Mortgage Repayment: 2013

Monday, March 4, 2013

A Mortgage Repayment Calculator Can Help You

Do you have a proper mortgage repayment calculator that you can use to see what is really happening with your money on a monthly basis? As soon as you have one you can start helping yourself a lot financially. If you play around with the figures you will see things that a lot of people don't realize. You can change the interest rates up and down and see what the effect will be and how big the effect of the interest is. You would be able to see what your outstanding mortgage amount is as time goes on, also what the total interest is that you have paid up to date. You can see what percentage of your payment goes to interest and how this changes with time. You will be able to see what the effect of paying extra money into your mortgage will be. You have the ability to play around with the figures and get to a point where you know what will work best for you. Then only after knowing what the results will be, you can apply what you have worked out. This helps you so that you don't have to guess what will happen and maybe make wrong decisions. The nice thing is that you will basically be able to see what the results will be even before you started. This will help a lot to stop you from maybe getting discouraged with short-term results. This is one of the mistakes a lot of people makes. They do things without even knowing what results they will be getting. It is difficult to know what the correct thing is to do when everyone has his own opinion. One thing I find very useful is being able to calculate what is most likely going to happen. Calculators give unbiased mathematical results and not opinions. You will be able to see the final results and this will help a lot with wealth creation and your debt reduction. Jan Olivier is the author of the book "Reach an Amazing Financial Future by Only Changing The Way You do Things". As an Author on the subject, he is at the forefront to provide solutions to getting your mortgage paid back quickly and living without debt.

A Mortgage Repayment Calculator Can Help You

Using a Mortgage Repayment Calculator

A mortgage repayment calculator will help you determine an estimate of your mortgage payments based on several factors: the amount borrowed, the interest rate and the mortgage or loan period. Not only that but it will also show you the total of how much you will repay over time. If you are looking into a mortgage, it is important that you look at a mortgage repayment calculator so that you understand your payment obligations over the next few years. You may also look at an amortization chart or schedule to look at monthly payments of principle and interest. This chart shows you how you will gradually reduce your depth through installment payments over time. For instance, if you are seeking a $165,000 loan to be paid over 30 years or 360 months and the interest rate is 7% per year, you would pay $1097.75 per month. This payment would be made even more quickly with amortization options. For example, if you add $250 to your monthly mortgage payment, $2500 as an annual payment and $5000 as a one-time payment, you could get that loan paid off in less than half the time. However, you need to consider how likely such options are. Your amortization chart may be much less but this will still let you get your debt paid much more quickly. As you are looking into your mortgage, consider several factors such as the annual percentage rate (APR) as well as the monthly fees or rates that come with your mortgage. You may want to consider other factors such as how flexible the terms of your mortgage are. You need to consider what you need to finance: student tuition, a commercial venture or maybe some improvements on your home. If you need options that are more advanced for your mortgage, it might be a good idea to consult your mortgage lender specialist. Although you can find a mortgage repayment calculator online to help you see what your monthly obligations will be, nothing beats speaking with an actual person so that you can get a better idea of what to expect. You can also find out how factors such as property tax and private mortgage insurance can affect you. Furthermore, if refinancing is an option for you, you may find that beneficial as well. No matter your situation, you need to have your mortgage repayment calculator on hand to determine just how much you need to set aside.

How to Figure a Mortgage Payment - A Quick and Easy Way to Calculate Payments in Your Head

There are several ways to calculate monthly mortgage PITI payments. PITI stands for Principal, Interest, Taxes (property taxes) and Insurance (home owner's insurance). o You could use a long, complex formula like: P = L[c(1 %2B c)n]/[(1 %2B c)n - 1] Does that sound fun to you? Me neither. o You can use an on-line calculator. They are all different, though. Some are good, some are not. But if you are out house shopping and do not have internet access - not an option. o You can even use a special, hand-held realtor calculator that will prompt you step by step to enter all the variables like: home price, down payment amount, interest rate, length of the loan, etc., then it will calculate the monthly mortgage PITI payment. However, these calculators are expensive, and unless you are a realtor, you will no longer need it once you find your home or refinance - not a cost-effective option. You need a quick and easy way to figure your payment in your head, or maybe with the calculator in your cell phone. Believe it or not, there is a way. It is very straightforward and will give you a ballpark estimate of your PITI payment. Are you ready for this? It is super simple - just a one step multiplication problem. OK. Here it is. To estimate your monthly mortgage PITI payment multiply the amount of your loan by .008 . That's it...seriously! (As long as mortgage interest rates don't change drastically from what is available in Jan 09) o If you are going to buy a $200,000 house, and you can pay $10,000 down, your loan amount will be about $190,000. o The math looks like this: $190,000 x .008. o Plug those numbers into your calculator. o Your monthly mortgage PITI payment will be about $1520 per month. Be advised, this figure is only an estimate - a simple way to get an estimate when you are not able to get to a computer. If you are in contact with a realtor or loan officer, they can give you a much more accurate idea of your monthly mortgage PITI payment.

Tips for Using A Mortgage Repayment Calculator

Mortgage rates are historically low and many people are finding home ownership attractive when comparing repayments to rents. In the euphoria of finding affordable repayments, you may want to consider the following: Repayments may be low now but they could be much higher if interest rates rise in the future. It is important to think beyond the fixed-interest period of your mortgage. When this period expires, you do not want to be in a situation where you are forced to sell in a weak housing market. Many people found themselves in this exact situation in the United States after the bursting of the property market bubble. The results returned by mortgage calculators are only as accurate as the data entered. Results should only be considered as approximations. The mortgage calculator you use may or may not take into account such things as monthly fees. Also, during the life of the loan, there are often several irregular events and circumstances which may cause you to fall behind on your repayments or borrow more money. Things such as late payment penalties and lump sum repayments can compound and significantly affect the repayments over the term of the mortgage. Make sure you compare oranges with oranges. As discussed, fees can significantly eat into your repayments and it may take considerably longer to pay off your mortgage. Therefore, when comparing the mortgage repayments for more than one mortgage product, it is advisable to enter the "comparison rates" rather than the quoted variable rates. Comparison rates take fees into account. Finally, you may not be able to borrow as much as you think. The level of repayments that you consider to be affordable may be considered risky by your lender. Lenders have become stricter in their lending criteria as a result of the Global Financial Crisis. This may actually be a good thing though. Life is full of surprises, so make sure that you allow for the unexpected. The consequences of not being able to meet the repayments on your home could be catastrophic for you and your family. When it comes to borrowing, as the saying goes: "it's better to be safe than sorry".

How To Make A Mortgage Payment Protection Insurance Claim

How to make a mortgage payment protection insurance claim.If possible find your copy of your Mortgage PPI policy's terms and conditions. If you can't find them, contact your lender to ask for a copy. Make sure it dates back to the time of your agreement as terms will change over time. Lenders can ask for £10 to provide this so include a cheque for £10 or a postal order to speed things up. The providers of PPI have a responsibility to ensure that you understand the nature of the product and that it is appropriate for you. All polices will have certain exclusions and you should have been told about them. As most policies are bought with a loan or credit card rather than standalone the key thing is. What was said at the point when you were sold the product? The following are the key mis-selling categories and you fit one or more of these you probably have a case to make a mortgage payment protection insurance claim but it is best to check with your claims management company first. If you have received a payout from the insurance, you won't be able to claim the policy was mis-sold to you. Single Premiums A single premium mortgage protection insurance policy is where the whole cost of the insurance is added as a lump sum at the start of the agreement, which is then repaid over the term of the loan. If you had one of these polices and left or changed the agreement part way through, you may be eligible for a part refund. This form of insurance is now frowned upon. In March 07, the regulator, the FSA said it thought they were likely to be unfair to consumers as they were restrictive and most didn't allow refunds if a contract ended early, meaning you have paid the insurance for the whole term of the loan, even if it is not used. As a result of the FSA's report, new and existing loan contracts must now allow refunds if a policy is ended early. This opinion greatly improves your mortgage payment protection insurance claim case. Were you told or sold the wrong thing? This covers anything from being told the mortgage protection insurance was compulsory, to not knowing you had even purchased PPI, to the fact you were already covered through work or your partner. It also applies if the policy isn't what you agreed to, you got store card cover in a shop and it was not explained or you didn't realise it's a joint policy but only in one person's name. Lenders selling PPI polices are obliged to tell you about the specific criteria of the policy and to confirm it's the right product for you. However, because PPI polices earn providers a high proportion of profit, staff are often highly encouraged to sell as many as possible, and are well remunerated for doing so, meaning mis-selling is rife. When you contact a lender by phone or in person about your mortgage payment protection insurance claim if they don't give you fair, correct and reasonable information it's likely you were mis-sold. Due to the volume of complaints, the regulators are quick to act on this issue. Some common examples of PPI mis-selling Were you told insurance was compulsory? It's a common complaint that consumers are told they must buy a mortgage protection insurance policy from the same provider as the loan or credit card to be accepted for the product. Any company that subscribes to the banking code agrees it will not insist that you buy an insurance product from them, so although it can request that you have PPI from somewhere, it does not have to be from them. Therefore if the salesperson: * didn't make it clear the mortgage protection insurance policy was optional, * implied or stated the loan would be more expensive if you didn't take the insurance, * implied or insisted you take out their policy to qualify for the product or help with your application, * was very pushy when selling the product so that you felt you could not say no, * would not let you continue with the loan application if you did not sign the insurance agreement as well, Did you already have insurance cover? If you were already covered - for example you had a separate income protection policy or your employer provided an illness and redundancy package, and you informed the salesperson that you had this cover but they insisted you also had to take their insurance; or you weren't asked if you had any alternative cover, go to the section. Have you tried to cancel your policy? Prior to Mar 07 some contracts had terms that said you could not cancel the mortgage protection insurance policy even if you had paid off your loan or had a change of circumstances. Since the FSA looked into these refund terms, cancelling is now possible for all current and future contracts. So if you tried to cancel your policy and were told you weren't allowed or that you needed to take out a new agreement with different terms claim now!

What is Mortgage Repayment Insurance?

There are few insurance products that are more misunderstood than this one. Before we go into mortgage repayment insurance let's look at a couple of the other similarly named products that can confuse many people. Income protection insurance In the first place you have income protection insurance. This insurance product is one which is suggested to people when they are taking out their home loans on the basis that if you fall ill or are injured then this policy will kick in enabling you to keep your mortgage repayments up to date. It is not strictly a mortgage repayment insurance product, it is a product aimed at maintaining your income over periods of prolonged illness following an accident or major health event, like a heart attack for example. Lenders Mortgage Insurance Secondly, there is lenders mortgage insurance. Once again, this is a product which comes up for discussion when people take out home loans. This is not an insurance product which gives you any protection at all. It is our policy which is taken out by your lender to protect itself against the possibility that you will not be able to pay your loan. Whilst it is true that the customer has to pay this premium, it should be reiterated once more that this is to protect the bank not the customer. Mortgage Repayment Insurance So what is mortgage repayment insurance? Simply put, this is an insurance product which you can specifically take out at any time to protect yourself against those situations where you find yourself unable to make your loan repayments. This can happen as a result of injury or illness which prevents you from maintaining gainful employment and therefore suffering a reduction in income. In these circumstances a mortgage repayment insurance plan can guarantee that your loan repayments are kept up to date.

How Do I Repay a Reverse Mortgage Loan and What Do I Get to Keep?

As pertaining to reverse mortgages, the method by which a homeowner makes his or her repayments is decided by under what conditions the loan ends. There are two primary conditions that will determine when the loan will be repaid. One of these conditions is the death of the last surviving borrower before the loan is paid off. This loan must still be paid off prior to transferring any titles or homeowner deeds to the rightful heirs of this property. The second condition is that perhaps you have decided to move or sell your home for one reason or another. The decision as to how this loan should be repaid is now the responsibility of the heirs of the deceased or the executor or executrix of the will. Some methods as to how they may choose to repay the balance of the outstanding loan are as follows: The heirs may choose to repay the outstanding loan by almost any legal means at their disposal. This is to say that they may use any of their own funds or monies that they choose. They may decide to take out another regular "forward" mortgage against the home. They may simply decide to sell the home outright and repay the outstanding loan balance with funds from the sale of the house. They may also decide to repay the loan balance with any remaining funds that are available from the estate. What happens when the reverse mortgage loan borrower decides for one reason or another not to remain in their home for the rest of their life? Perhaps they simply decided to move to another place. Or, perhaps one of them has an illness that prevents them from remaining there. These are all serious questions that you should look at when considering a reverse mortgage. Where does it all end? What will be the final outcome? It only stands to reason that not all people who have a reverse mortgage will still be in their home until the loan is repaid. Perhaps they did believe that they would be living in their home until their death or until the loan was repaid but due to unforeseen circumstances they were forced to move. This is precisely why you must plan ahead. You should try to know exactly what you will do if you decide to move or sell your home sometime in the future.

Mortgage Repayment Calculator and Extra Mortgage Payments

On average, the typical mortgage can last from 15 to 30 years. Most of the repayments made for these mortgages go to the interest of the loan. It will only be after a couple of years before the payments actually affect the principal amount of the loan. If you're looking for a quicker way to repay your mortgage, one way to do it would be to make additional payments every month. An extra $100 can go a long way in terms of taking months off your mortgage term. Using a mortgage calculator, you can find out how your extra payments can slash years off your mortgage. Lenders as well as other financial institutions have different rules in the matter of extra payments. The best way to know for sure if your lender allows extra payments without penalizing you is to call them and ask specifically about their policies for additional mortgage payments. Once they approve of your plan to add a little extra to your payments every month, all you have to do is come up with the additional funds. A mortgage repayment calculator will help you determine how extra repayments will affect your mortgage. For example, you have a 30-year mortgage worth $125,000 and your interest rate is 5%. If you make payments twice a month for this loan and add an additional $10, you'll be able to slash around 1 year and six months off your mortgage. Using a mortgage calculator, you'll come up with roughly $6,000 worth of savings on interest payment. And if you decide to pay twice a month and add an extra $100 per payment, you will be able to save nine years and months. That's over $36,000 worth of savings. And if for example you can make one payment every week, adding an additional $100 on your weekly due can chop off 13 years and six months on your mortgage term. Using a mortgage calculator again, you'll be able to save $50,000 in interest payments. You can use that sum for other purposes other than repaying your home. If you want to come up with a plan to make additional payments, you need to take a look at these things: your income and your expenses. Does your current monthly budget have sufficient room to accommodate extra mortgage repayments? You simply cannot afford to further squeeze your budget if you no longer have enough head room. Another way to pay extra is to make more payments in a month. Some families divide the payment in half and make two payments monthly. For some people, this method proves less stressful for the budget. Using a mortgage repayment calculator will allow you to determine if your current budget allows you to make extra payment or not.

Mortgage Repayment Types - The Basics

A mortgage is a loan secured against a property. Because the lender has the building as security, interest rates will be lower than for unsecured loans or credit card debts, however failure to keep up monthly payments could result in repossession of your home. When you take out a mortgage, you must specify how you are going to pay it back, the most common method being to gradually repay it over the term, which is known as Capital and Repayment. The alternative is an interest only loan. Under a capital and repayment arrangement monthly payments first cover the interest due and the excess then reduces the balance of the loan. As the outstanding balance declines, monthly interest reduces and more of your payments go to repaying the loan. The alternative to capital and repayment is interest only. Under an interest only contract, you only pay the monthly interest and the balance of the loan remains unchanged. Although criteria was far more relaxed in the past, nowadays you must be able to show that you have a repayment vehicle in place which is likely to repay the loan on maturity. The most common repayment vehicle is still the endowment, however bad press means that they are now far less popular, with more borrowers opting for ISAs and Pensions. As well selecting either interest only or capital and repayment in isolation, it is also possible to have a mixture of the two to suit your circumstances. For example, if a particular borrower has an endowment policy with a forecast maturity value of half of the outstanding balance, then half of the loan could be interest only, with the remainder as capital and interest. More recently, offset mortgages have become more common and provide borrowers with an high level of flexibility, but also the potential to overspend. An offset mortgage links the balance in a current account to the outstanding mortgage balance for the purpose of the interest calculation. On the calculation date (whether daily or monthly), any positive balance in the current account will reduce the mortgage balance, resulting in a lower interest charge. The Interest rate for a mortgage is usually far higher than the interest which can be received by capital deposited in a current account, resulting in better overall value. Offset mortgages usually also provide secured overdraft facilities, but because the loan is secured, it is essential to maintain a degree of financial restraint as building up a substantial overdraft can result in the eventual repossession of your home.

Dealing With Mortgage Repayment Difficulties

Homeowners struggle with mortgage repayment for various reasons. Unemployment, serious medical illnesses and other financial emergencies that drain a household budget make it difficult for homeowners to make mortgage payments on time. Although mortgages are "priority debts", the lender can repossess the home for non-payment, a homeowner with serious financial difficulties won't be able to make the full mortgage payments despite the risk to their home. As soon as a homeowner realises he won't able to make the full mortgage repayment plan, he should create a household budget. He must pay as much money on the mortgage as possible until he works out a solution with his lender and considers his finance options. If the homeowner stops paying on the mortgage completely, the lender may be reluctant to help. Lenders are more willing to work with homeowners who try to make some sort of payment. A budget calculator helps the homeowner make a budget that shows him how much money he actually has to put toward the mortgage each month. Budget calculator features vary by type but most include boxes for different types of monthly expenses, such as clothing, food and insurance. An online budget calculator may allow a homeowner to customise input fields to include extra costs not shown on a standard calculator. Once the homeowner has an accurate budget, he may consider his finance options. For example, consolidating other debts, such as credit card debts, may free up more money for the mortgage. A borrower who is already in arrears with the mortgage lender may have less finance options available because of the damage to his personal credit. The homeowner should contact the lender directly after he has freed up as much money as possible for his mortgage repayment and knows what he can afford to pay the lender. Lenders have special programs to help homeowners who can't make their payments. What the homeowner will qualify for depends on the lender's internal guidelines, his circumstances, payment history and how long his payment difficulties will last. Some common assistance programs for struggling mortgage borrowers include payment reduction, payment "holiday", the lender allows the homeowner to "skip" some scheduled mortgage repayment and the extension of the loan term to lower payments. The lender may add the arrears to the borrower's regular monthly payment, allowing him to back pay the arrears in small amounts each month if he can afford to do so. Government programs may be able to help the homeowner if the lender isn't will to do so. Programs vary by area. For example, a homeowner in England may be able to get help from his local council's housing authority under the government's Mortgage Rescue scheme. Homeowners who make less than 60,000 each year and have a priority person in their home, such as a child or pregnant wife--may get free financial education and assistance with loan repayments if they qualify for the scheme. Assistance hotlines, such as Consumer Credit scheme.

Mortgage Repayment Insurance

The function of mortgage repayment insurance is to assist in the protection of owners of a home in the event that it has become hard for them to repay the mortgage. A good example is when the borrower becomes incapacitated by disability or disease or if the borrower dies before paying the whole amount to the bank. In this case, the insurance company will come in and pay the amount that was outstanding and the next of kin will own the house fully, with no more debts to the bank. Not everyone is eligible for mortgage insurance; there are some conditions you have to fulfill to be eligible for an insurance package. First of all, you need to have updated the entire amount you owe to the bank. There should be no current outstanding debt to the bank and you must have a good credit score. You have to have a stable income and you have to prove your capacity to pay monthly premium on the policy you are applying for. The monthly premium on this insurance policy varies depending on many factors; the company, the policy and of course the mortgage repayment. Different companies have different packages and you will be restricted to the insurance companies within your area of residence. Insurance packages vary from person to person because of the specific conditions of their mortgages. Coverage ensures that you have peace of mind in the event that you are incapacitated for more than two weeks. The policy will ensure that your mortgage payment has been paid off until you are able to resume paying the debt by yourself. This is just one of the conditions that the policy takes care of. If you have lost your job, the provider will pay up to 50% of your monthly payments to the bank until you are able to get a new job. If your salary has been delayed and you are in financial straits, your policy provider can pay for you monthly payments depending on the terms and conditions of the package. There are some terms and conditions to the mortgage protection insurance e.g. ensuring that your unemployed status is official-by registering with the unemployment office. There are tens of loopholes in the terms and conditions that could leave you with no protection even after the payment of the insurance. Make sure you are fully involved in the processing of your insurance policy and search for legal advice if you have to.