run into.
Lender’s Fees can be a harsh wake up call when it comes to closing cost. A lender is going to charge you fees for the origination of your loan and they can be very high. The fees can be attributed to process, underwriting, credit checks and a host of odd little tasks. They can add up quickly to thousands of dollars, so make sure you get a written quote from the lender before applying.
Appraisal Fees are a near constant when it comes to closing costs. As the name suggests, these fees are paid to an appraiser who values the home you are going to purchase. Technically, the fees are not really closing costs because they are paid at the time of the inspection, but they are generally grouped as such when closing costs are discussed. The amount of the fee depends on the property and part of the country you are in. Fees of $300 to $600 are pretty typical.
Title and Escrow – These two fees are nearly always present in any real estate deal. Title refers to the title insurance a lender will require you to obtain. Escrow refers to an independent third party that will act as an agent to hold document and money and issue them as well per the escrow instructions agreed upon by the parties. The fees for title insurance depend on the property while escrow fees vary from area to area.
Impound Accounts are not per se a closing cost, but they are something you should be aware of. The exact nature of an impound account depends on the lender’s requirements. In loaning you money, a lender may require you to pay PMI, homeowner insurance premiums and property taxes in to an impound account. Obviously, these numbers can grow pretty large, particularly with property taxes. It is important that you gain a full understanding of what will be required of you in this regard as buyers can be cash poor after escrow and run into trouble trying to meet the impound obligations.
If it is your first time applying for a mortgage, don’t be startled by all of the fees mentioned above. The key is to educate yourself on what is required for your specific situation and then go into the deal with your eyes open.
By: Raynor James
Best Ways To Pay Off Mortgage Early
Posted by: admin in Real Estate, tags: All Creditors, Bankruptcy, Borrowers, Debts, High Risk, Home Equity Loans, Money, Pay Off Mortgage, Personal Benefits, Successful Business People
Paying off your mortgage early leads to a very good credit record and history, as well as personal benefits of satisfaction. Paying off your mortgage early is a great thing for all creditors and borrowers, it means that you can get a loan anywhere else in the future. But there are some tips which allow you to pay off your mortgage early and most are general money saving techniques.
The first technique is very general and that is to make sure you have money set aside to pay off your monthly repayments. When you start to save more this is when you adjust for future months and eventually you would have generated enough savings to pay off your mortgage for months in advance. If you continue to follow this cycle, you will soon be able to pay off your mortgage early, which is a great thing. A lot of successful business people pay off there debts early, as there investments usually give them a sharp return of profit.
Other wise you can use the more risky technique and this happens a lot more with home equity loans. Often investments return vast amounts of profit, allowing borrowers to make full and early repayments. This involves relying on an investment often like share trading, which is high risk. Potentially if the investment goes bad you could be left with a bad credit loan and other major financial problems such as bankruptcy. The most important thing in achieving this is to have good plans, organisation really leads to good results.
By: Steven Francesco Simpson
Mortgage Cycling: Mortgage Free in Ten Years
Posted by: admin in Real Estate, tags: Cycling, Home Equity Loan, Interest On The Loan, Interest Payment, Money, Mortgage Balance, Mortgage Loans, Repayment Strategy, Robbing Peter To Pay Paul, Years Mortgage
Mortgage cycling is a repayment strategy that promises to pay off your entire mortgage in ten years or less. To do this you need to make large payments to your lender twice a year. This means a $5,000 payment approximately every six months. This is all well and good if you have the cash; however, dropping $10,000 a year into your mortgage isn’t easy to swallow for the average homeowner.
There is a way to make the $5,000 easier to manage that involves home equity loans. First, an explanation as to why mortgage cycling works.
Mortgage loans are front-loaded with interest. This means at the beginning of the loan the majority of your monthly payment is applied to interest. The amount of interest paid each month is calculated based on the remaining balance of the loan. As the principal balance shrinks, the amount of your payment going to interest decreases as well.
By making large equity payments you are reducing the amount of principal used to calculate the interest payment. As a result, more of your monthly payment is applied to the principal balance, reducing the interest applied even more. The end result is your mortgage is paid down at a much faster rate.
If coming up with $5,000 is difficult there is an option using home equity. By taking out a home equity loan you will have six months to pay the money back before the next installment is due. This is a more expensive method of making the equity payments; home equity loans cost money to get started and you are paying interest on the loan.
This may seem like robbing Peter to pay Paul; however, by paying off the home equity loan every six months you are making a significant dent in your principal mortgage balance. By paying down the mortgage principal you save yourself money in the long run by paying less in interest for your primary mortgage.
The risk in using a home equity loan to cycle your mortgage is that the home equity loan is secured by your property. If you fall behind on the home equity payments you risk losing the home.
If you’re serious about paying down your mortgage as quickly as possible mortgage cycling could be right for you. Carefully weigh the risks of using home equity to repay your mortgage; if your cash flow cannot support the payments do not attempt this repayment strategy.
By: Louie Latour
Monopoly and Mortgage: Playing the Game
Posted by: admin in Real Estate, tags: Bank Mortgage, Hotels, Money, Monopolist, Mortgage Value, Opponents, Playing The Game, Sounds, Value Houses, Winning The Game
Remember monopoly? Remember mortgages? You know, the text that’s written when you flip your title deed. Flipping the title deed means your property is on mortgage and you’ll get money from the bank.
Sounds simple right? Wrong. There’s much more to it than that.
Here are the things you need to know about the game and how to get most out of your mortgages.
The idea of the game is to buy and rent and sell properties so profitably that one becomes the wealthiest player and eventual “monopolist”. Starting from “go” move tokens around the board according to the throw of dice.
When a player’s token lands on a space not yet owned, he may buy it from the bank: otherwise it is auctioned off to the highest bidder.
The purpose of owning property is to collect rents from opponents landing there. Rentals are greatly increased if you put houses (those little green ones) and hotels (those dreaded red infrastructures).
So your best bet in winning the game is to put the most houses or hotels in your lots. (That’s assuming you don’t land in your opponents’ lots with houses or hotels).
To raise more money, lots may be mortgaged to the bank. Here comes the tricky part. That includes deciding which lots to mortgage and how you can get the most out of your mortgaged property.
Mortgages in monopoly can be done only through the bank. The mortgage value is printed on each title deed. The rate of interest is 10 percent, payable when the mortgage is lifted. If any property is transferred which is mortgaged, the new owner may lift the mortgage at once if he wishes, but must pay 10 percent interest.
If he fails to lift the mortgage he still pays 10 percent interest and if he lifts the mortgage later on he pays an additional 10 per cent interest as well as the main value.
Houses or hotels cannot be mortgaged. All buildings on the lot must be sold back to the bank before any property can be mortgaged. The bank will pay one-half of what was paid for them.
In order to rebuild a house on mortgaged property the owner must pay the bank the amount of the mortgage, plus the 10 percent interest charge and buy the house back from the bank at its full price.
When you mortgage a property, you can use the money for anything you want to, so long as it’s legal under the rules of monopoly. The only restriction in this regard is that a player cannot pre-mortgage a property to finance its own purchase.
For example, say a player wants to purchase Boardwalk but can’t do it with his or her current assets. That player cannot say, “I’m going to buy Boardwalk by mortgaging it, and then using the money I get for the mortgage to complete the purchase.” You must own a property before you can mortgage it.
Playing the game is fun and it will give you an idea of how it is in the real buy and sell world. There are also the Community Chest and Chance spaces which players land on. Instructions ranging from winning $25 dollars to $500 dollars are given. Sometimes players even land in jail! This game is definitely a clever and amusing entertainment.
By: James Monahan
