|Mortgage Refinance Information|
An Infinity Mortgage?
Here in Spain the concept of a mortgage period of 20 or 25 years is something new. The general feeling by the banks is that want their money back more quickly than banks in countries in which they are accustomed to longer periods. The borrowers are also accustomed to the idea that the guiding principle is to pay off the mortgage as quickly as possible.
The problem for all those people starting out on the property ladder is the amount of money that has to go out each month to put the roof over one's head. At least this is true for the early years, but not necessarily as the4 years go by, since the advent of inflation. Cases that we studied showed e.g a couple, whose monthly income was £400, having to pay £150 per month in mortgage payment. Although the interest fluctuations since then have meant varying payments, as a percentage of their current monthly income of £2,000 per month, the mortgage does not now seem so horrendous.
Varying interest rates
The mistake made by many lenders in boom times is to conveniently forget the possible variation in interest rates during the early years. While a doubling of the payment in the case mentioned above would not be a disaster now, had it occurred during the early years it could have lead to foreclosure, and them losing their dream home. In our study we found various examples of interest rates going from 3% to 16% in very short periods of time. Maybe the lenders should have insisted on doing the relevant calculations, assuming a high rate, to check if the borrowers could afford the payment during the first few years in the event of this occurring. Asking the potential borrower would not necessarily have produced a sensible result, as many that we spoke to said, "It's OK, we'll manage somehow." Unfortunately, for thousands of borrowers, this turned out not to be the case. One case showed an initial payment of £269 per month, on an income of £800 per month, which ballooned to £690 per month on an income of £900 per month, with devastating consequences.
How long a repayment period ?
Many years ago, a borrower, my father, tried to convince lenders of the idea of a much longer repayment period. In fact so long that he gave the idea the name, infinity mortgage. The idea was to pay the interest, at whatever the actual rate would be, but not to repay the capital. Naturally in the staid world of banking this fell on deaf ears, and several so called bankers laughed at the idea. Eventually he was able to persuade an institution to go ahead with his proposal, and he purchased a house. He is now nearing retirement and still has not paid off the mortgage, and continues to pay the interest. He is happy with the idea that, when we inherit the house, we will have to pay off the capital, and so are we.
The current position ?
The house is now valued at £280,000. My father's income is £5,300 per month. And the mortgage payment ? The last time we spoke of the matter it was the mighty sum of £7.92 per month. The capital to be repaid ? The not insignificant amount of £1,900.
Whether your local currency is pounds sterling, euros or dollars, the principle is still the same. While the motivation at the time, as a penniless masters student, was to keep every payment down to a minimum, the capital repayment would not exactly have broken the bank once a few years had gone by. When he reached the point of what would have been the normal repayment period, and received advice from all and sundry that perhaps he might slip into the bank with a bit of loose change, and pay off the capital, he declined. He rather liked the idea of his infinity mortgage being just that, or at least being with him until his death. In that he will succeed, you know what some of these old folk are like.
© Jenny Barclay
About The Author
Jenny Barclay majored in math and economics, and obtained a masters in viability of banking institutions. She is currently studying Spanish in Andalucia, Spain.
This article may be reproduced on websites subject to credit being given to the author, and a link to her website.
High Risk Mortgage Lenders - Using a Sub Prime Lender Online
Sub prime lenders handle high risk mortgage loans that traditional lenders refuse to touch. Through slightly higher interest rates, sub prime lenders protect themselves from the higher rates of foreclosures. With sub prime lenders online, you can easily compare rates to find reasonable financing for your mortgage.
Mortgage Refinance - Tips to Help You Cut Fees and Costs
Saving money through a mortgage refi is more than just finding the lowest interest rates. You can further cut fees and costs through the structure of your loan, avoiding PMI, and buying lower interest rates.
Choosing a Real Estate Agent
Before you go looking at houses, you'll need to find a real estate agent. Hiring a real estate agent takes a little bit of time to do. You're making one of the most important financial decisions in your life and you want to make sure you hire the right person.
Taking the Time to Find the Best Home Improvement Loans
The best home improvement loans usually aren't going to be the first loans that you encounter, but if you're in the market for a loan to pay for repairs, expansions, or improvements to your home or other real estate then it might be worth your time to shop around before you decide on one loan or another.
Reverse Mortgages Learn The Facts First!
Reverse Mortgages, Most Common Features:
Refinance Home Loan and Refinance Home Loans
Refinance home loan lenders are eager to lend money to any individual regardless of credit as long as the homeowner has a fair amount of equity in the home and the home itself is in a condition that can be resold. Refinance home loans are different than a second mortgage or line of credit in that the proceeds from the loan disbursement first pay off the original mortgage loan. The remainder of the refinance home loan proceeds leaves the homeowner to spend the money as they wish. Typically, refinance home loans carry lower interest rates than purchase mortgages.
Home Loans For People With Poor Credit - Understanding The Requirements For a Subprime Mortgage
Home loans for people with poor credit demand that you understand the requirements for a subprime mortgage loan to get the best rates and terms. By satisfying the requirements, you can be assured of securing a subprime mortgage to buy a home.
What is a Flexible Mortgage?
'Flexible mortgage' is a term that's used a lot, but what exactly does it mean? A flexible mortgage allows the borrower to make extra repayments when they have the extra money and even reduce or skip payments should the need arise.
Home Equity Can Create a Never-ending Money Cycle
What could you do with $10,000? Well, you can have it, now in a new home equity loan! Did you know that if you have been in your home for just one full year, you may already have the opportunity to take out huge dollars in equity from your home -- tens of thousands, even! Did you also know that you can get this money with no closing costs, use it any way you like, and, best of all, it will cost you as little as the price of your cable bill each month, and you can create an amazing money cycle that will give you an endless supply of cash.
Tips For First Home Buyers On Getting Home Loans
Buying your first home will likely be the biggest and most important purchase you will ever make. It can be a very stressful and may even leave you sleepless for nights on end wondering whether you are making the right decision ? especially where choosing the right home loan is concerned.
Build Your Own Dream House!
So you're thinking about building your own house, are you? Well, you've come to the right place! It's a lot of fun (hard work and eventually fun!) to build your own home and it will save you thousands of dollars(we saved over a Hundred Grand by doing it ourselves - that's pretty significant cash!). If you happen to live in a Large City, like Los Angeles, or anywhere that Real Estate Values are 'close-to-insane', you could potentially save millions of dollars. Interested, you say?? Read on, My Friend, Read on...!
Good FICO Credit Score? Tips to Getting the Most Out of Your Home Mortgage Loan With Good Credit
Sometimes so much is talked about how to solve the problem of having bad credit, but what about when you have an excellent credit rating? Good credit is considered to be a credit score of 650 or higher. How can you get the best interest rate and loan terms to make your good credit history work for you? Even with excellent credit, you have to be careful not to get talked into a loan that may not be the best one you could qualify for. Here are some tips to help you find the best loan for your great credit history:
What is the PayOption ARM?
Imagine an adjustable rate mortgage that allows you to pick one of four payment options on your monthly mortgage bill. It is an ARM on which the interest rate adjusts monthly and the payment adjusts annually, with borrowers offered options on how large a payment they will make. The options include interest-only, and a "minimum" payment that may be less than the interest-only payment. The minimum payment option results in a growing loan balance, termed "negative amortization".
When is the Right Time to Refinance Your Mortgage?
You've heard that interest rates are down and you think it could be time to refinance your existing mortgage, but the entire loan application process was so exhausting during the initial loan that you aren't sure it's worth the hassle. You could very well be right, but there are some things you can do to help decide whether it's time to refinance your mortgage.
Bad Credit Refinance Loans - Finding a Good Lender
Finding a good lender to help you with refinancing your home loan can be tricky if you have bad credit. There are plenty of predatory lenders out there who would like to take advantage of you with excessively high interest rates and fees. The key to finding a good lender is to know what are reasonable terms and to compare lending companies.
Poor Credit Home Mortgage Loans - The Role of the FICO Score
If you have bad credit history and are looking to get a home mortgage loan, then chances are you are going to need to know all about how the FICO credit scoring system works.
5 Home Buying Essentials
Purchasing a home involves certain important, even essential, steps that every buyer should take before closing on a purchase. Let's examine these "essentials" which, if properly implemented, can help you save valuable time and aggravation.
Key an Eye on Your Mortgage Payments
In previous decades, when a borrower missed a payment on a mortgage, the lender would often consider them one month behind until they eventually caught up. Most lenders would impose a late fee and other interest or penalties, tacking them onto the back end of the loan as long as the lender stayed current with the rest of their payments.
Mortgage: For Those Twilight Years
Tracing back, the concept of reverse mortgages began when one good soul, Nelson Haynes of Deering Savings and Loans wanted to help out the widow of his high school football coach. Today that small act has developed into a popular financing option for the senior citizens. With about 6,000 people turning 62 every day, the market is on an upswing.
Option ARM ? The World?s Most Dangerous Mortgage
Home prices have reached record levels, and in many parts of the country, homes have become nearly unaffordable. Real estate has replaced the tech stocks of the late 1990's as the hot investment, and everyone has sold their stocks and jumped into investment property. Real estate prices have increased at a far greater rate than salaries, and the lending industry has attempted to solve this problem by introducing a tremendous number of mortgage options for borrowers who barely capable of purchasing a home. Most of these loan types feature adjustable interest rates and minimum down payments. One of these, the option ARM, is the most dangerous type of loan ever introduced. Borrowers who are considering an option ARM should be aware that this loan could leave them with a loan that is worth far more than the home it's used to buy and with a loan that he or she cannot afford to pay. The option ARM is not for the squeamish.
|home | site map|
|Mortgage Refinance Sources 2005|