3 Essential Vocabulary Words For Mortgage Holders
Obtaining a mortgage loan is a complicated procedure. It includes lots of paperwork, signatures, fine print, and red tape. Even ivy league colleges don't require that much paperwork for acceptance! It is an exasperating and confusing process that completely overwhelms most people. Even though applying for a mortgage is a stressful and long process, learning three basic homeowners vocabulary words can help you get a better handle on the whole thing.
The people who enter a mortgage with some basic knowledge helps them beyond belief, so they realize what they are agreeing to do. Understanding the lingo of the home buyer's world equips you to deal wisely.
The first essential piece of vocabulary is the word term. Term means the life of the mortgage you're applying for. In other words, it is the length of time you're making payments on the loan.
The majority of mortgages last anywhere from ten to thirty years. Longer mortgage loans come with lower monthly payments but you pay more in total interest over the life of the loan. So it's a trade off between one convenience for another. It's usually wise to choose the shortest term you can, because you stand to save tens or hundreds of thousands of dollars in interest with a short mortgage loan term.
The second vocabulary word is interest rate. Know what your interest rate is and how lenders will calculate it. This number (rounded to the one-tenth percent) indicates how much interest you'll be paying for the borrowed money over the life of the loan. Rates are either fixed (never changes) or variable (may increase at certain points during the life of the loan). Even though they appear to be a great deal at first, stay away from adjustable rate mortgages. When the rate increases, you can be in a world of hurt if you aren't prepared to make bigger monthly payments!
The third vocabulary word is closing cost. Learn how they affect the purchase price, because it's often the case that homeowners need to pay these closing costs completely on their own. House appraisals, attorney and notary fees, deeds fees, and more usually are part of the closing costs. Usually closing costs are packed with little fees that add up to a big number! Be wise when you buy a home. Look at the itemized list of fees and ask about anything that seems fishy. Unscrupulous lenders often try to nickel and dime consumers with a few bogus fees in the closing costs if you're not careful.
Now that you've learned these three basic vocabulary words, you can shop for your new home with confidence. Armed with your knowledge, you can get a great mortgage. Comparison shop for mortgages just like you would for any other large purchase, because even a slight difference in interest rates can equate to thousands of dollars. You have the right to spend your money wisely and make every penny count.
For additional information about mortgage loans, please visit the #1 mortgage resource on the net: http://www.MortgageLoans-101.com
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Are your debts making it hard to pay the mortgage?
Being in debt is a difficult situation for anyone, but when it limits your ability to repay your mortgage – arguably your most important debt – it can become very worrying.
Thankfully, there are a few ways you may be able to improve your situation.
What to do if you can’t pay your mortgage
First and foremost, you should never ignore the problem. A mortgage is a secured debt, and as such, you could ultimately lose your home if you fail to keep up on payments.
Contact your lender
In the first instance, you should always contact your mortgage lender to explain your situation. In most cases, your lender will want to help you – they may agree to a short payment holiday, or a temporary reduction in your payments, in order to allow you to focus on your debts and get your finances back on track.
However, you should only consider this as a short term solution. In general, your secured debts should be your first priority. If your unsecured debt problems cannot be solved during a short repayment holiday, then you may benefit more from a more specific debt solution.
Also be aware that your interest will continue to build up during a repayment holiday, so you could end up paying more overall.
Get free, independent debt advice
If you cannot come to a satisfactory agreement with your lender, then it’s a good idea to speak to a debt adviser to discuss your other options. There aren’t any debt solutions that will help directly with your mortgage payments, but if you have unsecured debts that are making it difficult to pay your mortgage, the right debt solution (such as a debt consolidation loan or debt management plan) might make it easier for you to meet your mortgage payments.
Consider a remortgage
If you’re in the position to do so, a then a remortgage could significantly reduce your monthly outgoings. With interest rates currently very low, many people are switching from fixed-rate deals to cheaper variable-rate or tracker mortgage deals. A fall of just a small percentage can save you hundreds or even thousands of pounds every year, depending on the size of your mortgage.
Take the following example of a £120,000 repayment mortgage being paid back over 25 years:
• At an interest rate of 5.5%, your monthly payments would be £736.90 • At an interest rate of 3%, your monthly payments would fall to £569.05 – a saving of £169.85 every month, or £2014.20 per year.
Consider that some of the savings you would make could also go towards repaying your debts, and the benefits are clear.
You may also want to consider temporarily switching to an interest-only mortgage. This can significantly reduce the amount you pay each month, but be aware that you will still have to repay the capital (the amount you borrowed) at a later date, and since this will continue to accrue interest, you will pay more towards your mortgage in the long run.
If you are in mortgage arrears, perhaps due to debt problems - Think Money may be able to help.
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