Natalie Aranda asked:




You need to use your house as equity to get some extra cash. However, you don’t know whether you should take out a second mortgage or a home equity loan. What’s the difference anyway? Wouldn’t Utah home equity loans and Utah home mortgages be the same over the long run? Well, not really. Consider the differences before making your decision and realize that mortgage planning is important.

First of all, the wording is difficult to understand. But, you must understand the difference in order to make the right decision. A second mortgage is simply another lien on your property. A second mortgage is very similar to the first mortgage, just that it comes second. It is likely to be an adjustable rate or fixed rate loan just like the first mortgage.

Then there are home equity loans. These loans appeared in the 1980s as a second mortgage that was a line of credit open for the individual to “borrow” from as needed. The loans were called home equity loans and they allowed the borrower to take what was needed on an ongoing basis up to a certain limit. The difference between the two has now been discussed, but which one is the best one for you?

If you are trying to decide whether you need a second mortgage or a home equity line of credit you simply need to answer a couple of questions. First of all, what do you need the money for? If you need the money for a big repair project on the house or some other situation where you need a large sum of money in the exact moment then a second mortgage is a good option. But, if you need money over time, say to pay for college, then a home equity line of credit is the better option. You really need to determine your needs and what is available to you before making a decision. Once you have all of the information you will be ready to choose the best option for you.

Remember that when it comes to mortgage planning you can rely on a banker or someone else to guide you. But, you should be informed and educated on the options and what you are able to chose. Not to mention how it will affect you. When you have this information you will make better financial choices. So, do your research, learn the difference between the two, and then go ahead and make the best decision for you.

Lorraine

Ross Bainbridge asked:




A mortgage is a device for a lien between a lender and a borrower. Through a mortgage, the borrower pledges the property to the lending agency as a security. This way the loan is secure and the lender can foreclose the property and recover his loan if the borrower fails to make mortgage repayments. A mortgage lien comprises the actual mortgage and a note that registers this lien. This process is also called hypothecation.

Mortgage loans in California, as in other parts of the country, are essentially of two kinds: fixed-rate loans or adjustable rate loans. A fixed rate loan is called an Amortized rate Mortgage (ARM) where the interest rate on the mortgage is agreed to and fixed for the entire period of the mortgage. In an ARM, the lender assumes the risk of interest rate fluctuation. This means that if the market rates go down the lender benefits from it but if they go up, the lender has to continue to charge only the fixed rate.

Adjustable rate mortgages have variable interest rates that can vary monthly or annually. In these loans the interest rate risk is transferred to the borrower. Therefore, loan rates of adjustable loans are also marginally lower than existing market rates. Many California homeowners also capitalize on the equity of their home by applying for a second mortgage on their homes.

Typically, most homebuyers apply for a pre-approval to loans. Through this process, the lending agency judges the loan repayment capacity of the borrower by their credit ratings, equity, income, etc. Once the loan is pre-approved, the borrower can easily enter into a mortgage lien with the lender once he actually locates a house.

Last but not least, a home mortgage loan with no down payment on the house is a popular option that many homebuyers opt for. This allows them to own a home and yet not invest all their savings into buying it.

Betty

melinamenny asked:


 

Understanding Mortgage Calculators and Monthly Mortgage Payments

Mortgages truly are a great invention. The truth is that most people, even those who are worth a great deal of money, do not have the cash readily available in order to purchase a home without getting a home loan, or mortgage. Preparing yourself to find the right mortgage and using a few tools to get ahead of the game will help you find a financial product to truly meet your needs.

The Tools

There are a number of tools that you can use in order to help you to obtain your mortgage easily. One of the most useful tools is a mortgage calculator. Mortgage calculators are a wonderful way to discover exactly how much you will have to budget for your monthly bills, as well as how much you will be paying in interest over the life of your loan.

Using a Mortgage Calculator

There are a number of different types of mortgage calculators, and with a bit of searching you can find a calculator that will suit your specific need. One way to use a mortgage calculator is to help you to determine how much your monthly payments will be. This is generally called a simple calculator and is useful in a number of ways.

Say, for instance, that you are looking to purchase a home that costs $235,000. You will be using $20,000 from your IRA as a down payment, which means that you need to borrow $215,000 from your mortgage lender. With an interest rate of 6.7% over thirty years, you would be asked to pay about $1,387 a month with a fixed rate loan.

Another way to use a mortgage calculator to make things easy is to use one that is set to help you to discover exactly how much you can afford to spend on a house.

33% Of Your Income

Did you know that when you purchase a home, you are only supposed to spend 33% of your monthly income on your mortgage, insurance, and tax payments? This may not seem like a lot, but it actually surprises some people when they do the math, to discover that they can afford a much more expensive home than they originally believed they could. A person, or couple, who brings home $5,000 a month can afford to spend $1,650 on a monthly mortgage payment. And a family who has a monthly income of $3,500 can spend $1,155 on their mortgage payment. This is a valuable thing to know, but what does that translate to when it comes to the price you can afford to spend on a home?

What Kind of Monthly Payment Can I Afford?

Many people who are purchasing a home for the first time often make the same mistake: they go house hunting before they discover exactly how much they can afford to spend on a home. This often results in heartache when the prospective buyers discover that they can not afford to own the home that they have fallen in love with. Before you go house hunting, you can get a step ahead of the game by looking to a mortgage calculator.

There are some mortgage calculators that can help you to discover exactly how much you can afford to spend per month on a payment. It then, in turn, translates that into how much you can afford to spend on a home. Often it is much more than you would ever imagine. Say, for instance, that you bring home $6,000 a month in income. You pay $600 for your car payments and $200 for credit card payments. Once you figure in your property taxes and insurance, and add the interest rate in, the calculator will tell you that you can afford a monthly mortgage payment of $1,144, and that you can afford a mortgage of $177,288.

Getting Ahead of the Game

But what does it accomplish when you use a mortgage calculator in order to figure out what your monthly payments will be? To begin with, it gives you a starting point. If you use a calculator that is set to help you discover how much you can afford to get for a loan, you can help your real estate agent to narrow down the homes that they have to offer to just the homes that you can afford. This will save time, and a lot of frustration, as you will be able to look at the homes that you may be able to own rather than the homes that you can’t afford to purchase.

Discovering what your monthly mortgage payment will be is also a good way to help you set a budget up, even before you get into your new home. Having a budget, especially when you are just moving into a brand new home and accumulating new bills, is an excellent way to ensure that you are able to continue to afford your house. It may also help you decide what kind of loan you need to get. For example, an interest-only loan will allow you to make smaller payments each month. A calculator can help you realize exactly how much you can afford so you can get the right kind of loan at the outset.

Other Calculators

There are a number of other different kinds of mortgage calculators that you can utilize in order to help you to get ahead of the game. If, for instance, you choose to get an adjustable rate mortgage loan, or ARM, there are some mortgage calculators that can help you discover, on a monthly basis what your loan will be. There are also calculators that exist in order to help you to know if it will be easier for you to rent or to buy, and if your investment in your home will be a beneficial one. There are hundreds of different reasons to use a mortgage calculator, but never forget the way that they were first used: to discover exactly what your monthly mortgage payments will be.



TERRY