Real Easy Mortgage

For years you have been scrimping and saving, preparing for that day when you could purchase your first house. Now, that day has arrived. However, now that it is here, it becomes evident that the process of home buying can be a little overwhelming for a first time buyer. So, what to do? first of all, don’t panic and rush out and put a down payment on the first house you see. This is going to be a big purchase so you will want to plan your steps very carefully.

1. Get your credit sorted out. Having a good handle on your finances will only make this process easier. It’s great that you have a down payment set aside, but have you secured financing yet? Having financing arranged before you start looking for a home is one of the best moves you can make. However, having financing arranged before you start looking means having the credit to get pre-approved for a mortgage.

2. Get pre-approved. Being pre-approved for a mortgage allows you to shop worry free and it lets you know ahead of time what you can afford. Having your mortgage pre-approved will also be an attractive asset to realtors and home owners as it shows them that you are a serious customer.

3. Be Choosy. This will likely be one of the more difficult steps. Buying a home is allot like looking for a rental property but with much more stress and emotion, and a much bigger payoff. If you are not sure what you should be looking for in a home, consult extensively with your realtor and friends that own homes. Start thinking about what you need in a home. What are your requirements in terms of rooms, location, amenities and other such aspects? Making a list is the easiest way to keep track of the necessities.

4. Get an Inspection. After finding the home that you can see yourself purchasing, have the home inspected. This is a huge step that must be observed. Most people include a subject on the purchase contract that the home must pass an inspection. Never skip this step! There could one of many things wrong with the home you have chosen that the owner may not even know about. Inspections will survey the plumbing & electrical systems in the home as well as the roof and the structure itself. Anything that is amiss can be utilized as a bargaining point in the sale of the home, or if severe enough; can simply be reason to walk away from that particular home.

5. Close. Assuming that everything has gone according to plan you should now merely be concerned with your possession date. The home passed inspection, your offer was accepted, and the deal closed. Congratulations! You have bought your first home!

Mortgages. First-Time Buyers Let Down By The Governments Homebuy Scheme.

Late last year, accompanied by the usual razzmatazz, Gordon Brown announced the Governments new Open Market Homebuy mortgage scheme for first-time buyers.

Under the Homebuy scheme, first time buyers take out a mortgage for 75% of a home’s value with no deposit and the Government and the mortgage lender will in practice buy the remaining 25% of the property. Then when the borrower eventually decides to sell the property, the borrower will receive 75% of the net sales proceeds and the remaining 25% of the sale price will go to the Government and the mortgage lender. In the mean time, if the owner wishes to buy out all, or part, of the Governments or mortgage lenders 25% interest, the borrower can simply repay the money the Government and mortgage lender initially put in.- there will be no penalty.

In our view, first time buyers shouldn’t become too excited about this scheme for six reasons: –

The Government has recently confirmed that buyers will have to pay a 1% premium on top of the usual mortgage rate.

There has been no announcement as to the amount relative to income, which borrowers can qualify for. So at this stage it’s impossible to judge what sort of house a first-timer could buy. However, we bet it’s a very small one!

Despite hopes that more mortgage lenders would join the Yorkshire Building Society, the Halifax, and the Nationwide, as co-sponsors of the scheme, no additional lenders have been added to the list.

The Government expects Homebuy to lend to 4,000 first time buyers per year. That’s only fractionally over 1% of the 361,000 first time house purchases arranged each year. In terms of availability, it seems as if Homebuy mortgages are going to challenge hens teeth!

The Government hasn’t even announced the rules under which a first time buyer can qualify to even apply for a Homebuy mortgage.

The scheme is not planned to be operational until October 2006.

So even if you’re happy to pay the 1% premium, your chances don’t look too good for qualifying for an Open Market Homebuy mortgage. Our advice is to forget about them and find a top class mortgage broker to seek out a great deal on the open market.

Signs that our reticence is shared amongst Members of Parliament came from a comment from Michael Grove, shadow housing minister. He is reported as telling the Sunday Telegraph that he wanted to see the Homebuy scheme made easier and cheaper for lenders in order to encourage greater participation from the mortgage providers. We think that’s fine, but participate in what? Until we know who can apply and how much they can borrow, the scheme means nothing.

Florida has been labeled a progressive state before, when it introduced radical ‘green’ measures throughout the state, but this time its innovative idea is to offer help to first time buyers. Florida has recognized that younger people are being pushed out of the housing market, and are trying to rectify this with fairly substantial financial incentives.

This failure to accommodate young people in the realty market has happened because nationwide, most homes have become larger and more expensive. Consequently, they are too pricey for the average first time buyer.

A spokesman for a local builders association told the St. Petersburg Times that builders will still be building over-sized homes but there will also be an increase in smaller houses being built. This change in strategy is not seen as a fad by builders; it is simply sound economics as smaller homes are in short supply.

Building smaller homes in the Florida area could also be one way of keeping the younger generation active there. There have been extensive studies involving the affordability of house prices for young people. One recent study was carried out in Boston, Massachusetts. This is an area known for its lack of moderately priced housing.

Boston is the third most expensive property market in the nation and according to the ‘Boston Globe’ newspaper, young people are moving away in droves because of the house prices. This is costing Massachusetts the ‘human capital’ needed for future growth and economic expansion. This type of situation could easily be replicated in Florida because it is such a popular retirement area; approximately 17% of the population is over 55.

This youthful exodus has been recognized and hotly debated in Boston. Part of the blame has been laid at the local government’s feet with their zone rulings favoring large residential lots. A study proved that homes built from 1998 to 2002 used an average of 1.3 acres per lot.

With the cost of a building lot in Boston quoted at around 300,000 and a house costing around 250,000, young people have no chance of owning a home.

Perhaps learning from Boston’s mistakes, the news in Florida is that the government is trying to encourage more first time buyers. This will expand the younger segment of Florida society and consequently will also be likely to increase the permanent population.

The first time buyer program is designed to help those people who may have only a modest income. (There is a ceiling on the monthly salary.) Income limits are not rigid, but determined by the number of individuals living in the house.

The help that the state of Florida is offering is very worthwhile to look into if you are a first time buyer. Help can come in the form of assistance with the down payment, with the closing costs and in the provision of low, fixed rate mortgages.

There are several requirements to be met in order to qualify, including established credit worthiness and not having owned a home in the last three years. The program details can be found on the web listed as Florida’s First Time Buyer Program, or you can ask your real estate agent to help you sort out the details.

Changes in the threshold for stamp duty failed to stop the inroads made by the tax, a new study by a leading mortgage lender reveals.

Portman Building Society shows that in the following months after the rise in the exemption threshold from April 2005, British homeowners paid almost 60 million more in stamp duty than in the same period before April. Portman Building Society also advises that even though the government raised the threshold to 120,000, the change made minimal impact at a time of rising house prices, considering that the average property stands close to 200,000 and the typical first-time buyer purchase amounts to 145,000.

Matthew Wyles, group development director at Portman Building Society commented that “Stamp duty is no more than a form of advance capital gains tax – paid long before buyers have enjoyed any of the financial benefits achievable from home ownership”. First-time buyers should be liberated from this unjust tax.

Newcastle Building Society is hoping to help first-time buyers by launching new mortgage deals aimed specifically at graduates.

Steve Urwin, the marketing manager from Newcastle Building Society advises they understand the issues first-time buyers face so they launched the 100 per cent mortgage and the guarantor mortgage at the society. Mr Urwin says that there are parents and grandparents who want to help their offspring become first-time buyers. This is made possible through sharing the initial cost of a mortgage, with the first-time buyers taking on increasing responsibility as they start getting paid more.

The new first-time buyer mortgage offerings include a deal that offers 100 per cent loan-to-value on properties valued up to 200,000.

The guarantor mortgage is available to first-time buyers between the ages of 21 and 35 who earn an annual salary of at least 15,000.

Please visit MoveTo for a wide range of properties suitable for first-time buyers.

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.

Getting a foothold on the property ladder is not easy particularly these days with property prices above the amount most peoples salaries can cover.

Reports from the property market show that the age of first time buyers has increased in recent years as younger people struggle to get a mortgage. Some first time buyers struggle to cover all the costs of buying, and often hadnt anticipated all of the extra costs beforehand. There are some solutions to these problems, however.

The market is responding to the needs of first time buyers and can offer special types of mortgage and extra support. If you mention to your lender or advisor that you are a first time buyer, they will offer advice specifically for your situation.

No Deposit?

Finding 10% of your mortgage is no mean feat. Younger people often dont have the savings to put down a deposit, and have to borrow the money. There are 100% mortgages available for those unable to find the cash deposit, or mortgages where you provide just 5% of the total amount. Unfortunately many of these mortgages apply charges (Higher Lending Charges) and have less flexible terms than other mortgages.

Salary Not High Enough?

If your salary doesnt qualify you to take out a large enough mortgage, you may want to look at guarantor mortgages. Basically, someone who is more financially secure (often a parent) will undersign your mortgage agreement, promising to honour the debt should you fail to meet repayments. This type of mortgage is often chosen by students, who either then pay rent to the guarantor, or pay the mortgage directly to the lender. The guarantor should be totally clear about the responsibility they are undertaking, and its a good idea to have a legal document written up laying out all terms of the agreement.

Share The Cost

You may want to consider taking out a joint mortgage. This doesnt just apply to couples two or more people can enter a partnership and apply for a mortgage together. Normally a bank will pay up to 3.75 times the largest salary plus the amount of the second salary. If you choose to undertake a joint mortgage you should have a legal agreement with the person you are going into partnership with. All the terms should be clearly understood by all parties, and the paperwork should be processed by a solicitor.