The Truth About Mortgage Loans

When you close on a new mortgage, your loan papers state the interest rate you will be paying for your loan. But is that interest rate really as good as it looks? Out of your monthly payment that you faithfully make each month, do you know how much of that amount is actually going towards interest?

During the signing of your loan papers, you might have noticed a large sum being disclosed (about three times the size of your mortgage) which indicates the amount of interest and principal you would be paying over the life of your loan?

For example, if you have a 30-year fixed loan for $100,000, over 30 years, you would have paid approximately $300,000 to your lender. Only 1/3 of that money is actually what you borrowed. The majority of your hard earned money is actually interest payments.

To verify this for yourself, take your current monthly payment that you make to your lender, (principal and interest only) and multiply it by 360 for a 30-year loan and you'll see the total payments your lender would receive over 30-years.

That huge sum of money in interest is going to someone else. It is money that should be working for you and building you wealth. Do you really want to work three decades to give your lender such a large chunk of your hard earned money?

Here's another tidbit of information that is even more important. How often do you move? In America, the average person moves every 7 years. I don't know about you but when most people move into a new house, they get a new mortgage and go right back to payments where 90% of the amount is going towards interest. If you are average, you'll probably never pay off a house in your lifetime unless you become aware of how money works. And one of these days, it may be too late.

Think of it like this. If you have a 30-year fixed, $100,000 mortgage at 7% interest and you move after 5 years, you will still owe 94% of your original loan or $94,000. Of the thousands of dollars you have paid over 5 years, you will only have reduced the principal by $6,000 because most of your payment for the first 5 years goes towards interest. After 10 years of payments, (120 payments) you'd still owe about 86% of your mortgage balance. It takes literally 20-25 years of mortgage payments just to reach the 50% mark.

If you are one of those people who are not prepaying a mortgage because it is your last tax shelter, think about what you are really doing. You are paying a dollar of interest to get back 28 cents in tax deductions (or whatever your tax rate is). This is called "negative cash flow."

Another reason I hear for hanging onto a mortgage is that people would rather use the money to invest and get a greater return. First of all, this is not an apples to apples comparison as one is a guaranteed rate of return and the other is not. There's no guarantee with other investments like there is with paying off a mortgage. It all boils down to risk. Yes, you may come out ahead in some investments but they are not Guaranteed. If your money were in the stock market right now, paying off your mortgage would probably have given you a greater return than you are getting right now.

So what is the solution? Pay extra on your mortgage and get it paid off early! Even just one extra payment a year will remove about 8 years from a 30-year loan.

Do you have a plan to be debt free? No matter your income or expenses, it can be achievable for you. Find out where you are now, identify where you want to be in 5 years and make a plan to get there.

Start your debt-free plan today, include your mortgage and build YOUR future wealth, not someone else's.

Home Equity Loan vs. 401(K) Loan Which should you choose?

You've finally decided to add that patio you've always wanted to your home. Now you can enjoy barbecue outdoors and get a little fresh air every now and again. But how are you going to pay for it? If you're like most people, you don't have cash for home repairs just lying around the house. You'll have to borrow. So where should you go to borrow? Mortgage rates are low these days, so a home equity loan would be pretty affordable, as would a home equity line of credit (HELOC) if you have a number of remodeling projects in mind.Then it occurs to you -- "What about my 401(K) money? I can get good terms on a 401(K) loan and borrow the money from myself!" That seems like a good idea. You can borrow the money from yourself and pay yourself back with interest! What could be better than that?.

On the surface, borrowing from your retirement savings may seem like a better idea than taking out a home equity loan. The terms are good either way, and the interest rates are probably comparable. So, why not borrow from your 401(K) account?.There are several reasons why it may not be desirable to borrow from your retirement account:.

Most Americans fail to save enough for retirement, so borrowing from your retirement fund may leave you short later should you default. No one wants to be broke when they retire.
If you have a diversified 401(K) account, you will probably be earning interest on your retirement money. In fact, the interest rate you are earning on your retirement fund may exceed the interest rate you would pay for a home equity loan. In that case, you take out a home equity loan, leave the retirement money where it is, and you should earn a net gain between the two.

If your retirement fund is earning good interest, and in the late 1990's many were earning upwards of 20% per year, then borrowing on your principal could hurt you tremendously in the long run. Due to the nature of compounding, the amount you lose by borrowing from your retirement account could be far more than simply the sum of the loan amount plus interest.
The interest on a home equity loan is tax deductible, up to $100,000. The interest on a 401(K) loan is not.There are certainly some circumstances where you might benefit from borrowing from retirement funds instead of taking out a second mortgage, but those situations are fairly rare. A substantially higher interest rate on the home equity loan than the 401(K) loan would be one such example. If in doubt, you should consult with a financial planner.

Home Equity Loan Beware of the lingering lien!

A problem that often arises when people try to refinance their home is the discovery of a pre-existing lien from a previous loan that was not removed by the lending company. The cost of removing a lien and returning the title to the homeowner, a process known as reconveyance, is usually included in fees associated with a home equity loan. When the loan is paid off, the lender is generally responsible for removing the lien, so that public records show the property to be unencumbered.

There are various reasons for why the lien isnt always removed oversight on the part of the lender, especially during heavy periods of refinancing, is often the problem. Occasionally, the problem can arise when a lender is sold to another company or when that lender goes out of business. No matter what the cause, a lien that hasnt been removed can come back to haunt a homeowner. If a homeowner is in the process of refinancing a home and discovers an old lien that hasnt been removed, the entire refinancing process can be held up for weeks. This can be critical if the owner is trying to lock in an interest rate prior to closing.

The problem can also arise when a homeowner is trying to take out another home equity loan, perhaps to facilitate debt consolidation or home improvements. Here are a few things you can do to avoid this problem: Get a copy of your credit report. If there are any errors, particularly errors showing an open line of credit or a home equity loan that has been paid off, contact your lender.

Keep your paperwork from all real estate loans, even if you have already paid them off. Then you will have them at hand should you need to demonstrate that you have fulfilled your obligations. If the lien shows up on public records or a credit report, but the original lender says that you have paid it, have them send you a copy of their documentation regarding your reconveyance.As with most issues that come up when financing or refinancing a home, this one can be resolved by remaining diligent and keeping proper paperwork.

As always, its a good idea to check your credit report regularly, particularly if you plan on taking out a loan in the near future.

Bad credit loans authenticate what is positive about bad credit

This might not be the front page news but it is now out in the open! Bad credit is getting loans all kinds of loans. Lending institutions, banks and other financial constitutions are coming forward to provide loans for bad credit. There is a new rescue programme for people with bad credit - bad credit loans.

Millions are earmarked every year for bad credit. It is highly unlikely that you dont suffer from bad credit. Bad credit loans have become easily accessible to people making it easier for people to sort out their money issues. Those who have been previously rejected have now bad credit loans to start off their financial plans.

The meaning of the term bad credit has changed leading to a new improved perspective of loans lenders towards people with bad credit. Therefore, bad credit loans have become more flexible, more consumer friendly and with innovative modifications.

You are liable to bad credit if you have made any previous faults with credit payment which amounts to arrears. Further bankruptcy, county court judgements, credit card debts or any other financial impairment leads to bad credit. Bad credit loans are offered to people by leading mortgage lenders.

If you are fresh to the concept of bad credit loans then perhaps you need to understand credit rankings. A minimum 500 credit score entails any kind of bad credit loan. Grades are provided by various loan lenders to differentiate between various loan borrowers.

A + credit score (580-620 or more) implies very few or no credit problems since last two years and no delayed mortgage payments.
A credit score (560-580) few mortgage problem over two years and one or two thirty day late payments.
B credit score (550-560) implies a fall in the credit reports. This means a 10% down payment is required for any loan claim.
C credit score (535-550) lots of late repayments. Any late mortgage payment that is in the 60- or 90-day range. This also includes bankruptcy or foreclosure that had been discharged or settled in the last 12 months. A 15-20% down payment would be required for bad credit loan with this credit score.
D credit score (500-535) implies lots of missed payments. A bad credit loan claim with D credit score would require a 20% down payment.

Bad credit loans are forever providing financial aid to bad credit loan applications. But dont jump on to the first bad credit loan advertisement where low APR, reduced interest rates are frequently flashed. Bad credit loans are furnished at higher rates as compared to other loan types. There is no escaping that in the context of bad credit loans.

Bad credit loans are provided as secured bad credit loans or unsecured bad credit loans. Unsecured bad credit loans cater to those residents who do not own a home or who cant place their home as a guarantee. On the contrary, a secured bad credit loan is meant for homeowners or those people who can place their valuable assets as a security. Loan lenders have specialist products for every bad credit loan condition.

Higher rates for bad credit loan are unavoidable but with constant and careful research, you can get a bad credit loan at lesser interest rate. You can borrow up to 5,000 to 75,000 with a bad credit loans. Further some bad credit loans can permit you to take approximately 125% of your property. Bad credit loan can overcome financial impediment of any kind such that you can buy a new car, get married, go on a holiday, make home improvement, and also consolidate your debts.

Debt consolidation through bad credit loans can do wonders. It will not only bring down interest rates for all your debts but also initiate a debt free cycle. If honesty is the best policy, it is certainly true in relation to bad credit loans. If you are straightforward about your debt condition then perhaps you will be able to avail a good interest rate on bad credit loans. Also being aware of your rights with respect to loan borrowing will put you in a better condition while taking a bad credit loan.

It is a vicious circle. What bad credit loans? No. Bad credit. Bad credit can start circle of ongoing unpleasant circumstances if not tackled. Bad credit loans are provided but you dont want bad credit to go a long way with you. Bad credit loan should not be made a habit but should solve temporary monetary stress. Buying a new home, or a car, starting a new business do you think anyone can stop that? Certainly not bad credit loans.

About the author:
Amanda Thompson holds a Bachelors degree in Commerce from CPIT and has completed her masters in Business Administration from IGNOU. She is as cautious about her finances as any person reading this is. She is working as financial consultant for chanceforloans .To find a Personal loans,bad credit loans,Debt consolidation,home equity loans at cheap rates that best suits your needs visit http://www.chanceforloans.co.uk

Loan Amortization

Most loans are repaid through a loan amortization schedule. This includes making monthly payments until you have paid back all the money you owe. Each month the payment amount will include principle and interest on your balance.

Loan amortization is the spreading out of a lump sum cost over periods of repayment. Loan amortization can include home mortgages, car loans, boat loans, etc.

A loan amortization schedule can help you break down the cost of the loan into its main components. You can also use a loan amortization to see the payments from period to period.

Loan amortization shows you how much you will be paying from month to month. The monthly payments can be broken down into interest payments and principle payments. As the loan repayment period progresses, you will be paying less in interest payments and more in principle payments. This is because as you principle is reduced, there is less interest accumulating on your balance.

Loan amortization can allow you to structure your monthly payments accordingly. You can figure out the best amount to pay monthly on your debt repayment. You can also see any benefits of pre-payment on your loan. There might be penalties associated with pre-payment on some types of loans.

A loan amortization calculator can help you break down the amount you will be paying each month. Generating a loan amortization schedule is especially beneficial if you want to compare two loan options. You can see which loan will lead to paying more in interest payments and which loan will take longer to fully repay. If you are looking for a consolidation loan, you can compare it with your current loan to see if will be getting a better deal.

There are many sites online that offer free loan amortization calculators. You input the amount of the loan, the interest rate, period of repayment and calculate the monthly amounts of repayment. By trying different inputs you can figure out the monthly payment amount that will be best for you and will lead to higher principle payments and less interest payments.

About the author:
Please visit http://www.cashbazar.com/debt-elimination.shtml and learn how to eliminate your debt step by step.

What are Home Improvement Loans?

Home improvement loans are loans specifically designed by loans companies to help you fund an essential home improvement projects.

Home improvement loans provided by loans companies are secured on the value of the borrower's property. The amount available to the borrower is subject to the equity in their property and their ability to repay home loans when their outgoings and other loans are taken into account.

A home improvement loan is one that is issued by the lender on the basis that you use the amount of the loan to make improvements to your home that will increase the market value.

Typically a home improvement loan is offered by your existing mortgage lender, where the equity value in the house acts as security for the lender. Where this is the case, the amount you can borrow may be determined by the amount your improvements will add to the market value of your home.

Home improvement loans can be arranged at the same time as you are buying the property. This is as long as the total amount of mortgage and home improvement loan will not exceed the value of the property.

The reason why you would want to get this loan from your mortgage lender is that you may be able to obtain the same interest rate on the loans that you are paying on your mortgage, which cannot be beaten with a personal loan.

Home improvement loans are in some ways an extension of your mortgage, in that the first port of call for someone wanting to carry out major home improvement work on their home would be their mortgage lender. It is, however, a separate loan, which can be paid back over a different period.

The mortgage lender will not discourage this home loan, as it is in their interests for improvement work to be carried out on the home they are lending on, considering that they effectively own it until the mortgage is repaid.

Loans secured for home improvement are flexible in duration. The loans are independent of mortgage loans and are typically available with loans repayment terms of between two years and twenty five years.

With home improvement loans homeowners can borrow anything from 5,000 to 75,000 for a larger home improvement project.

There are countless home improvement projects that can be undertaken using improvement loans. New interior decoration can be funded by loans for home improvement, as can the purchase and installation of a fitted kitchen, bathroom or conservatory.

If you want better storage in your home then loans secured for home improvement can be used to purchase fitted bedroom furniture or to develop unused spaces in your home.

Loans for home improvement can be used for garden improvement too, such as landscaping the garden.

Larger loans for home improvement can be used to design and build an extension to your home.

You may freely reprint this article provided the author's biography remains intact:

ABOUT THE AUTHOR

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk/ website.

California Farm Loan

If you live in California, you know that farming still plays an important role in the Californian economy. With nearly 40 million residents, the Golden State still has farms producing a wide variety of agricultural products. Indeed, California is a leader in the production of wine and cheese; California products are seen at grocers all over America. So, how do you get started? By reading the suggestions we have outlined below!

Financial Institutions - Commercial banks, savings banks, savings and loan institutions as well as credit unions are all good places to go for you California farm loan. You need to bring with you detailed financial information including a list of your assets, pay stubs, references, and more. While at the lending institution you will be given the appropriate forms and disclosures to help you get started. Depending on which lending institution you choose, they may have a separate California Farm Loan department or it may be part of their small business association department.

Government Agencies - The state of California is a large provider of government services. Naturally, they want their multibillion dollar industry to thrive and the appropriate agencies are in place to assist you with your California Farm Loan. Call Sacramento to find out which agency is right for you.

Farm Associations - Your local farmers probably belong to a farm association. Pay the association a visit and see if they offer California Farm Loan plans. Some may act as an agent for the U.S. federal government's Farm Service Agency [part of the USDA] and can then point you in the right direction. In any case, check with the association on their recommendations.

You can also borrow against your own assets and create your own California Farm Loan. If you have equity in a home, a 401(k) plan, a life insurance policy, or other assets these may turn out to be important funding devices for your new farm.

California Farm Loans are available to you, especially if your credit is good. Do some research, talk with other farmers, and find the loan that is right for you. Soon, you will be tilling soil and planting the crops that will grace American dinner tables.

About the author:
Mark Lambie is the founder of The Loan House a website that allows consumers to quickly and easily get online mortgage quotes and mortgage information.

Click For Loans

Money matters always have huge investments of trust going along. This is manifested in face-to-face dealings. There was a time, when loans could be taken only after counseling from an expert, professional or otherwise and then a personal interview with the lenders. Today on-line loan services have changed the entire scenario. Not only are there sites to take your applications for loans or mortgages but also the complimentary services they provide have erased the concept of in-person dealings.

Money matters always have huge investments of trust going along. This is manifested in face-to-face dealings. There was a time, when loans could be taken only after counseling from an expert, professional or otherwise and then a personal interview with the lenders. Today on-line loan services have changed the entire scenario. Not only are there sites to take your applications for loans or mortgages but also the complimentary services they provide have erased the concept of in-person dealings.

The first step in the process of taking loans is to know how much money you need and how much you can afford to take. These questions can be answered by searching for sites. Here you can calculate with your given financial parameters.

Then comes, the search for lenders. Sites give you the opportunity to post quotes free of cost. The lenders who are registered to that site will go through your credit history and the demands you place and contact you directly. The better the credit history, faster the contacts will be made. You can either go directly to the lenders or go through the broker sites. For more options, brokers services may be availed, though it carries an extra cost at times.

You can then weigh your parameters with that of the packages given by the chosen lender. All these decisions require detailed analysis, which sites provide you. They have articles and question- answer forums where you can clear doubts and calculate your gains .

The best part of on-line loan services is you need not move out. You can sit at home and do all the dealings with a steaming cup of coffee and your family around or at
office spare time. You dont need to fix appointments and do a lot of legwork and paper work. All you need is a computer and the internet and fingers clicking away at a whole world of e- loan services . It is up to you how you use it and get the best deals.

About the Author: Lance Wiliams is an accomplished contributing writer presently working in association with http://www.mortgagefit.com He specialises in mortgage and real estate arena.