Home Loan Basics
Keywords: Mortgages, mortgage, uk, home loan, loans, loan, uk, compare, adverse, credit, debt consolidation
Owning a home is a dream that many people share. Understanding the basics is a good first step in homeownership. This article will explore a few of the fundamental issues concerning homeownership and the terms associated with the process.
The vast majority of people looking to buy their own homes have to rely on financial help. Generally, this financial help comes from banks or mortgage lenders. Some of the terminology these agencies use can be confusing. Let’s look at some of them.
Mortgage: Mortgage is a term that you will hear over and over again as you move through the process of buying a home. In simple terms, a mortgage is a type of loan used to buy real property such a home or land. In essence, a bank or mortgage lender will loan you the money to make the purchase and they will hold the home or the land as security for the loan.
When you take the mortgage loan, the lender will hold the title to the property until the debt is paid off. If you cannot or do not make the required payments on the property, the lender may sell the property in order to recoup its money. This is known as foreclosure.
PITI: PITI stands for Principle, Interest, Taxes, and Insurance. This is a common term used during the home buying process.
Down Payment: As far as home loan basics are concerned, the down payment is the amount of money that you pay upfront. In a traditional sense, the down payment is money that you already have saved. The more of your own money that you can apply to the down payment the lower your payments will be. Conversely, if you make no down payment at all (or a very small one) the higher your monthly payments will be. A general rule of thumb is to have at least 3-5% of the cost of the home as a down payment.
Principal: The term principal is the total amount of money that you are borrowing from the lender. In other words, principal is the cost of the home or land, minus the down payment that you make.
Interest: Interest is the amount of money that you pay the lender for its services. This is above and beyond the principle amount. Interest is assigned as a percentage and it may come as either a fixed rate or a variable rate. The lower the interest rate on the loan, the less your payments will be.
Taxes: Many home shoppers do not realize the impact that taxes will have on their loan or the buying process in general. All home buyers are required to pay property taxes. The amount of the tax is often put into an escrow account where a third party will hold the money until the deal closes and the money is released to the taxing agency.
When considering buying a home make sure you take into account the various taxes that you will have to pay during the course of the year or at year’s end. These taxes must be paid so ensure that you plan for them.
Insurance: Insurance is another obligation and payment that you will be required to take on when you buy your home. The lender will require a certain amount of insurance on the home, but you will probably want to add other types as well. For instance, if you live in a flood zone you will probably want flood insurance.
Closing Costs: Closing costs can vary from one lender to the next so make sure you understand what your lender is charging. In general, closing costs include loan origination fee, title search fees, discount points, survey fees, appraisal fee, title insurance, deed-recording fee, and credit report charges.
These are only a few of the home loan basics. Home shoppers can find much more information on the home buying process either online or through a reliable real estate agent.
Peter Kenny is a writer for The Thrifty Scot, please visit us at www.thriftymortgages.co.uk and www.thriftyscot.co.uk
Previous Articles Highlighter:
How To Dispute Your Credit Report (1)
If the lender determines that the information you are disputing is indeed wrong, it is required to make a correction and to update the account with all three credit bureaus.
Stop Credit Card Debt And Get Your Finances In Order (2)
If they do this, and you continue to pay the minimum, you can see how you will never pay off the total balance or even pay it down at all!
How To Train Your Eye For Foreclosure Investing (3)
It costs very little money to train your property developer's eye. By simply purchasing a map and scouting out local neighborhoods, you can develop several of the essential skills needed for good foreclosure investing.
The Top 5 Ways To Build Your Credit Score (4)
Don't Get Rid of Old Accounts. Old credit cards are beneficial to you because they show that you have a long, and hopefully healthy, credit history. Even if you do not have such a great payment history with these old cards, you are better off leaving them open.
Choosing A Good Financial Recruitment Agency (5)
At the end of the day this is what you care about- getting your dream job which will push your banking or financial career forward. You need an agency with access to the top positions at the top banks and financial firms, who can speak directly to their recruitment teams and recommend you for the right positions.
Texas Homestead Exemption (6)
Many other states may not have these restrictions. The amount of the loan plus the balance of the first mortgage is not allowed to exceed eighty percent of the property value.
How Is A FICO Credit Score Determined? (7)
Multiple inquiries within a relatively short period of time have a negative effect on your FICO score, especially if these are credit card inquiries. The fewer the inquiries the better.
Money Saving Tips: Knowing Where To Begin (8)
When confronted with this they tend to feel quite angry for allowing this to happen. The second being, you will implement a plan for change. You will quickly start to prioritize your spending and cut out many of those expenditures that you don't really need.
Rewards Credit Cards Are My Best Friend (9)
If you are going to have a credit card, why not get one that will give you a little bit back for the money you spent with your credit card?
Stay At Home Moms - Dare Yourself To Save Money (10)
This can help to keep you from overspending when you're at the grocery store. Absolutely forbid yourself to use the checkbook or credit card instead. There are times where it's really hard to minimize your spending.
What If I Cannot Make A Loan Payment? (11)
Do not get too creative at this point. If the reason you cannot make the loan payment is a temporary one and you expect to be back to normal in a short while, tell them so.
How To Raise The Limits On Your Credit Cards (12)
Second option: There are some occasions when you are in need of something that will cause you to charge over your limit. In this case, raising your credit limit is a must if you want to avoid spending money on penalties and keep from decreasing your credit score.
Eliminate Debt? The Unforgiving Truth Behind Paying Off Your Personal Debt! (13)
Credit Cards for Everyday Purchases: If you are using your credit cards for buying gas or food then again you know that cash is being spent on something that it shouldn't be.
Should You Prefer Your Home Equity Line Of Credit Or Your Credit Card? (14)
If you make new purchases with the same card, you may very well have to pay a regular interest rate on those new purchases. It is best to just put the card in a safe place and forget that it's there.
What You Need To Know Before Committing To Student Loans (15)
Since you will likely have a long stretch of time between when you receive the funds and when you repay them, keep all of your student loan paperwork in one place.
The Top 3 Pitfalls Of Refinancing Your House To Pay Off Your Credit Cards (16)
The top three pitfalls of refinancing your house to pay off your credit cards may shed a little light on the subject, and it just might change your mind. 1.
Tips For Choosing A Gas Credit Card (17)
There is a catch, however - for cards with 5% rebates, you may find that there is a cap on the amount of gasoline spending that the card can pay out for.
What Is An Unsecured Loan? (18)
Order copies of your credit report before you apply for the loan. When you receive your credit reports, examine them carefully for errors or omissions. If you find mistakes notify the agency via their contact policy and have the mistakes fixed as quickly as possible.
How To Find The Right Home In Any Real Estate Market (19)
As mentioned a moment ago, for most people the most significant investment that they will make during the course of their lifetime is the purchase of home. Chances are this is the case with you as well.
How To Find Your Best Mortgage Deal Online (20)
It is also worth having a look online at the types of mortgage available, before you go ahead and find an advisor. Different Types of Mortgage Mortgages can be interest only, where you pay off the loan at the end of the term using an endowment, pension plan or ISA savings plan, or repayment mortgage, where you repay both capital and insurance to your mortgage provider.
Newer Articles Highlighter:
FICO Score 101 (1)
However,the components of your credit history that are used in calculating your score are known: Payment history 35% It is important to lenders to know how responsible you are in paying your bills in a timely manner.
Consumers 'Switch Off' When It Comes To Financial Planning (2)
"With retirement income, the difference between 'what people want' and 'what people will get' is very different and it's essential that individuals face up to their needs in retirement." Mr Brown added that because of "current trends" such as increasing life expectancy, it is crucial that Britons take the time to begin planning for their financial future "as we are reaching a point where some people will spend almost as long in retirement as they will in work".
Credit Score: True Or False (3)
Educating yourself about credit scores is highly recommended and will ensure that you are doing what you can to improve your own credit rating. Peter Kenny is a writer for Finance 123.
How To Be A Mortgage Expert: Use A Title (4)
But to get the award, you have to advertise in the magazine. Great idea isn't it? What is keeping you from becoming "The Greatest Loan Officer in the World"?
Avoiding Sour Negotiations In Real Estate (5)
Basically, understand the other party's situation so that you can try to come up with something that might benefit them as well as who you are representing. That way, you can hopefully turn the negotiations into a win-win situation.
Scottish Borrowers 'Hit Hard' By Rising Levels Of Debt (6)
However, as with any form of borrowing, consumers opting for such a loan should look to keep up with demands for payment, otherwise they could find their debt problems worsening.
Selling Homes By Owner: Setting Up Your Website (7)
However, the impact of your "squeeze page" can greatly affect your ability to attract buyers to your home. The purpose of this page is to capture contact information, especially the email address, from each and every visitor to your website.
Why Have A Realtor? (8)
A good Realtor also has the professional experience to handle all the aspects of an offer, negotiating, and closing process. There's more to offers than just a piece of paper with some signatures.
What Is A Credit Score? (9)
The score is simply a number that indicates what you have done in the past regarding credit. Lenders can'tt simply take your word that you will pay a bill, so be sure to make positive financial decisions so your score will indicate your responsible financial habits.
Best Ways To Improve Your Credit Score (10)
In many cases, your creditor or lender arrange to waive a monthly payment. Many lending institutions have online bill paying systems that allow you to send payments automatically. If your bank has this system, use it to avoid falling behind on your monthly payments.
Surge In Debt Noted Among Young Homeowners (11)
This is mostly because property wealth and mortgages have doubled in size. This is probably a result of people putting down larger deposits after getting help from parents. But the average mortgage debt of younger house owners has increased more proportionally than their household income." As a result, Mr Lloyd claimed that the government needs to continue developing new financial advisory services - which could help consumers adopt a more responsible attitude towards managing their money and repaying loans - and study how living in debt "affects the behaviour and choices of younger cohorts".
How Do I Calculate Finance Charges? (12)
In this case, $1860 divided by 104 weeks equals $17.88 per week. Calculating simple finance charges is easy once you have done some practice with the formulas. Peter Kenny is a writer for The Thrifty Scot, please visit us at www.loansubmit.co.uk and www.thriftyscot.co.uk
Brits Look To Treat Themselves After Reaching 'Financial Targets' (13)
Consequently, there is nothing wrong with rewarding ourselves generously after we reach our financial targets". "But the road to complete financial independence is not about setting a single set of objectives, it's about constantly setting and reviewing new goals for ourselves.
Relying Too Much On Credit Can 'Deepen Debt Difficulties' (14)
Meanwhile, the Derby Citizens Advice and Law Centre has dealt with more than 3,500 financial advice cases, as residents in the city cope with some 4.5 million pounds of debt incurred via loans and other means.
AI: Alpha And Index Funds (15)
A quick digression for those of you who aren't familiar with alpha and beta. In traditional finance, return not correlated with a broad market index, such as the S& P 500, is referred to as alpha.
Mobile Bills Could Cause 'Unpleasant Shock' For Tourists (16)
Meanwhile, the mobile phone operator stated that for tourists travelling outside the EU, there are no restrictions on how much they could be charged, which consequently could see such holidaymakers facing increased debt difficulties.
People Need To Be 'Tax Savvy' With Their Finances (17)
With this equating to an overall tax waste of 125 million pounds, if Britons were more prudent with their finances, the funds could have been used to service demands on their spending such as utility bills, mortgages and personal loans repayments instead.
Brits Need 'Control Of Financial Affairs' (18)
In research carried out by Barclays Financial Planning, 51 per cent of employers at small to medium-sized enterprises (SMEs) are worried that staff are not putting enough money into pension accounts.
Mortgage Marketing Techniques - Generating Mortage Leads (19)
The leads that these companies help you and other mortgage professionals get are called mortgage marketing leads. The Advantages By and large, mortgage marketing leads are more successful than other types of leads you might get.
Car Buyers 'Should Take Time' When Purchasing (20)
Some manufacturers now let you test drive a car over 48 hours, or sometimes even longer," the NFDA director asserted. Upon receiving their car, motorists were advised to make sure it is in perfect working condition and that all tax and insurance documentation are in order.