Advice And Tips For Getting The Right Home Mortgage

If you've decided to buy a house you will either be filled with joy or apprehension. If it's the latter it's probably the thought of borrowing all that money that is the most worrisome. Getting a mortgage can, at first glance seem daunting but if you prepare in advance it can be a relatively painless process. So here goes with 3 tips to ease the way:

1/ Pay up your credit card and other debt.........Yea right! how longs that going to take? ..Well of course it may take a while but if we're in the early stages of planning that's ok.Otherwise try and consolidate the debt into just one card and begin paying more than just the monthly minimum. Some credit card companies will give a lower initial interest rate to transfer debt to them; check around.
If you simply can't wait get mum and dad to pay up your cards and repay them later when you have your new mortgage ( having allowed for that extra amount in the loan total). You will of course pay much lower interest rates on a mortgage than on a credit card so you can afford to pay it off quicker.
The idea here is to impress the mortgage manager of your fiscal resolve.You are going to be one great customer who always pays on time.

2/ Get Pre-approved.....Well why bother you might say "let me find the home first". But hold on. Are you sure you know how much you can spend? How much you can afford to repay each month? There is nothing more dissappointing than finding the perfect home that you simply cannot afford, cus nuttin will measure up after that!...Getting Pre-approved will answer these questions and you will have any problems that might crop up sorted out. Best of all your realtor will love you because you are in a better position to put in a strong offer. Not only that but you will probably buy at a much better price because your offer looks a whole lot more attractive. Ok thats number 2 go to your selected lender and get this process completed.

3/ Don't Overburden Yourself......Ok your pre-approved for a mortgage, you know your maximum spend is lets say $200000. So look at houses between $175000 - $195000.
Hopefully you can buy $10000 - $20000 below budget. Great because now you have freedom to pay for the unexpected. Closing costs, things to buy for the house and garden etc. If your lucky you might now be able to fit in extra lump sum payments to pay off the mortgage loan quicker. By doing that you could save yourself thousands of dollars in interest payments.Imagine a 20 year mortgage payed off in 15 years, wow, how many thousands would that save you.

So go to it... slam the door on wasted rent money and open the way to a sound financial foundation. With the down turn in the real estate market now is a good time to go bargain hunting.

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Reverse Mortgages or Lifetime Loans

Reverse mortgages or lifetime loans are an increasingly useful source of money for retired people. In essence they are a very simple concept. If you own your own home and have paid up all your mortgages but this has left all your money tied up in the home, you can release a percentage of the value of your property with a reverse mortgage.

If you are in the situation where you find that there is no discretionary spending money available or you are faced with a financial emergency such as urgent medical needs or home repairs these sorts of things can run into thousands of dollars. So you really only have the two choices on a limited income. One you can sell the house and release funds. That, however, means leaving your much loved home and may also mean that you are forced to take a less desirable property in an inferior neighborhood. Sure you free up, maybe $100000 but in the process you've had some pretty heavy expenses with real estate fees for selling your home and all the other legal and moving expenses that are an inevitable part of changing houses.

That is one scenario and one that lots of people employ in this situation. Less well known but a very viable alternative is the reverse mortgage. This loan is taken out on the security of your property but unlike a mortgage there are no payments for the duration of your time in the home. Interest accumulates and is payable either on your death, when the house is sold or on you voluntarily selling your home to move on for whatever reason.

Meanwhile you have had the money to spend at those times of financial emergency or even maybe to take that trip of a lifetime. You have not had to move house and you can continue to enjoy your current lifestyle. Not only that but you can continue to benefit from the increasing property value of your home.

You may like to use your reverse mortgage to take out a lump sum and then as property values rise take out further lump sums. You may even prefer to have a regular monthly payments. Many of the companies specializing in those types of financial instruments can be very flexible and if you are over 60 and have no savings then this is something that you should definitely start to explore.

Fees on these loans can range between very little to very high, depending on your provider. If your need is urgent and important to your well being, you may find that you are eligible for government agency help. In any event check out all your options and get advice on fees. Perhaps you are going to move house in a year or two anyway and for a short term loan the fees may make this type of loan uneconomic. It may be that in these circumstances just a regular loan might be better.

Despite some drawbacks reverse mortgages are a very useful source of money for many older people that own there own homes. It is certainly worth exploring and a way of enjoying the fruits of a lifetime of work while you are still able bodied. What is the use of tying up all your money in property until the day you die when you could be enjoying the use of some of that equity now.

Common Mortgage Mistakes..... 3 Solutions

The most common mortgage mistake is over extending yourself. In other words borrowing right to the limit with no slack for a downturn in your fortunes. But what can go wrong you say? Well plenty, actually . If you're dependent on 2 salaries. One partner could lose their job or your wife could get pregnant.The overtime you were depending on could be cut back. If you're mortgaged to the hilt it's a worry even if you have some insurance. Try and keep your mortgage repayments within reasonable limits so there is still money for emergencies.

One solution which is not for everyone but which works well for lots of people is to take in lodgers or flatmates to help pay the mortgage. If you have one or two extra people contributing rent every week it makes a huge difference. Just don't forget the the tax man and be selective in your choice of tenants. Remember this doesn't have to be for ever but it sure helps over the short term. Even if you sacrifice a bit of privacy you could make up for it with new friends and lots of fun. It depend on you.

Second solution which requires a little more patience and requires you to save a bigger deposit. 20% or more is ideal, the more you can put down will often get you much more favourable mortgage terms. You can get lower or no deposit mortgages but you should think about these carefully. A few years back my sister in law and her husband took out a low deposit loan just before property values droppped and interest rates went higher. Suddenly they found that their house was worth less than the mortgage so that they couldn't sell without losing money. Not only that the repayments had ballooned out so that she had to work 2 extra part time jobs just to meet the mortgage repayments. Hopefully that kind of situation has passed into history but plan for all eventualities.

Third solution isn't really a solution but part of pre-planning when you apply for your mortgage. That is : Make sure you choose the right type of mortgage to suit your situation. Your mortgage manager can help you here. He wants your loan to be trouble free just as you do so be up front with your finances and budget and discuss all the various options with him. Time and careful planning here could save hours of worry and trouble later on. Often there are special features to help at the start of a mortgage or features to break the loan up into different repayment options. Whatever they are choose the one best suited to your circumstances.

But hey it's not all doom and gloom out there. Property ownership has made more wealth for more people than anything else. And borrowing other people's money leverages that money much much more to make even more wealth. So get started as soon as you can, you won't regret it. Just be sensible, budget, preplan and keep it all within your control.

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