Home Mortgage and Refinancing » insurance

Shopping for Home Insurance

Mortgage Maven — Sat, 04 Sep 2010 19:24:10 +0000

There are two types of home insurance. There is one where you are insuring the property itself. Then there are home contents insurance policies that cover the contents of your home.

The regular house insurance is usually a minimum requirement for getting a mortgage. Most people usually get the standard package. Depending on your geographic location, you may be required to get wind and flood insurance as well.

Many people neglect getting flood insurance and they don’t realize that most standard policies don’t cover damage from floods. This happened in New Orleans after Katrina. Most of the house policies did not cover flood damage and so most of the homes were lost.

Then there is home and contents insurance. This will insure the property inside your home that is not attached to the real property. This will cover valuables like home theaters, family jewelry, antiques, art, etc.

In order to find a good content insurance policy, you need to first make a list and tally of all the items you want to insure. Then you should document them so you have evidence of ownership in the event you need to make a claim.

Then you should call around to different brokers and see what deals you can get. You should also go online to get quotes from online dealers as well. It is important to not only shop around for the best rates, but to also make sure the coverage is what you need.

Many people have problems when they are trying to make claims because they didn’t not accurately read the fine print. Make sure you are clear and understand the details of your policy before you buy it. Talking to an insurance advisor or broker will really help in this regard.

Importance of Insurance in Personal Finance

Most people just think about investment planning when they think about personal finance. In fact, insurance is just the other side of that coin. While investing is meant to grow your money, insurance is meant so you don’t lose it to catastrophe.

What will I have to Pay in Closing Costs?

admin — Wed, 09 Sep 2009 23:42:41 +0000

After all of the expenses of buying a home, many new owners are shocked to see how much more they have to pay at the closing. It is important to understand these fees, especially if you are considering re-financing your home, since any savings on a new rate may disappear once you have to pay the closing costs on a new loan.

You would expect the lender to charge something for creating a new loan. Needless to say, the bank is not going to absorb these costs, but rather pass them on to the borrowers. (Although, in competitive loan markets, banks have used lower closing costs as a factor to attract new borrowers, by absorbing part of the fees.)

Depending on the state where you live, there may be even more.

If you are concerned about these costs, you may be able to lower some of them to a certain extent. In some markets, banks may be willing to reduce or eliminate fees that they themselves charge, such as application fees. But many of the fees involved in the closing of your mortgage are not under the control of the bank, such as the appraisal fee, the legal fees, etc.

One of the first steps you should take is to get a good faith estimate of the closing costs. Be careful that your lender has not offered you a great loan rate, but then padded the closing costs to such an extent that they recover the difference.

If you do find that any of the costs are not in line with market rates (you can call another bank and ask them what their fees are-this will apply in some areas, such as an appraisal or a credit search, or you can file another application and get another good faith estimate), call them on it and request to negotiate the item.

Now you understand how much your closing costs are going to be, and you have made some efforts in reducing them, you can calculate if refinancing is really going to be worth while by using an online mortgage calculator to find out the costs left on your present loan.

To the total cost of the new loan, be sure to add the closing costs, since you will not have them if you stay with your present mortgage. Now you can decide if it is worth taking out a new loan on your home.

How do Banks Decide upon the Rate for a Home Loan?

admin — Mon, 07 Sep 2009 23:41:08 +0000

If you are shopping for a mortgage, you of course want the best possible rate. This is a decision that you will live with for many years. How do the banks determine the rate they quote you in the first place?

And once you know how those rates are determined, is there anything you can do to get the best rate for your mortgage?

The most critical determinant of the interest rate you will be quoted by the banks is your credit score. This is an issue that is in the headlines all the time, and everyone who is looking to buy a home is concerned about their “FICO” numbers.

The idea behind a FICO rating is that private agencies do an analysis on a borrower’s credit profile to determine the chances that he will be able to pay the loan. Using the financial data of the borrower, such as payment history, held, credit card and other debt, the score will help the bank decide how much to charge for the mortgage.

The next determinant that will influence your interest rate is the size of the deposit you are putting on the property.

The higher the down payment, the better the rate you will receive from the bank; this is because with a higher down payment, the bank has less exposure based on the value of the property.

This means that the bank can consider you a better risk and will lower your home loan rate. In order to accumulate a higher deposit, the longer you would have to pay rent, so that tradeoff has to be taken into account.

Another important factor in the determination of a loan rate is the maturity of the loan. When lenders commit funds for longer terms, they have to include a cushion into the rate.

This is why you will typically see short term loans at a lower rate than a 25 or 30 year mortgage. Despite this fact, many people prefer a longer, fixed term mortgage because they always feel that the rates over time will increase and the loan will cost more in the long run.

Which is what leads us to the next determinant for interest rates, one which you have no control over: the market. If interest rates are going up in general, interest rates on mortgages will go up as well, since banks have to pay interest on the money they obtain. These market rates are set according to complex economic indicators.

But just as rates go down as well as go up, many people would rather have a longer term fixed rate.

Another factor that has an influence on the rate of your mortgage is the size of your loan. Banks have limits as to the size of the home loans they can write, and anyone who requires a higher loan than that, even if they have the income to support it, will most likely pay a higher rate.

Mortgage Payment Options

admin — Fri, 24 Jul 2009 15:05:35 +0000

One of the things a lot of homeowners should look into is the way they pay their mortgage each month to make it as easy as possible for them. The more you can tailor your mortgage payment options to your personal requirements, the better the chance that you will pay your home loan on time.

Suppose you are one of those who never pays his home loan on time simply because you are too busy; you could use online bill pay or you could have an automatic bank deduction. This is only an option for those who are not having issues paying, only in finding the time to pay because of too much travel or work time.

You may even find that many banks are able to offer a lower rate if your mortgage is automatically deducted from an account you hold with them. Their processing costs are lower, and they are guaranteed that the loan is paid, so they can pass some of those savings on to you.

One of the most usual problems many wage earners have is to keep the funds available for when the mortgage is due. If you are like most consumers, the funds sitting in the checking account gets used up on other things and when the mortgage is due, there is not enough there. A solution a lot of folks like is to pay one half of the mortgage in the middle of the month when one paycheck is received and the next half when the second check of the month is received.

Matching the due dates of their home loans with the receipt dates of their salary helps many people budget their mortgage better. An added benefit is that the borrower will reduce his mortgage faster by paying half the payment two weeks early each month.

Another product that banks offer is an option mortgage, which means the borrower can pay just what he wants to on his mortgage. Although this is extremely convenient, it is important to manage this option carefully. There is normally a minimum amount due which is the amount of the interest due, and then the homeowner pays anything (or nothing) above the interest. However, only paying the minimum means that the principal balance is never paid.

This can be a good solution for earners with fluctuating income patterns, such as a person who works on projects, or a building contractor who gets a lump payment on completion. As long as you have the discipline to put the extra money towards the mortgage when you have them, this option can be ideal.

What You Need To Know About Home Mortgage Payment Protection Plan

admin — Sun, 19 Jul 2009 12:58:46 +0000

Because of unfortunate circumstances such as accidents and physical disability, any individual can, at worst, find himself jobless and at best, with a decreased income. It is in these instances though that medical expenses and hospital bills are likely to increase. There is a way to deal with expenses incurred by unforeseen happenings.

There are two types of insurance. These are mortgage life protection and mortgage payment protection. Mortgage life protection covers payments in your mortgage in the event of your death. On the other hand, mortgage payment covers monthly payments in the event that you lose your job or become gravely ill.

How does home mortgage payment protection work?

You make your payments (which are tax-deductible) to your creditor, and receive benefits that are paid along with other benefits. Premiums are pre-calculated in association with the decreasing death benefit, so they stay fixed. The rate provided by a policy can vary depending on different factors like how old you are and if you are a smoker or not.

Advantages:

There are many advantages of mortgage life insurance and one of them is that it offers you an affordable means to give your family protection and security while paying off your mortgage balance if death occurs. This insurance can give your family the benefit of spending for other living necessities and personal expenses. In its essence, mortgage protection involves you paying a fixed premium during a period of time and your insurance pays off your mortgage at the event of unemployment, illness or death. Here are the advantages:

- Affordable and optimal coverage – Flexible policies – Financial difficulties are eased – Policies have fixed premiums for everyone and are available to younger individuals, who have tighter budgets – You can have control over the pre-payment of your mortgage – Mortgage payment protection gives you time to regain employment. The state will no longer aid those who have lost their jobs – Even if your mortgage has already been paid off, your beneficiaries can still receive remaining death benefits – You can reissue your mortgage protection policy if you refinance your mortgage

Who Qualifies?

- Almost anyone qualifies for a protection plan, no matter what sex or age – You are able to obtain joint coverage for you and your spouse

Where To Get Home Mortgage Payment Protection Insurance:

- Establishments that organizes your mortgage – You can get mortgage life insurance through your mortgage lender at a cheaper rate.

What You Want To Do:

- Start saving larger amounts of mortgage interest – Own your own home at a sooner time

Downsides:

With private mortgage insurance people are allowed to keep their homes, while in mortgage life insurance, payment is done in the even of death. Mortgage protection coverage pays only your mortgage balance. If you default, private mortgage insurance only partially covers your loan.

Of course, there are some charges, expenses and risks that come along with some types of life insurance. This is because they can be sold by prospectus. Review pamphlets carefully before jumping into an investment or plan. It is always best to contact with your tax advisor or attorney for information that is free and does not require commitment.

by Matthew Sanz

About the Author:

If you want to learn more concerning second mortgage, home mortgage payment protection plan, or where to find online home loan equity mortgage calculator, check out home mortgage online. Find relevant facts and make informed decisions!