Mortgages

How to Choose a Relevant Home Loan

Author: Gary

For most people, getting a home would be the most expensive investment ever made in one’s lifetime. That’s simple because of the long term financing required.

A home loan (or mortgage loan) is considered a term loan, secured on a property that you purchase. And depending on which part of the world you live in, the lending bank will have first charge on the property, followed by your local government’s provident funds board.

Before you go about hunting for a ideal home loan, do consider the following basic factors:

a) As a general rule of thumb, your requested home loan monthly instalments and other long term debts, such as car loans, etc, should not exceed more than 35% of your gross monthly income (note that by the definition “gross”, we are referring to prior deduction for local taxes);
b) Always allow a percentage for foreseeable contingencies, such as a potential increase in your requested bank home loan over the defined loan period;
c) If your state or country you live in allows for government interest free loans, find out what is the limited percentage you can utilize;
d) Remember to factor in the bank’s defined overdue interest rate should there be a possibility of you defaulting the current month’s loan repayment;
e) In case you’re not aware, in the event that if you fail to pay your instalments within the stipulated timeframe, the bank has the right to exercise the option of recalling the loan and repossess your purchased property as well; and,
f) In the event of a repossession, and the sales of your property are not able to cover the loan amount and interest from your agent bank, you may be made a bankrupt, should you not be able to compensate on the shortfall amount.

As a general principle, home loans can be classified under two broad categories: Fixed rate loans, and Floating or Variable rate loans. Let’s examine the main differences in these two types of loans.

Fixed rate loans as the name implies, indicates that the interest rate is guaranteed and fixed in the first few years on the borrowed principal sum. This is a good option to consider during economic periods where the interest rate is low, or if your want to budget with certainty over the first few years, since the interest rate will not fluctuate nor change, even if interest rates rise or fall during that defined initial period. As such, this form of loan is ideal for newly-wed couples or folks who have just landed a stable monthly based income job. However, do note that after this period, the interest rate will be recalculated to factor existing market conditions.

Floating or Variable rate loans on the other hand will fluctuate in accordance to the economic market. However, before you go assuming that if the market goes down and expect the banks to lower their interest rates, think again! Trends have often shown that banks usually take awhile to adjust the lending interest to home owners downwards, but are often quick to adjust upwards in possible times of uncertainty. And depending on where you live in, banks are usually obligated to inform borrowing parties with a thirty day advance notification before adjusting this lending interest. Likewise, as a home owner, you have the right to re-adjust or exercise your refinancing options.

As a word of consideration, you should speak with the bank only when you intend to shorten your home loan period, rather than if you wish to lengthen it since this will likely have an effect on the overall interest rate and period.

Do visit our link to find out more on how you can further reduce your home loans and other related loans as well.

About the Author:

Gary is currently pursuing his MBA and majors in business continuity and loans finance. He is also currently working in the homelands security industry. To find out more about home loans and related loans, do visit: http://www.bizenginesite.com/loans

Article Source: http://www.articlesbase.com/mortgage-articles/how-to-choose-a-relevant-home-loan-748418.html

Mortgages

Top 5 Reasons People Get Reverse Mortgages

Author: Justin Narin

Once you’ve done your research on reverse mortgages and gained a more complete understanding of the product, the next step is to decide if a reverse mortgage is right for your situation. If you’re eligible (a homeowner 62 years of age or older with equity in your principal residence), this may be a quick decision or one that requires a bit more consideration. Below are the top 5 reasons people get reverse mortgages:

~ Retire in style! – Most homeowners getting close to retirement age have spent that last thirty years or more making mortgage payments; depending on where you live, this monthly obligation could be anywhere from a few hundred dollars a month to a few thousand dollars a month and beyond – phew! Every month that one big check goes out the door to the bank and leaves you with that much less cash to save, invest or spend on the items you need and want. How great is it to finally turn the tables on Main Street Bank, where they now send you a check each month? Most retirees have steady monthly costs, such as housing, medical, insurance and other necessary expenses. For non-working retirees, those expenses are managed with a fixed income from retirement accounts, pension plans, social security or other plan.

The reverse mortgage allows a retiree to increase their fixed income and provide cash to do some things that they might otherwise not be able to afford to do. Typically, the personal quality of life is the number one reason people get reverse mortgages.

~ Pay hospital or medical bills – For many older Americans and retiree’s medical issues are an increasing reality in their daily lives. With the ever rising cost of healthcare, this can put tremendous demands on a fixed income. Ongoing medical treatments, prescription drug regimens, or a large one-time (possibly unforeseen) medical bill are all top reasons that people get reverse mortgages.

~ Improve or modify a home – While this may not be an expansion of the home, the early part of retirement is a great time to re-purpose your house to accommodate the way you will be living for the next ten, twenty, thirty years and on. Maybe it’s time to expand the kitchen, widen the hallways or remove some steps, or exchange the old pool in the backyard for a beautifully landscaped garden. As we get older, a top reason people get reverse mortgages is to outfit their house for their new lifestyle.

~ Dream vacation anyone? – What better time to just get away than when your working days are behind you and the weather turns a bit gloomy? Proceeds from a reverse mortgage have allowed many homeowners to take that vacation they’ve always dreamed about, but never had the time or resources to take. Bon voyage!

~ Pay off high interest rate or problematic debts – With the large amount of debt that the American consumer accumulates over a lifetime, it should be no surprise that this is a top reason people get reverse mortgages. Whether its high interest rate credit cards, a relative’s student loan debt, or even a potential foreclosure that must be dealt with, reverse mortgages can be a very effective way to get a large sum of cash to manage other debts.

These are the top 5 reasons people get reverse mortgages – once you’ve made a decision to move forward with a reverse mortgage, send us your top reasons and we’ll add them to the list!

For more articles on Reverse Mortgage visit: http://www.bills.com/reverse-mortgage-info-article/

About the Author:

Justin has 5 years of experience as a financial adviser; his key areas are loan consolidation, debt relief, mortgages etc. For more free articles and advice visit http://www.Bills.com.

Article Source: http://www.articlesbase.com/mortgage-articles/top-5-reasons-people-get-reverse-mortgages-751314.html