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)
It is recommended that you also include a copy of the credit report highlighting the information that is questionable. WHen they receive your letter, the credit bureau will look into your claim and forward any details you provide about the claim to the institiution or lender who provided the initial information.
Stop Credit Card Debt And Get Your Finances In Order (2)
With a 29.99% card you pay about 2.5% interest per month on your balance. So, if you owe $2,000 on a card that is charging this excessive and unseemly rate, you would be paying $50 the first month just in interest!
How To Train Your Eye For Foreclosure Investing (3)
Once you have a feel for the neighborhood, practice finding the home that doesn't quite fit. Or home that is dressed with grasses; or house that is not fixed.
The Top 5 Ways To Build Your Credit Score (4)
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)
The land must be owned by the homeowner and be used as a yard or other purpose related to the use of the homestead. Individuals may also be eligible for an exemption if they are unable to gain work due to physical or mental disability or you are 55 years old and blind and unable to work due to the blindness.
How Is A FICO Credit Score Determined? (7)
Each credit account you hold reports your payments as either on time or late. Late payments are reported as being 30-, 60-, 90-, and 120-days late. After six months of no payments being made, many creditors charge-off your account, considering it an uncollectible account.
Money Saving Tips: Knowing Where To Begin (8)
This situation similarly apply to other expenditures that we think has just little contributions to our total money-spending. We should realize this thing. Once you see how much money is wasted on insignificant items such as these two things will likely happen.
Rewards Credit Cards Are My Best Friend (9)
The bottom line is that when you use rewards cards, you basically get back a portion of what you spent on your credit card, though perhaps in a different form.
Stay At Home Moms - Dare Yourself To Save Money (10)
But as you improve your overall spending habits you can be better prepared to cope. Stephanie Foster runs www.homewiththekids.com as a resource for moms who want to stay at home.
What If I Cannot Make A Loan Payment? (11)
So what can the consumer do if he does not have the cash to pay on a loan? Here are some tips to help reduce any problems you may encounter when you cannot make a loan payment.
How To Raise The Limits On Your Credit Cards (12)
The biggest question concerning your need for a higher credit limit is, "Could I pay it back if I spent that much?" No matter how high your limit is, you still have to pay back what you spend.
Eliminate Debt? The Unforgiving Truth Behind Paying Off Your Personal Debt! (13)
Minimum Payments: If you are only able to make the minimum payments then you know that trouble is lurking. In order to eliminate that debt you have to be able to make a payment that is larger than the minimum.
Should You Prefer Your Home Equity Line Of Credit Or Your Credit Card? (14)
There are pros and cons to both sides, but it really depends on the homeowner. Court helps people to learn about understanding credit cards. You can read more of his work by visiting: applyforcreditcards.name.
What You Need To Know Before Committing To Student Loans (15)
While student loans are in place to assist you with the cost of college they should be used wisely. Take the time to establish a budget of what you can pay on your own for college.
The Top 3 Pitfalls Of Refinancing Your House To Pay Off Your Credit Cards (16)
Why not? That would relieve some of your interest rates and a whole lot of your stress, and you are already paying on your mortgage anyway, so what could it hurt?
Tips For Choosing A Gas Credit Card (17)
2 - Flexible Cards These flexible gas credit cards are generally the brainchild of a bank that realizes that some consumers want to have the option of giving their business to whichever gas company provides the best price, or is the most convenient wherever they happen to travel.
What Is An Unsecured Loan? (18)
Here are a few tips you can use to help improve your odds of getting an unsecured loan. Be truthful on the application form. The information that you supply will be checked, and if you are using false information the lender will be much more hesitant to trust you with a loan, especially one that is not secured with collateral.
How To Find The Right Home In Any Real Estate Market (19)
A person investing in real estate normally examines any issues pertaining to zoning. Many people either overlook or do not sufficiently examine covenants that are attached to residential real estate.
How To Find Your Best Mortgage Deal Online (20)
Keywords: Mortgage advice, Mortgage brokers, Financial advice Whether you are looking to find your first home, take on a council property under your "right to buy", consolidate your debts, find property abroad or finance a self build, there is a mortgage advisor out there who will be able to help.
Newer Articles Highlighter:
FICO Score 101 (1)
While there is no perfect formula for the kinds of credit accounts you should have, it is good to have loans as well as revolving credit. This part of your score plays a larger role when you don't have a lot of other information in your credit report.
Consumers 'Switch Off' When It Comes To Financial Planning (2)
However, with this figure said to be 14 times the typical amount of annuity that is actually taken out, consumers may well find themselves struggling to manage their finances, which could incorporate paying utility bills and servicing secured loan payments, as they are older.
Credit Score: True Or False (3)
After that time, the credit reporting agency will either remove the information from your credit report, provided it was truly incorrect, or inform you why it will not be removed.
How To Be A Mortgage Expert: Use A Title (4)
"I hereby appoint you an expert in the field of mortgage brokerage by all the power given to me by the Great Board of Loan Officer Experts which I just created" Ameen Kamadia is known in the mortgage industry as "The Millionaire Loan Officer".
Avoiding Sour Negotiations In Real Estate (5)
From the buying perspective, if we take the fridge example again, is it really worth the fridge to spend more time looking and spend money on another inspection? Sometimes your client will say that it is worth ending the deal, and in that case, you will represent them as they want, but most people become rational after they get past the initial emotions of "wa nting" something.
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)
This is a very important step that is often glossed over. However, the impact of your "squeeze page" can greatly affect your ability to attract buyers to your home.
Why Have A Realtor? (8)
Purchasing a home is most Americans' primary investment. When making any other investment, it makes sense to consult with an expert, so why go at it alone? Find a good Realtor who fits with your values and has the right experience to help you.
What Is A Credit Score? (9)
Other factors that have an affect on a score are the amount of debt, length of credit history, recent credit applications, and types of credit. A low debt level, longer credit history, fewer loan applications, and a variety of different kinds of credit are positive factors that will increase a consumer's score.
Best Ways To Improve Your Credit Score (10)
Begin taking the steps to improve your score now and you will enjoy the positive effects once your score begins to improve. Peter Kenny is a writer for Finance 123.
Surge In Debt Noted Among Young Homeowners (11)
However, despite such statistics the study also pointed to an increased difficulty on the part of the young in handling their finances, as the average mortgage debt was revealed to have doubled over the space of the ten years.
How Do I Calculate Finance Charges? (12)
Weekly payment amount = total repayments divided by loan period, T, in weeks. 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.
Brits Look To Treat Themselves After Reaching 'Financial Targets' (13)
David Kuo, head of personal finance for the Motley Fool, said: "It seems that many of us believe that charity begins at home even after we achieve our financial goals.
Relying Too Much On Credit Can 'Deepen Debt Difficulties' (14)
He suggested that by consistently looking to borrow money to see them through periods of financial difficulties, consumers could well see problems in handling their debts rising dramatically. Mr Tutton said: "People generally can afford credit when they take it out, but something can happen as time goes on.
AI: Alpha And Index Funds (15)
Alpha and index fund investing makes a great deal of sense. You know what to expect in terms of risk and return when you invest in an index fund.
Mobile Bills Could Cause 'Unpleasant Shock' For Tourists (16)
Meanwhile, research released by Equifax earlier this year suggested that households could be furthering their debt difficulties as a result of financing holidays ineffectively. According to the credit reference agency, 51 per cent of those planning to go away are set to fund such a break by borrowing money, whether this is via a credit card or loan.
People Need To Be 'Tax Savvy' With Their Finances (17)
Commenting on the figures, David Elms, chief executive of Unbiased, said: "The government introduced child trust funds as a way of helping parents plan for their children's futures. However, our research has shown that parents are not making the most of this opportunity.
Brits Need 'Control Of Financial Affairs' (18)
In research carried out by moneysupermarket, 12.7 million Britons have taken out a personal loan so as to merge their debts into a single repayment, which in turn allows them to free up money which that go towards increasing savings.
Mortgage Marketing Techniques - Generating Mortage Leads (19)
Look for a mortgage marketing system that helps you do these things. With such a program, you will work in tandem with real estate agents to turn renters into buyers and land their mortgage.
Car Buyers 'Should Take Time' When Purchasing (20)
If you're not a car expert, take a knowledgeable friend along with you. Some manufacturers now let you test drive a car over 48 hours, or sometimes even longer," the NFDA director asserted.