Apr
15
Filed Under Mortgage | Leave a Comment
Gregory van Duyse asked:
You have probably heard that it is better to make your home loan payments as frequently as possible. How can we best understand this concept?
Let us look at the two different ways of making weekly or twice monthly payments (prêt hypothécaire).
-accelerated weekly payments
-minimum weekly payments
The most common method is the accelerated weekly payment. It is really the monthly payment divided by 4. But in reality, there is not 4 weeks in a month, but a little more. This method is called the accelerated payment method because is has 4 extra weekly payments over a whole year and this fact by itself increases the payment made against the capital of the home (prêt hypothécaire) loan during the year.
The other method is the minimum weekly payment. It is the minimum payment that you can make on your mortgage until the end of the amortization period, and the home loan is fully paid.
It is clear that the savings from these different two mortgage payment (hypotheque) methods is not alike. The minimum weekly payment only increases the frequency of the payments from 12 times a year to 52 times a year, and the accelerated weekly payment increases not just the frequency of payments, but also adds 4 additional payments.
Let’s look at the result of my studies on mortgage payments for these two cases.
The minimum weekly payment
Summary:
1. The minimum weekly payment method saves $1,294.12 on a $200,000 loan amortized over 25 years with an interest rate of 5.4%, in comparison with monthly payments – hypothèque.
2. The higher the interest rate, the better the weekly payment will fare. If the rate is doubled, the savings will be 7.08 times more.
3. One receives 43% more savings with a weekly payment than with a payment every two weeks (14 days) and the rate of interest does not make a difference.
Why?
The explanation is simple, but difficult to describe. Since there is less time between each payment, one part of the capital is repaid a few days earlier, which more rapidly reduces the interest paid on the amount that is paid down. The savings is small for each payment but increases dramatically over time.
Conclusion: The more frequent the payments, the greater the savings, even if you do not increase the amount paid. If it is possible, make your payments each week, if not, pay your mortgage every two weeks – prêt hypothécaire.
The accelerated weekly payment
An accelerated weekly payment will increase the payments on a mortgage by $23.25 per week on the $200,000 mortgage, amortized over 25 years at 5.4%.
In this case, the home will be paid for in 1,107 payments, or 21.3 years.
The total savings will total $28,173.78i (please refer to the calculations at the end of the article.)
However, you are better off not to make accelerated payments if you have a fixed or guaranteed investment that pays 7.52% per year before taxes.
It is important to choose the best payment method for your mortgage, but the most important thing of all is to choose the best mortgage strategy.
Notes : If someone buys a home for $200,000 (with a rate of 5.4%) and pays it once a month ($1,209.16 a month), he will have paid $362,749.83 after 25 years ($200,000 plus $162,749.83 in interest); on the other hand, with accelerated weekly payments ($302.29 per week), he will have paid $334,576.05 ($200,000 plus $134,576.05 interest) in 1,107 weeks our 21.3 years. This is a savings of $28,173.78 ($362,749.83-$334,576.05) to pay the same mortgage.
EZRA
You have probably heard that it is better to make your home loan payments as frequently as possible. How can we best understand this concept?
Let us look at the two different ways of making weekly or twice monthly payments (prêt hypothécaire).
-accelerated weekly payments
-minimum weekly payments
The most common method is the accelerated weekly payment. It is really the monthly payment divided by 4. But in reality, there is not 4 weeks in a month, but a little more. This method is called the accelerated payment method because is has 4 extra weekly payments over a whole year and this fact by itself increases the payment made against the capital of the home (prêt hypothécaire) loan during the year.
The other method is the minimum weekly payment. It is the minimum payment that you can make on your mortgage until the end of the amortization period, and the home loan is fully paid.
It is clear that the savings from these different two mortgage payment (hypotheque) methods is not alike. The minimum weekly payment only increases the frequency of the payments from 12 times a year to 52 times a year, and the accelerated weekly payment increases not just the frequency of payments, but also adds 4 additional payments.
Let’s look at the result of my studies on mortgage payments for these two cases.
The minimum weekly payment
Summary:
1. The minimum weekly payment method saves $1,294.12 on a $200,000 loan amortized over 25 years with an interest rate of 5.4%, in comparison with monthly payments – hypothèque.
2. The higher the interest rate, the better the weekly payment will fare. If the rate is doubled, the savings will be 7.08 times more.
3. One receives 43% more savings with a weekly payment than with a payment every two weeks (14 days) and the rate of interest does not make a difference.
Why?
The explanation is simple, but difficult to describe. Since there is less time between each payment, one part of the capital is repaid a few days earlier, which more rapidly reduces the interest paid on the amount that is paid down. The savings is small for each payment but increases dramatically over time.
Conclusion: The more frequent the payments, the greater the savings, even if you do not increase the amount paid. If it is possible, make your payments each week, if not, pay your mortgage every two weeks – prêt hypothécaire.
The accelerated weekly payment
An accelerated weekly payment will increase the payments on a mortgage by $23.25 per week on the $200,000 mortgage, amortized over 25 years at 5.4%.
In this case, the home will be paid for in 1,107 payments, or 21.3 years.
The total savings will total $28,173.78i (please refer to the calculations at the end of the article.)
However, you are better off not to make accelerated payments if you have a fixed or guaranteed investment that pays 7.52% per year before taxes.
It is important to choose the best payment method for your mortgage, but the most important thing of all is to choose the best mortgage strategy.
Notes : If someone buys a home for $200,000 (with a rate of 5.4%) and pays it once a month ($1,209.16 a month), he will have paid $362,749.83 after 25 years ($200,000 plus $162,749.83 in interest); on the other hand, with accelerated weekly payments ($302.29 per week), he will have paid $334,576.05 ($200,000 plus $134,576.05 interest) in 1,107 weeks our 21.3 years. This is a savings of $28,173.78 ($362,749.83-$334,576.05) to pay the same mortgage.
EZRA
Apr
13
Filed Under Mortgage | Leave a Comment
Usha Pradhan asked:
The word mortgage comes from the Old French word morgage which means literally “death-pledge.” It is a form of debt that is secured by the borrower’s real estate property and usually is for the acquisition of the real estate property that the mortgage is being placed on. This allows the borrower to purchase real estate without having to pay its entire value up-front. There happen to be many different types of mortgages including but not limited to: Fixed Rate Mortgages, Adjustable Rate Mortgages, Balloon Mortgages, FHA Mortgages, and Shared Appreciation Mortgages.
Fixed Rate Mortgages, as the title implies, have a fixed interest rate that will simply not change for the entire duration of the loan. The monthly payments are usually, but not always, a fixed amount as well. With an FRM the principal payment rises with each payment; the first payments are mostly interest, but with each payment the principal is a bit larger and the interest is a bit smaller. FRMs have different terms and usually last for 10 to 40 years.
With an Adjustable Rate Mortgages the interest rate can go up or down in accordance with the market at pre-designated intervals. The payments are determined by indexes such as Treasury Bills or the average national mortgage rate. The general appeal of these mortgages is that they often begin with a very low interest rate that gradually rises over time. The unpredictability of these loans has lead many to criticize them for preying on young homeowners who don’t know any better.
Balloon Mortgages mature before the principal and interest have been paid off and the remainder is due in one large lump sum. They can be divided into two different kinds: Interest-only and Rollover. In an Interest-only loan, payments cover only the interest. The Rollover Mortgage is short term and must be refinanced at the end of the 3-5 year term. The Balloon Mortgages provide excellent protection against future interest rate hikes, but its short term nature and strict payment plan may make it a bit too risky.
An FHA Mortgage loan is federally insured by Federal Housing Administration. This gives lenders protection in case the borrowers default on their loan. It all began in the Great Depression when banks were refusing to give people mortgages and continues to operate today as a way for those with less than ideal credit to get mortgages. This type of loan requires the borrower to pay monthly mortgage insurance for 5 years or until the loan is paid down to 78%.
Finally, a Share Appreciation Mortgage is a loan where the borrower receives a low below market rate of interest, but must share part of the appreciation of property value with the lender for a number of years. At the end of this term, the borrower must pay the lender its share of the appreciation in cash, even if it means selling the property in order to come up with it. It’s a risk for the lender as well as the property can always decrease in value.
RANDOLPH
The word mortgage comes from the Old French word morgage which means literally “death-pledge.” It is a form of debt that is secured by the borrower’s real estate property and usually is for the acquisition of the real estate property that the mortgage is being placed on. This allows the borrower to purchase real estate without having to pay its entire value up-front. There happen to be many different types of mortgages including but not limited to: Fixed Rate Mortgages, Adjustable Rate Mortgages, Balloon Mortgages, FHA Mortgages, and Shared Appreciation Mortgages.
Fixed Rate Mortgages, as the title implies, have a fixed interest rate that will simply not change for the entire duration of the loan. The monthly payments are usually, but not always, a fixed amount as well. With an FRM the principal payment rises with each payment; the first payments are mostly interest, but with each payment the principal is a bit larger and the interest is a bit smaller. FRMs have different terms and usually last for 10 to 40 years.
With an Adjustable Rate Mortgages the interest rate can go up or down in accordance with the market at pre-designated intervals. The payments are determined by indexes such as Treasury Bills or the average national mortgage rate. The general appeal of these mortgages is that they often begin with a very low interest rate that gradually rises over time. The unpredictability of these loans has lead many to criticize them for preying on young homeowners who don’t know any better.
Balloon Mortgages mature before the principal and interest have been paid off and the remainder is due in one large lump sum. They can be divided into two different kinds: Interest-only and Rollover. In an Interest-only loan, payments cover only the interest. The Rollover Mortgage is short term and must be refinanced at the end of the 3-5 year term. The Balloon Mortgages provide excellent protection against future interest rate hikes, but its short term nature and strict payment plan may make it a bit too risky.
An FHA Mortgage loan is federally insured by Federal Housing Administration. This gives lenders protection in case the borrowers default on their loan. It all began in the Great Depression when banks were refusing to give people mortgages and continues to operate today as a way for those with less than ideal credit to get mortgages. This type of loan requires the borrower to pay monthly mortgage insurance for 5 years or until the loan is paid down to 78%.
Finally, a Share Appreciation Mortgage is a loan where the borrower receives a low below market rate of interest, but must share part of the appreciation of property value with the lender for a number of years. At the end of this term, the borrower must pay the lender its share of the appreciation in cash, even if it means selling the property in order to come up with it. It’s a risk for the lender as well as the property can always decrease in value.
RANDOLPH
Apr
9
Filed Under Mortgage | Leave a Comment
Jeffry Evans asked:
An adjustable rate mortgage (often referred to as an ARM) is a type of loan that offers a varying rate of interest at different times during the repayment period. These rate changes often occur on an annual basis, and depend on market conditions as to whether the rate will increase or decrease. ARMs are attractive because they usually offer lower initial rates of interest than comparable fixed rate mortages. The 5 things you need to know about adjustable rate mortgages are:
1. Know when the rate is subject to change. Some common examples of an ARM include:
* 3/1 ARM – Rate is fixed for the first 3 years, then subject to change once per year thereafter.
* 5/1 ARM – Rate is fixed for the first 5 years, then subject to change once per year thereafter.
* 7/1 ARM – Rate is fixed for the first 7 years, then subject to change once per year thereafter.
2. Know what the rate increase ceiling is (if the loan even has a rate ceiling).
Typically, adjustable rate mortgages will offer a contractual maximum increase per year so the loan doesn’t get out of control. I have seen some offer around 2% for an annual rate increase ceiling (meaning if your rate was 6%, then the rate could not increase to more than 8% the next year). Many ARMs also offer a total rate ceiling, usally offered as a fixed addition, e.g.the rate cannot increase more than 6% for the life of the loan. These are very important conditions that anyone interested in an adjustable rate mortgage should look for and evaluate.
3. Have a plan for the future.
If you plan to sell the house before the adjustment period of the ARM begins, then maybe it is a viable option to consider. If you want to buy a little more house, and you think you will obtain better employment or a higher salary later, adjustable rate mortgages offer a lower initial monthly payment due to the lower initial interest rate. If you are looking to buy a house to live in for some years to come, think twice before getting an ARM; fixed rate mortgages tend to be better for this situation.
4. Ask the lender about market conditions.
Have rates been falling or increasing in the last 5 years? What does the lender think will happen over the next five to ten years? At the time of the writing of this article, rates were at 40 year lows, and are expected to increase over the next few years. Not the best time for an ARM in my opinion. If rates were substantially high, and expected to decrease in the coming years, adjustable rate mortgages would be more attractive to the borrower.
5. Review the worse possible scenario.
Using the information obtained from the lender, get an understanding how bad it could be. If the loan increased to the maximum interest allowed in the contract, how much would that cost me per month? Can I really afford it? Ask the lender as many questions as you can think of. Review the truth in lending (typically referred to as the good faith estimate) provided by the lender. Specifically, review the total interest over the life of loan, and compare to other mortgage options.
RODRIGO
An adjustable rate mortgage (often referred to as an ARM) is a type of loan that offers a varying rate of interest at different times during the repayment period. These rate changes often occur on an annual basis, and depend on market conditions as to whether the rate will increase or decrease. ARMs are attractive because they usually offer lower initial rates of interest than comparable fixed rate mortages. The 5 things you need to know about adjustable rate mortgages are:
1. Know when the rate is subject to change. Some common examples of an ARM include:
* 3/1 ARM – Rate is fixed for the first 3 years, then subject to change once per year thereafter.
* 5/1 ARM – Rate is fixed for the first 5 years, then subject to change once per year thereafter.
* 7/1 ARM – Rate is fixed for the first 7 years, then subject to change once per year thereafter.
2. Know what the rate increase ceiling is (if the loan even has a rate ceiling).
Typically, adjustable rate mortgages will offer a contractual maximum increase per year so the loan doesn’t get out of control. I have seen some offer around 2% for an annual rate increase ceiling (meaning if your rate was 6%, then the rate could not increase to more than 8% the next year). Many ARMs also offer a total rate ceiling, usally offered as a fixed addition, e.g.the rate cannot increase more than 6% for the life of the loan. These are very important conditions that anyone interested in an adjustable rate mortgage should look for and evaluate.
3. Have a plan for the future.
If you plan to sell the house before the adjustment period of the ARM begins, then maybe it is a viable option to consider. If you want to buy a little more house, and you think you will obtain better employment or a higher salary later, adjustable rate mortgages offer a lower initial monthly payment due to the lower initial interest rate. If you are looking to buy a house to live in for some years to come, think twice before getting an ARM; fixed rate mortgages tend to be better for this situation.
4. Ask the lender about market conditions.
Have rates been falling or increasing in the last 5 years? What does the lender think will happen over the next five to ten years? At the time of the writing of this article, rates were at 40 year lows, and are expected to increase over the next few years. Not the best time for an ARM in my opinion. If rates were substantially high, and expected to decrease in the coming years, adjustable rate mortgages would be more attractive to the borrower.
5. Review the worse possible scenario.
Using the information obtained from the lender, get an understanding how bad it could be. If the loan increased to the maximum interest allowed in the contract, how much would that cost me per month? Can I really afford it? Ask the lender as many questions as you can think of. Review the truth in lending (typically referred to as the good faith estimate) provided by the lender. Specifically, review the total interest over the life of loan, and compare to other mortgage options.
RODRIGO
Mar
11
Filed Under Mortgage | Leave a Comment
Felix Maudio asked:
gage Payments: Get Your Mortgage Paid For FREE
The most important thing you must realize about a mortgage is that what you believe it to be is actually wrong. Often referred to as a mortgage home loan, they are not a loan in the traditional meaning of the word. The mortgagor is the person who owes money to the mortgagee (the person who finances the deal) using a legal contract called a mortgage. In fact, in reality, this isn\’t the debt but the security required by the lender to protect their interests for the duration of the term.
The facility that a mortgage creates means individuals and companies can acquire land or property without needing the full face value to purchase it at the time. To help understand how this works, some important information is discussed here. The mortgagor who is also referred to as the Borrower (leading to the false impression that it is a loan) and the mortgage, who is also called the Lender (again, falsely leading you to think that a loan has been agreed). The security the mortgagee uses is called a lien which is a legal term that stays in force until all monies are repaid.
The mortgagee\’s money is then protected by this knowing the property is in fact security against its own debt. The lien (document) is normally recorded at the local courthouse in the public records section. So while the property is recorded as yours, there is an interest in its ownership which cannot be altered until the debt is paid off. Even if your property is mortgaged, you still own the property wholly and completely and nobody else, not even the mortgagee has title to the property.
However if the mortgagor or the owner defaults on his or her payments, the mortgagee has the right to dispose of the property to reclaim funds. In the unfortunate event that requires the property to be sold or Foreclosed, then the case will need to be presented to the courts for approval. This is a further step but it is a legal formality which needs to be taken and is often referred to judicial foreclosure. This is only a short introduction as the subject is much more complex but this information should make this important issue much clearer.
Click Here To Get $1500 To Pay Your Mortgage Instantly!
LESLIE
gage Payments: Get Your Mortgage Paid For FREE
The most important thing you must realize about a mortgage is that what you believe it to be is actually wrong. Often referred to as a mortgage home loan, they are not a loan in the traditional meaning of the word. The mortgagor is the person who owes money to the mortgagee (the person who finances the deal) using a legal contract called a mortgage. In fact, in reality, this isn\’t the debt but the security required by the lender to protect their interests for the duration of the term.
The facility that a mortgage creates means individuals and companies can acquire land or property without needing the full face value to purchase it at the time. To help understand how this works, some important information is discussed here. The mortgagor who is also referred to as the Borrower (leading to the false impression that it is a loan) and the mortgage, who is also called the Lender (again, falsely leading you to think that a loan has been agreed). The security the mortgagee uses is called a lien which is a legal term that stays in force until all monies are repaid.
The mortgagee\’s money is then protected by this knowing the property is in fact security against its own debt. The lien (document) is normally recorded at the local courthouse in the public records section. So while the property is recorded as yours, there is an interest in its ownership which cannot be altered until the debt is paid off. Even if your property is mortgaged, you still own the property wholly and completely and nobody else, not even the mortgagee has title to the property.
However if the mortgagor or the owner defaults on his or her payments, the mortgagee has the right to dispose of the property to reclaim funds. In the unfortunate event that requires the property to be sold or Foreclosed, then the case will need to be presented to the courts for approval. This is a further step but it is a legal formality which needs to be taken and is often referred to judicial foreclosure. This is only a short introduction as the subject is much more complex but this information should make this important issue much clearer.
Click Here To Get $1500 To Pay Your Mortgage Instantly!
LESLIE
Feb
28
Filed Under Mortgage | Leave a Comment
FortLauderdale Mortgage asked:
Fort Lauderdale Morgage Broker
Any Fort Lauderdale mortgage broker that wants to get ahead and increase their business will certainly be turning to a provider of commercial Fort Lauderdale mortgage leads.
They get these leads by pushing a free Fort Lauderdale mortgage quote if the possible customer takes the time to fill out some pretty basic information and submit it to them. Once their information makes it to the advertising company, they are sure to receive a free guess within a specific amount of time. This saves them time and also provides Fort Lauderdale mortgage corporations the opportunity at a lead that may lead to a sale. It’s done with reverse Fort Lauderdale mortgage lead and just about each other conceivable finance related product.
Many Fort Lauderdale mortgage corporations will contact these lead generating firms to purchase the leads from them. This saves time and money for the Fort Lauderdale mortgage company because they do not need to spend any time researching potential business opportunities.
There are two types of Fort Lauderdale mortgage leads that may be bought. The most costly but also must helpful leads are the exclusive leads. An exclusive lead is only sold to one individual and that is why it costs so very much more.
If you want to have an exclusive lead and not need to compete against other Fort Lauderdale mortgage agents then it is surely worth the additional cash to get the Lead as an exclusive lead. By employing Fort Lauderdale mortgage leads you are bringing folks that are definitely considering getting a loan right to you which should lead to higher sales in a shorter amount of time.
RIGOBERTO
Fort Lauderdale Morgage Broker
Any Fort Lauderdale mortgage broker that wants to get ahead and increase their business will certainly be turning to a provider of commercial Fort Lauderdale mortgage leads.
They get these leads by pushing a free Fort Lauderdale mortgage quote if the possible customer takes the time to fill out some pretty basic information and submit it to them. Once their information makes it to the advertising company, they are sure to receive a free guess within a specific amount of time. This saves them time and also provides Fort Lauderdale mortgage corporations the opportunity at a lead that may lead to a sale. It’s done with reverse Fort Lauderdale mortgage lead and just about each other conceivable finance related product.
Many Fort Lauderdale mortgage corporations will contact these lead generating firms to purchase the leads from them. This saves time and money for the Fort Lauderdale mortgage company because they do not need to spend any time researching potential business opportunities.
There are two types of Fort Lauderdale mortgage leads that may be bought. The most costly but also must helpful leads are the exclusive leads. An exclusive lead is only sold to one individual and that is why it costs so very much more.
If you want to have an exclusive lead and not need to compete against other Fort Lauderdale mortgage agents then it is surely worth the additional cash to get the Lead as an exclusive lead. By employing Fort Lauderdale mortgage leads you are bringing folks that are definitely considering getting a loan right to you which should lead to higher sales in a shorter amount of time.
RIGOBERTO