Title:
First time buyers
mortgage
Word Count:
566
Summary:
First time
property buyer has a good option to crack a most beneficial mortgage deal.
Although the own property has several benefits over rented house, an optimal
financial loan should be secured to avoid dangerous consequences.
Keywords:
mortgage, online
mortgages, mortgages buyer, fixed mortgage rate, mortgage payment
Article Body:
Introduction:
Property is an investment, and if purchased in a planned way is beneficial
otherwise it may be dangerous if a high amount is borrowed. Most of the
financial authorities prefer the first time buyer and offers various
incentives. You should contact to an estate agent and discuss about your
financial health, repayment options, and selection of mortgage and redemption
options. On the basis of your financial repayment capabilities, you should
select a most beneficial option.
Benefits of home over rented house:
• The rent you pay is not admissible
to give you benefits under state or federal law. The mortgage loan interest is
deductible from income tax. This saves a lot of amount.
• The property tax paid is also
accounted for tax deduction purposes.
• The value of own house will rise
over a period of time and it will be an additional benefit.
General Mortgages:
(a) Fixed rate Mortgage and Adjustable
rate Mortgage:
Whether you are eligible for a particular mortgage or not, it is better you
know about all types of mortgages. The common types of mortgages include fixed
rate mortgage and adjustable rate mortgage.
In fixed rate mortgage, the interest rate remains same for throughout the
mortgage periods. Some mortgage may be as high as for 30 years and some may be
lower periods. The benefits of fixed types of mortgage are that you can plan in
advance the amount to be paid.
In adjustable rate mortgage, interest rate generally starts lower than the
fixed rate mortgage and may vary once or twice during the year as these rates
are linked to a financial index. Depending on financial index (Treasury Security
Index for United States) the rates may be either low or high. As the initial
amount in these rates is always lower than the fixed rate mortgages, a more
mortgage loan can be secured for the same burden.
(b) Repayment and Endowment
Mortgage:
First time buyers prefer repayment mortgages, as at present conditions
endowment mortgages are not capable to cover the mortgages.
(c) Interest only option of
payment:
Some lenders may give an option for a few years for repayment option of loan
interest only. In such cases, the repayment amount will be low, but principle
amount will remain as such. So this option is not favorable.
Mortgage Amount:
Many lenders may offer 100% of the property value and up to 5 times salary of
the individuals. It is recommended that single person should take between 2.5
to 3 times of the salary and couple should take 2 to 2.5 times of the
salary.
Mortgage Indemnity Guaranteed (MIGs):
First time depositor may be asked by the lender to deposit a few percent (5 to
10%) of the loan amount for a lower risk of mortgage default. If the deposit
amount is less than the expected amount, the lender may force the borrower to
buy MIG. This is an insurance policy and provides protection to lender in case
of default. These MIG are of no use to the borrower, as the premium amount of
these policies has to be paid by borrower. Therefore the borrower should
initially deposit 5 to 10% of the loan amount, to avoid MIG. If the borrower
has to take a MIG, the borrower should ensure a good deal.
Penalty:
The lender lends the money to the borrower against a mortgage deal for a fixed
period and if the borrower does not follow the deal, a provision of penalty is
made.