Fixed Rate Mortgage

Questions frequently arise regarding the advantages and disadvantages of fixed rate mortgages. Sometimes the advice is straightforward and helpful, whilst at other times it can be misleading. An interesting article about fixed rate mortgages can be found at Fixed Rate Mortgage-Free Mortgage Advice. An extract from the article is reproduced below.

"As the name suggests, a fixed rate mortgage is an arrangement under which the sum borrowed is repaid over an agreed number of years, at a constant rate of interest, agreed at the time the mortgage loan is negotiated.

Many people prefer fixed rate mortgages because they are not subject to interest rate fluctuations, so they are better able to control their finances. Fixed rate mortgages enable people to plan ahead, without the possibility of rising interest rates creating hardship.

As with other types of mortgage, a fixed rate mortgage may run for differing terms, to suit the applicant. Loan terms of between 15 and 30 years are fairly common, and either could be suitable for particular circumstances. Obviously the monthly repayments would be higher for a fixed rate mortgage over the shorter term, but the total outlay would be considerably less than for a longer term deal. It is really a case of what you can best afford, in consideration of your present and future circumstances."

If you would like to read the full article please visit Fixed Rate Mortgage-Free Mortgage Advice.


First Mortgage Loan

One of the most exciting things to contemplate, as young people become young earners, is owning a home of their own, and embarking upon their first mortgage loan. It is not a decision to be taken lightly and it should be realized that if it runs for the full term, that first mortgage loan would have cost more than the property it is associated with.

As an example, consider a first mortgage loan of $250,000 at 8% with a 30-year repayment term. By the time the loan was paid off, to the extent of the property becoming debt free, over $410,000 in interest would have been paid. The upside is that over the years domestic property has proven to be a sound investment, and historically prices have risen over time. Therefore, as well as the obvious pleasure of living in a home you enjoy, there has been an overall financial gain.

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Not least because of the relatively large amount of money involved, those seeking a first mortgage loan should do their homework thoroughly. Not all mortgage deals are the same, but fortunately there is no shortage of advice from which intending homebuyers could benefit. For instance, you may consider a:

Fixed Rate First Mortgage Loan

With fixed rate mortgages the interest rate is set at the start to be continued throughout the term, regardless of whether it is for ten, twenty, thirty, years or any other period. Such a first mortgage loan would have the advantage of ensuring that the interest rate did not vary, upwards or downwards, no matter what else was happening in financial markets. It would be a good way of being aware of your obligations and of knowing that they should remain constantly affordable.

With a fixed rate first mortgage loan, you could be sure that if market rates were, to rise suddenly, your outlays would not be affected. Playing it safe, is a good way forward for many people, and a fixed rate mortgage offers that sort of opportunity.

Adjustable Rate Mortgage Loan

There are undoubtedly many people who have gained financially from an adjustable rate mortgage loan. However, before you enter into such a deal you should be aware that interest rates could go up as well as down. If your finances are less than predictable, an adjustable rate mortgage could be too much of a risk. On the other hand, if your circumstances are absolutely secure, you may consider that some risk is justifiable, and could pay dividends.

Balloon First Mortgage Loan

If you do not intend to remain in your first house for long, you could consider a balloon first mortgage loan. This would provide funds at a low rate of interest for an agreed period of a few years after which the rate would rise significantly. If your circumstances were to change, as a result of which you decided to stay put, your outgoings could rise dramatically.

You should be able to grasp why proper planning and an understanding of mortgage markets is vital. There is no great virtue in biting off more than you can chew. Fortunately, there is so much good advice available, from qualified advisors, books and libraries, and of course the Internet. So please do your homework and you have every chance of negotiating the best mortgage deal to suit your personal circumstances.


Amortization Mortgages-Free Mortgage Advice

Understanding Amortization Mortgages

Many prospective home buyers are aware of the term, amortization mortgage, but that does not mean to say that they understand all its implications. Because home loans are about the largest financial commitment many people will enter into, it is essential that they familiarize themselves with amortization mortgages amongst other considerations.

There is an interesting article covering amortization mortgages on the Free Mortgage Advice web site, Amortization Mortgages-Free Mortgage Advice, and an extract is reproduced below:

"An amortization mortgage requires the repayment of the amount borrowed by periodic repayments, usually monthly, over an agreed period of time.

Amortization mortgages are frequently used to pay off home loans by equal monthly installments. There are two parts to an amortization mortgage, namely the principal amount that is the sum of money borrowed, and the interest amount that is the benefit due to the lender for providing the money.

The principle is at its highest at the time the loan is initiated, and in the early years most of the monthly repayments mainly pay off the interest, with a relatively small sum being applied to reduce the amount borrowed. During the latter years the situation reverses and a greater proportion is applied against the principle. Some borrowers have failed to grasp this aspect and have been disappointed, to learn how much of the principle remains, if they have decided to pay off their mortgage, even after an initial period of ten years or so into a thirty year term."

To read the full article please visit the Free Mortgage Advice Web Site.

Mortgage Payments Help - Will Obama Follow Brown?

The UK Prime Minister, Gordon Brown, has announced plans to enable people who are struggling to meet their mortgage payments, to receive generous assistance. This is a move to try to stem an increasing number of foreclosures that have been forecast to rise to similar levels as those experienced in the recession of 1991.

This latest initiative, to assist with mortgage payments, is aimed primarily at people whose jobs are at risk, or where a demonstrable drop in income has occurred. Help is to be available for up to two years and for mortgages secured against properties valued at up to £400,000. It seems that many, but not all, of the major lending authorities have agreed to participate in the scheme.

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It would appear that full details of the intended scheme are still being assessed. However, it would seem to be of potential benefit to both borrowers and lenders. It would assist borrowers with their mortgage payments, during difficult times, and the government would guarantee any additional exposure by the loan sources. If the circumstances of participants had not improved, after the two-year period, the banks would not suffer additional losses because of their commitment to the plan.

There can be no more unpleasant prospect than the threat of losing a home, when job prospects are declining, and mortgage payments are high. Therefore, most pundits have welcomed the plans as a step in the right direction. Others have suggested that it may be only delaying the inevitable. But that is a gloomy view, and the whole world has a vested interest in doing whatever possible, to limit the effects of the downturn.

The situation in the United States will be clearer after the inauguration, but as with Prime Minister Brown it is known that President-elect Obama, will want to do all he can to help homeowners at risk. Global problems need global solutions to restore the confidence that is currently lacking.