Best Financial and Excellent Real Estate News Coverage

Mortgage payment protection is an insurance policy that provides mortgage repayment protection.  For instance, if one loses his job or is unable to work, the insurance company takes over the repayment of the mortgage until such time that one finds a job or is well enough to be able to work again. Other policies specify the takeover of repayment for only up to a year.

This policy is more affordable compared to those which promise to pay off the entire mortgage once one becomes terminally ill.  The reason why it is more affordable is that it specifies a limited period for the loan repayment takeover by the insurance company. Mortgage Payment Protection is important because one cannot always rely on the state to save you financially, when you lose your job or become unable to work for other reasons.

The Benefit period of Mortgage Payment Protection

The benefit period means the time period in which one can claim monthly payments for the mortgage. This period will vary from policy to policy.  When buying an insurance policy, one can actually select if the coverage wanted is for one, two, three years, etc. The longer the period that one wants to be covered for, the greater the premiums would be.

The Initial Exclusion Period of Mortgage Payment Protection

There is usually an Initial Exclusion Period during the start of the insurance policy contract.  During this period, no claims can be made.  This would usually apply to the time of unemployment only and covers a period of thirty, sixty days or longer.

The Excess Period of Mortgage Payment Protection

Most of the mortgage payment protection policies have an excess period for each of the claims.  There are thirty, sixty or more days which are not included from the claims payment.  For instance, with a sixty day excess & a claim for sixty five days, only 5 days are paid.

Everyone wants to make his/her home as comfortable and as beautiful as possible. One may plan to add new rooms, repaint, and add better facilities and new roofing. However, it is not everyday that you have sufficient cash-on-hand to support such additions. You should keep some of your money for emergency situations. Fortunately, you can make home improvement loans to support these renovations.

Don’t hesitate about loaning because there are good lending agencies out there. Improving your house is different from small impulsive purchases. It is a wise investment to increase the value of your house. In fact, an improved house can act as security to make larger loans in the future.

Choosing a Lending Office

Basically, there are two categories of loans that can be used for remodeling your house. Namely, they are the secured and unsecured loan programs. It is advised to choose a secured loan because the interest rate is relatively low. In this setup, the borrower needs to put some collateral against the borrowed amount. It can be any valuable property of the borrower like a lot or a vehicle.

Unsecured loans, on the other hand, require no collateral against the loan. However, the rate is significantly higher. If it takes you 30 years to repay, total payout can reach 50-100% higher than secured rates. Besides that, the maximum amount that you can borrow through unsecured programs is just 30-50% of what you can borrow through the secured counterpart.

Hence, the best form of loan for home renovations is a secured program. You must choose zero collateral setups only if you need a relatively smaller amount, and if you can repay the debt as soon as possible.

The Home Equity Loan Setup

There are times when lending companies will turn you down. This may be due to bad borrowing history or poor credit points. Don’t fret because you can still push through with your house renovation. You can actually borrow a large amount by using your house’s value as collateral. This is called a home equity loan.

When you file a home equity loan, you just need to present a proof of your house’s value and use it as security. Lenders are more generous in this setup because the collateral cannot be easily moved or destroyed. Home improvement loans are actually the most popular reasons for making home equity loans. In a sense, it is using the house’s value to raise the same house’s value through improvement and renovation.

Why patronize services from a loan shark when you can go for secure loans? These sharks lend money without any security or collateral but, oftentimes, these are on very high rates. When looking for a person or company to borrow money from, don’t be hasty to trust any company. There are several legal offices that can lend you a large sum with fair interest rates.

Dealing with Loan Sharks

These people are usually associated with criminals and other influential parties that bypass the law. Traditionally, these sharks are perceived to be blackmailers who threaten their borrowers who cannot pay. Nowadays, their methods focus on generating more money for themselves through interest rates which are high and, sometimes, absurd. This setup is commonly known as shylocking.

Among lenders in the mafia, shylocking is referred to as the “6 for 5” setup. As the name suggests, you have to pay 6 for every 5 you borrowed. That’s about 20% interest and compounding is done per week. That means interests can soar beyond 1200% in a year. Some shylockers even go beyond 3000% worth of interest per annum.

Home Equity Loan – The Better Choice

You can borrow money by using your house as collateral. This setup is called home equity loans. People usually resort to loan sharks after they have been turned down by loan agencies. They get turned down because of low credit scores or poor loan history. However, this doesn’t matter much with home equity loans. Lenders can get liberal because the house is an immovable asset. After all, you can’t easily disappear with your house and lot.

Your home equity can be used for emergency situations, especially if they are not covered by insurance. For example, fire can severely damage your house or a family member can get terribly sick. You can use the equity of the property to file a loan, and use the money to repair the house. Repairs and renovations, in turn, will increase the value of your property. You can also get home equity loans for healthcare services and for the post-secondary education of your children.

Other Options – When the Going Gets Tough

Sometimes, great need for money comes suddenly. If you really need money overnight and you don’t have time to process all the papers, there are lending offices that can help you. This setup is called payday loan. You may still call them loan shark agencies because of their high rates but they will not threaten you with violence. Usually, the funds from these financial institutions will be routed to your bank account.

It would be best if you understand a reverse mortgage loan if you are planning to avail of one. Here are some FAQs on the home loan.

1. What is a reverse mortgage home loan?

-         A reverse mortgage is a special kind of loan that allows you to convert a part of your home equity into cash. The equity that has piled up over the years can be given to you. However, unlike the conventional home equity loan, you are not required repayment until the homeowner abandons the home as their main residence or do not meet the financial obligations to the mortgage.

1. Am I eligible for one?

-         To qualify for a reverse mortgage, you should be a homeowner of at least 62 years old, must own the home entirely or has a low mortgage balance which can be paid off from the money of the reverse mortgage and must live in the home.

1. What types of home are qualified?

-         The qualified home types are single family home or a 1 to 4 unit home with one of the units occupied by the borrower. There are also condominiums and other manufactured homes that are qualified.

1. When will my home loan become due and payable?

A reverse mortgage loan must be paid entirely if you die and sell the home. The loan then becomes payable when

-         You fail to pay property taxes or disobey other responsibilities.

-         You move for good to a new house.

-         You fail to reside in the home for 12 consecutive months (like you have to move to a nursing home).

-         You let the house depreciate and do not take actions for repairs.

1. Will I still have some properties to leave as inheritance to my family?

-         When you sell your house, you will pay the money expected from the reverse mortgage with the interest and other fees to the financial institution. The remaining sum, if there are any, is left to you and to your family.

1. How much cash will I acquire from my property?

The sum of money you can borrow depends on the following

-         Age of the borrower

-         Present interest rate

-         Lesser of the appraised value of your house

-         The initial MIP or Mortgage Insurance Premium option you select

The more valuable your home, the older the borrower and the lower the rate of interest, the more money you can borrow from a reverse mortgage loan.

Home equity line of credit is based on what is viewed as the most essential asset someone could have – the home. In fact, it is recommended that they be used only during periods of great necessity, such as medical illness, educational fees, and not in other times where one’s financial standing is more stable. So how does such a credit setup give money to the borrower?

Take a credit card, for example. The bank allows you to borrow money, up to a certain credit limit. However, credit cards do not require collateral. In a home equity line of credit, a borrower allows a debtor to borrow up to a maximum amount of money, just like a credit card could do. However, the collateral is the borrower’s equity on his or her home. This makes it imperative for the homeowner to have equity in the home – that will assure that the homeowner will be responsible enough to pay any debts that have been incurred over time. Just as in credit cards, when getting a home equity line of credit, your competence will be determined according to the five C’s of credit.

Like most loan settings, a home equity line of credit require fees to get one; these fees include appraisal fees (to determine the value of your home), an application fee, up-front charges, and closing costs (taxes and miscellaneous fees). However, before embarking on a living based on a home equity line of credit, make sure that you have already figured out how to pay the debts incurred, with interest. Remember – that your home is at risk for foreclosure if you don’t abide. One option is to pay a monthly fee, which includes interest. Another option is to pay off the entire debt at the end of the period set for the plan. Still another is to pay off just as one would pay off what the home equity line of credit has been used for.

One thing we should know about a home equity line of credit is that they usually have variable interest rates. Since these rates are available to the public at any given time at any given location, a debtor must practice discretion before continuing with their home equity line of credit prospect. The interest rate of a variable-rate plan, however, should not go over a specified limit set by the law. Also, there are plans that allow conversion from variable-rate payments to fixed-rate ones

Now, since your home is the one you’re practically betting with using your home equity line of credit, read the terms and conditions first carefully for your plan. Sometimes your lender will “freeze” your home equity line of credit if it turns out that they think you won’t be able to pay fully, or if your property’s value plummets drastically. In which case you must do your best to show to your creditor that you are a reliable person when it comes to credit – it’s just that such-and-such circumstances beyond your control happen; or look for another appraisal on your property; or simply look for another creditor.