By Joseph Kenny
Amongst the two most popular types of mortgages taken out in the UK today are the standard variable rate mortgage and the fixed rate mortgage. There are other mortgage products available that also come under the umbrella of a variable rate mortgage, such as a base tracker mortgage or a discounted mortgage. If you are new to the world of mortgage it may be difficult to decide which mortgage to opt for, and there are pros and cons to both variable and fixed rate mortgages.When deciding whether to opt for a variable or a fixed rate deal it is important that you consider the pros and cons of both so that you can make a more informed decision with regards to which type of mortgage will prove most suitable for your needs and pocket. Your mortgage is an important long term commitment and in order to avoid hassles and additional costs it is important that you get it right first time.Variable rate mortgagesThere are a number of mortgages that come under the umbrella of variable rate mortgages, and this includes lenders' own standard variable rate deals, discounted rate mortgages, capped rate mortgaged, and base tracker mortgages. A variable rate mortgage is where the interest rate can vary, and can go up or down in line with the Bank of England base rate.The main benefits to a variable rate mortgage is that if interest rates fall then your rate of interest and your mortgage repayment will also fall, which means more money for you. Another benefit is that the initial interest rate charged on the variable rate deal is lower than the current fixed rate deals, and you can get some competitive deals from a range of lenders. There is also a choice of variable rate deals, so you should not have too much difficulty finding one to suit your needs.One the downside the interest rates on variable rate deals can also go up, and as has been seen over the past year following a series of Bank of England rate rises this can quickly lead to unmanageable repayments and the possibility of repossession.Fixed rate mortgagesA fixed rate mortgage is a mortgage where the interest rate is frozen for a specified period, so no matter what happens with the base interest rate your fixed rate will remain unaffected. Fixed rate mortgage have become increasingly popular, and are particularly popular amongst first time buyers. You can get different fixed rate lengths, although the most common are between two and five years.The advantages of fixed rate mortgage is that they offer financial stability and peace of mind, because you know exactly what your repayment will be each month and there will be no fluctuation throughout the term of the fixed rate. This means that you can enjoy easier financial management, which is perfect for many first time buyers that are not used to having to budget.One of the main disadvantages is that if the base interest rate starts to fall your fixed rate will not fall and it will remain fixed. Therefore you will have to continue making the higher repayments at the higher rate of interest
Tuesday, February 26, 2008
What Does A Short Sale On Your Mortgage Mean
By Court Tuttle
What Does A Short Sale On Your Mortgage Mean
The real estate market has hit on some tough times. You may find yourself among the millions of homeowners whose homes have become more worrisome than happy. The short sale of a house is a good method that can help people who are unable to make their monthly payments and need a way out.A short sale is an agreement by a lender to take less than the principal owed as payment on a loan. The advantage to the lender is that by doing this they can avoid the expense of a foreclosure. Also, the lender really does not want your home, he wants your money.When a borrower is in default on a mortgage they not only owe the bank payments but also may owe late fees, property inspection fees, attorney fees, etc. This can add up quickly to eat up all the equity the borrower had in the property.With a foreclosure, the lender can lose up to 40 percent of the mortgage amount because of the extra costs involved with foreclosing on property; attorney fees, court costs, lost interest, eviction costs, property maintenance costs, and selling costs. It is sometimes in the best interest also for the lender to accept the short sale.In order to be eligible for a short sale a borrower must prove that they are unable to pay their loan and that a foreclosure is pending. The borrower must find a buyer for their house at a price, which is comparable to the market in the area.Then they must write an explanation of the situation. Financial information will be requested. Finally if the deal is accepted the lender will write off the unpaid debt. When the lender reviews all of the necessary papers required they may or may not approve the short sale. If they do not approve, they will proceed with the foreclosure. If they do agree to the short sale you will close on the sale of your property and the lender will take the loss.The borrower is still not off the hook. The lender has the options to try to collect the shortage and may require the borrower to sign a note to repay the shortage. They may also file a collection for the amount of the shortage.This is something that an attorney with expertise in this area of real estate needs to be consulted. Also, the IRS may come after the borrowers for income taxes on the amount of the shortage. If the shortage was forgiven, the lender will report the shortage as income to the IRS and the IRS will collect taxes on this amount
What Does A Short Sale On Your Mortgage Mean
The real estate market has hit on some tough times. You may find yourself among the millions of homeowners whose homes have become more worrisome than happy. The short sale of a house is a good method that can help people who are unable to make their monthly payments and need a way out.A short sale is an agreement by a lender to take less than the principal owed as payment on a loan. The advantage to the lender is that by doing this they can avoid the expense of a foreclosure. Also, the lender really does not want your home, he wants your money.When a borrower is in default on a mortgage they not only owe the bank payments but also may owe late fees, property inspection fees, attorney fees, etc. This can add up quickly to eat up all the equity the borrower had in the property.With a foreclosure, the lender can lose up to 40 percent of the mortgage amount because of the extra costs involved with foreclosing on property; attorney fees, court costs, lost interest, eviction costs, property maintenance costs, and selling costs. It is sometimes in the best interest also for the lender to accept the short sale.In order to be eligible for a short sale a borrower must prove that they are unable to pay their loan and that a foreclosure is pending. The borrower must find a buyer for their house at a price, which is comparable to the market in the area.Then they must write an explanation of the situation. Financial information will be requested. Finally if the deal is accepted the lender will write off the unpaid debt. When the lender reviews all of the necessary papers required they may or may not approve the short sale. If they do not approve, they will proceed with the foreclosure. If they do agree to the short sale you will close on the sale of your property and the lender will take the loss.The borrower is still not off the hook. The lender has the options to try to collect the shortage and may require the borrower to sign a note to repay the shortage. They may also file a collection for the amount of the shortage.This is something that an attorney with expertise in this area of real estate needs to be consulted. Also, the IRS may come after the borrowers for income taxes on the amount of the shortage. If the shortage was forgiven, the lender will report the shortage as income to the IRS and the IRS will collect taxes on this amount
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