South Australian landlords Are More Likely To Invest In Their Own State

South Australian Landlords are more likely to concentrate their investments in their state.

LAURA COOK reported that seeing their investments in the flesh, and a stable market, are motivating South Australian landlords to invest in their own backyard, according to local real estate experts. 

Research conducted by Terri Scheer Insurance showed South Australians landlords are the second-most-likely nationwide to purchase investment properties in their own state, with 81.7 per cent of landlords investing in South Australia.

Real Estate Institute of South Australia chief executive Greg Troughton said the numbers reflected the fact that “people know their own backyard, and they know value”.

“South Australian property still represents the best value buying right throughout much of Australia,” Mr Troughton said. He said South Australia’s consistently steady real estate market gave locals confidence to invest.

“South Australia doesn’t have those peaks and troughs, we’re steady-as-she-goes,” he said, describing investing in South Australian property “as good as money in the bank.”

After investing in their own backyards, the next most favoured interstate investment location for South Australians was Queensland, with 9.8 per cent of landlords owning property in the Sunshine State.

Almost 3.5 per cent (3.2 per cent) of SA investors purchased in Victoria, while 2.2 per cent own investment properties in New South Wales.

Harris Real Estate director Phil Harris said when people make a significant investment, like buying property, making it locally has its benefits.

“Residential real estate is one of the major wealth generation tools for average Australians, and there’s a huge advantage in buying locally,” he said.

“For the average investor, most people like to buy a piece of real estate that they can still actually take a drive by, and see that it’s still tracking well.

“It’s about peace-of-mind, and security for people to have proximity to a large asset.”

Tim O’Shea, who has invested in a townhouse at Port Noarlunga and units at Mount Gambier, said he weighed up the merits of buying investment properties interstate.

“I had a look at other parts of the country, but came back to the idea of investing in South Australia,” he said, adding that he intended to continue investing in South Australian real estate, with the relative affordability, good quality housing stock, and good returns available.

No Place Like Home! 

What is a Mortgage?

Let’s assume the day has arrived that you’d like to buy a house. Chances are you don’t have enough cash in the bank to pay for it in full. Instead, like a car, you would probably prefer to put a small amount down, and make monthly payments on the rest. This is the purpose of a mortgage loan.

A mortgage loan is procured by a buyer to pay off the seller of a piece of property in full. The buyer then owes the mortgage lender the total amount borrowed, plus interest and fees. As collateral or guarantee of payment, the lender of the mortgage holds the deed or ownership of said property, until the buyer pays the mortgage off. However, the buyer occupies the property as if it were already his or her own.

There are several types of mortgage loans available, and which is best for a particular buyer depends on his or her financial situation and long term plans. Some people plan to stay in a house for thirty years; others make short-term investments to move up the real-estate ladder. Matching the right client with the right mortgage loan requires time and energy on the part of buyer and lender both.

A few of the common terms associated with mortgage loans are closing fees, points, and the annual percentage rate (APR). These and many other fees can be negotiated. The best-looking mortgage advertisement isn’t always the cheapest due to possible hidden fees. Experts say comparing the APR of a mortgage loan can help the buyer determine which mortgage is less expensive, as law requires that all fees be included in this calculation. Often the APR of a mortgage is not advertised and the buyer must ask for this information.

If a buyer can put down 20% of the buying price in cash, mortgage interest rates will be lower and the buyer will not have to get Private Mortgage Insurance (PMI). PMI is required for buyers with little or no equity, as PMI will make mortgage payments in the event the buyer cannot. Lenders require PMI to protect their investment when a buyer puts less than 20% down, because the mortgage, with fees and interest, will initially be greater than the worth of the property. This changes when the loan has been paid down over a period of time, building up approximately 20% equity, at which point PMI (and its fees) terminates.

After PMI expires, if the holder of a mortgage misses payments, the lender can foreclose on the loan. This means the buyer has defaulted on his contract to pay the mortgage, and the lender can evict the buyer and sell the property to recoup losses. The buyer loses everything in this scenario. When this occurs, it usually happens early on. Once people build up equity in property they are more motivated to save the investment and have more options.

If a mortgage holder who has built up substantial equity is suddenly strapped for cash, he or she might consider refinancing. By refinancing the mortgage over a longer period of time, the monthly payment can decrease. Some people refinance to draw equity out of the home in the form of a cash payment, often used to make improvements on the home.

A general rule of thumb is that a mortgage payment should not exceed 28% of the total income of the qualifier(s). Qualifying for a mortgage will require an acceptable debt-to-income ratio. Credit cards, car loans and any other financial debts figure into this calculation. It is a good idea to see how much you qualify for before shopping for a home.

Mortgage loans can be fixed-rate or variable, short term or long term. The right mortgage loan will depend on many factors. Be sure to get professional advice, educate yourself thoroughly on your options, and shop around before deciding on the best mortgage plan and lender.

What Does a Real Estate Agent Do?

A real estate agent or realtor is a person licensed within a specific state to help people either sell their property, or to act on behalf of others to try to purchase property. The real estate agent is usually formally trained through taking real estate classes (though some have on the job training instead), and then must usually pass examinations that allow him or her to become licensed. Though you can buy property or sell your own property without an agent, there are so many laws that apply to this process, that many find employing a realtor is an easier process. Employing a real estate agent also means that your property, when you’re selling, will be listed and advertised by the company or agency for which the realtor works.

A real estate agent or realtor is a person licensed within a specific state to help people either sell their property, or to act on behalf of others to try to purchase property. The real estate agent is usually formally trained through taking real estate classes (though some have on the job training instead), and then must usually pass examinations that allow him or her to become licensed. Though you can buy property or sell your own property without an agent, there are so many laws that apply to this process, that many find employing a realtor is an easier process. Employing a real estate agent also means that your property, when you’re selling, will be listed and advertised by the company or agency for which the realtor works.

When you’re interested in buying property, you can choose to use one real estate agent or numerous ones. Generally people may use one realtor, who will not only look at the properties his or her agency currently is selling but will evaluate properties available through other agencies. If you find a property you like, the real estate agent helps you submit a price offer, and then continues to negotiate for a price if your initial offer is not accepted. The agent does have a vested interest in selling properties listed by his/her particular agency, since pay is often determined based on commission alone, a percentage of profits from the sale of listed properties.
If you are selling property, the real estate agent helps you determine the appropriate asking price given assessed value, and the current market. A realtor will also “show” your property, by running open houses or by bringing potential customers to look at your home. When others wish to buy your property, the realtor fields offers, conveying them to you, helps make counteroffers when prices are too low, and sets up the terms for accepting an offer. Many people both sell and buy at the same time, which means the agent is not only helping people sell their own home, but purchase a new home.

In addition to working to help customers buy and sell property, real estate agents may also manage property owned by clients or by their company. They may list properties for rent, collect rent, show available properties for rent, and oversee repairs on rented dwellings that require them. They’ll accept applications, submit applicant’s information for credit checks and help to determine the best and most reliable renter for a property. Though this technically falls under the category of property management, many realtors work in companies that not only help people buy and sell property, but also offer property management services.
Realtors often keep contacts with other professionals in the realty industry, like bank managers, home assessors, and mortgage brokers. Before you get to make an offer on a property, they may have you sit down with a broker or with a lender to determine the exact amount you’ll be able to afford to pay for a home, and what types of loans you can qualify for. This information is vital since it allows the real estate agent to look for things that are specifically in your price range, but meet the basic requirements you need, like a home having a certain number of bedrooms or being located in a specific school district.

Essentially then, as the name real estate agent implies, the agent acts on behalf of someone else, the client, in order to quickly buy or sell property of all types. Pay for this job is frequently through commission only on the sale of properties, though some trainees may receive pay while they train. Agents may work alone, for small companies, or for large ones, and they may specialize in listing certain types of property. For instance some people only sell or attempt to purchase homes for clients. Others may sell office buildings, property for development, industrial sites, or commercial buildings.

Essential steps every first-time buyer should know

If you think it's about time you bought a home instead of renting, a little homework before you start looking will increase your odds of finding the best buy for you. First, you must educate yourself about the home buying process. You can take a class or pick up books from your local library. Also be sure to read the real estate sections of your newspaper to familiarize yourself with properties and prices in your area. Consumer magazines that focus on the home can also be a good source of information.

Here are some things you will want to do:


· Separate needs from wants
What are your priorities for your next home? How important are public transportation, community facilities, on-street parking, lot size, privacy? How many bedrooms and baths will you need? Will you need a space for a home office? How important are quality neighborhood schools?

· Investigate neighborhood prices
What neighborhoods feature homes in your price range? Are there areas you may have overlooked? With the help of a trusted real estate agent, you may discover neighborhoods and home types you may not have considered. We’ll introduce you to a wide range of possibilities and help you find the home that best suits your needs.

· Determine how much house you can afford It's tough to home shop if you don't know what you can afford.
Together with a reputable lender, we can help you determine how much home you can afford and which loan program will maximize your buying power. Also, by getting pre-approved for a loan before you start looking for your first home, you'll be a better prospect in the seller's eyes.

· Shop for the best loan
Which type of loan is best for you? Will you be in the house several years and benefit most from a long-term fixed rate, or do you want a lower, short-term rate because you plan to move soon or expect your income to increase rapidly over the next few years? You may want to interview several lenders to learn about the many mortgages available.

· Check out interest rates
What are current local mortgage interest rates for 15-year and 30-year fixed rate mortgages, and for 1-, 3- and 5-year adjustable rate mortgages?

· Dig up your down payment
Know where your down payment cash will come from. If it's coming from stocks, go ahead and sell them. If Aunt Mabel is loaning you the money, get it in hand so you are ready to go.

· Relax and let an experienced real estate agent to help you through the process
Buying your first home can be an overwhelming experience, but, with the help of a professional real estate agent, you can easily manage the process and confidently close the deal.
Chances are you can answer a couple of these questions on your own, but you may need some assistance with others. If you do, please call or e-mail us. We can make sure you have the preliminary house-hunting information you need.

House hunting - Buying and Selling Houses

The single most important rule in looking for a home

While many important details must be considered in choosing your first home - style, size, price, location - one thing is certain: if you will be moving again in a few years, be sure you buy with selling in mind. Chances are, the items that make your new home a comfortable fit for you will also attract buyers later on.

Some special considerations for the first-time homeowner who has resale in mind:

§ Watch for growth potential
Look for an established neighborhood that will be enhanced by future growth but not inconvenienced by it.

§ Look out for resale value
Seek a prime neighborhood where homes sell well in any market.

§ Check out location
Consider availability of all aspects of transportation; even those you may not use.

§ Research Area Schools
Check for quality public schools, whether or not you have school-age children.

§ Go for the green
Look carefully at the lot for trees and greenery to buffer winter winds or summer heat.

§ Make room for visitors
See if ample guest parking is available for you and your neighbors.

§ Ponder privacy issues
Consider how much privacy the home and lot provide.

§ Drive the commute before you buy
Check morning and afternoon drive time to work, schools, shopping, churches.


The best first step in home buying

Before you start looking at homes for sale, be sure you do some "homework." Here are some of the questions for which you'll need answers:

· Check out interest rates What are current local mortgage interest rates for 15-year and 30-year fixed rate mortgages, and for 1-, 3- and 5-year adjustable rate mortgages?

· Shop for the best loan Which type of loan is best for you? Will you be in the house several years and benefit most from a long-term fixed rate, or do you want a lower, short-term rate because you plan to move soon or expect your income to increase rapidly over the next few years?

· Determine how much house you can afford How much of a mortgage can you qualify for? The loan amount plus your down payment tells you how much house you can afford.

· Investigate neighborhood prices What neighborhoods feature homes in your price range?

· Separate needs from wants What are your priorities for your next home? How important are public transportation, community facilities, on-street parking, lot size, privacy? How many bedrooms and baths will you need? Will you need a space for a home office? How important are quality neighborhood schools?


Chances are you can answer a couple of these questions on your own, but you may need some assistance with the others. If you do, please call or e-mail us. We can make sure you have the preliminary house-hunting information you need.

Step 2
Who represents whom in the home-buying process

Your purchase offer looks good to the sellers. They are ready to accept it, but you are using a buyer's agent (also called buyer's broker). You know that sellers pay their agent, but what about yours?


What is a buyers agent?
A buyer's agent is retained by a buyer to look out for the buyer's interests and to negotiate the best price from the buyer's point of view. Just as the agent who lists the seller's home owes the seller complete loyalty, the buyer's agent owes the buyer the same degree of loyalty.


Who pays the fee of the buyers agent?
Sellers generally indicate on the listing agreement whether the seller is willing to pay the buyer's agent. Most sellers choose to work with a broker who splits the commission with a buyer's agent even though that agent does not represent the seller's interests. This, of course, maximizes the number of potential buyers for the home. Because the listing broker is already prepared to share the commission with a seller's agent who produces a buyer, most sellers don't mind when their broker, instead, shares the commission with a buyer's agent.


What are some tips every home buyer should know to get started?

If you think it's about time you bought a home instead of renting, a little homework before you start looking will increase your odds of finding the best buy for you. Here's how:

Dig up your down payment
Know where your down payment cash will come from. If it's coming from stocks, go ahead and sell them. If Aunt Jessie is loaning the money, get it in hand so you are ready to go.

Nail down your financing
It's tough to home shop if you don't know what you can afford. Together with a reputable lender, we can help you determine how much home you can afford and which loan program will maximize your buying power. By getting pre-approved for a loan, you'll be a better prospect in the seller's eyes.

Take your time
Don't jump at the first home you see. Let us introduce you to different areas and home types to see what suits your needs the best.

Do your homework
Once you've found the home you want, ask us to run a competitive market analysis of other homes that have recently sold, so you'll be able to make a sensible offer to purchase.

Enjoy!
With expert assistance and a positive attitude, home shopping can be fun and rewarding.

How To Find A Reliable Real Estate Agency

Finding a reliable real estate agency could be quite stresful but it pays to have one handle yoour deal, not just any one. If you are interested in purchasing or selling some property or land, you would most probably have to go and visit a real estate agency. A real estate agency is a body comprised of real estate agents who act as legal middlemen to settle deals regarding realty or property. For most deals regarding property and realty, you would generally have to either consult a real estate agent to negotiate a deal for you with the plot owner.

What is an Agency?

An agency is an area of commercial law, which deals with contractual and quasi-contractual tripartite set of relationships when an Agent is authorized to act on behalf. The real estate agency therefore acts as a law abiding group of agents who act as mediators between people who want to buy realty and people who want to sell it. This branch of law partitions and standardizes the relationships between:

Agents and Principals (i.e. the agent who is the person of the agency and the principals who are the people who authorize the agent to act on their behalf to create the relationship between them and the third party)

Agents and the third parties (i.e. the third parties are the group of people with whom the agents deal with on the Principal's behalf)Principals and Third Parties (this occurs when the agents purport to deal on their behalf)

Choice of Real Estate Agency

With the growing realty market, there are an increased number of real estate agencies to choose from. Most are good, but you should be on the outlook to find a great real estate agency. After all the good real estate agents might be able to get you a good deal, but the great ones could end up saving thousands of dollars of your expenses. You should look out for the following characteristics within a good real estate agency:

Trustworthiness:

The real estate agency must be trust worthy to begin with. Most great real estate agents have a large client base so that you can get testimonials and opinions from previous clients. Recommended real estate agencies from your friends could be a great way to start as well. After all, when considering property, trust is an essential need.

Professionalism:

You would want to look for a highly professional real estate agency and not some side business run by someone. Real estate agencies generally run with the help of real estate agents, and getting a good professional agent for your pursuance of property is necessary to get the best deal.

Experience:

In the field of realty, the more experienced the real estate agency is, the better deals it is going to be able to get you. Experience is therefore a must.

Choosing a good real estate agency could be vital in buying property. A real estate agency could save you a lot of money which you could then utilize to decorate or upgrade your property, or even just save the extra money for something else. A real estate agency will guide you and help you obtain the best price for the property for which it is valued.

How To Find A Reliable Real Estate Agency

If you are interested in purchasing or selling some property or land, you would most probably have to go and visit a real estate agency. A real estate agency is a body comprised of real estate agents who act as legal middlemen to settle deals regarding realty or property. For most deals regarding property and realty, you would generally have to either consult a real estate agent to negotiate a deal for you with the plot owner.

What is an Agency?

An agency is an area of commercial law, which deals with contractual and quasi-contractual tripartite set of relationships when an Agent is authorized to act on behalf. The real estate agency therefore acts as a law abiding group of agents who act as mediators between people who want to buy realty and people who want to sell it. This branch of law partitions and standardizes the relationships between:Agents and Principals (i.e. the agent who is the person of the agency and the principals who are the people who authorize the agent to act on their behalf to create the relationship between them and the third party)Agents and the third parties (i.e. the third parties are the group of people with whom the agents deal with on the Principal's behalf)Principals and Third Parties (this occurs when the agents purport to deal on their behalf)Choice of Real Estate AgencyWith the growing realty market, there are an increased number of real estate agencies to choose from. Most are good, but you should be on the outlook to find a great real estate agency. After all the good real estate agents might be able to get you a good deal, but the great ones could end up saving thousands of dollars of your expenses. You should look out for the following characteristics within a good real estate agency:Trustworthiness: The real estate agency must be trust worthy to begin with. Most great real estate agents have a large client base so that you can get testimonials and opinions from previous clients. Recommended real estate agencies from your friends could be a great way to start as well. After all, when considering property, trust is an essential need.Professionalism: You would want to look for a highly professional real estate agency and not some side business run by someone. Real estate agencies generally run with the help of real estate agents, and getting a good professional agent for your pursuance of property is necessary to get the best deal.Experience: In the field of realty, the more experienced the real estate agency is, the better deals it is going to be able to get you. Experience is therefore a must.Choosing a good real estate agency could be vital in buying property. A real estate agency could save you a lot of money which you could then utilize to decorate or upgrade your property, or even just save the extra money for something else. A real estate agency will guide you and help you obtain the best price for the property for which it is valued.

Report: When it comes to finding a commercial real estate broker

When it comes to finding a commercial real estate broker, the old adage 'know thyself' holds true. It's not only about finding the broker with the right skills and qualifications. It's also crucial to know exactly what it is you have in mind. 'The single most important thing at the outset is being honest with yourself and adequately identifying and clarifying exactly what you're looking for,' said Randall Walker, president of the Society of Industrial and Office Realtors. All too often buyers or tenants approach real estate brokers without a clear idea of what kind of building or space will fit their needs, Walker said. They may sit down at the table with grandiose plans that they can't afford, or they might want to set up shop in a part of town for which their business isn't suited."
When tenants look for a commercial real estate broker they really should look for someone who can advise beyond the bricks and mortar, says Jim Elcock, executive vice president at Colliers Meredith & Grew in Boston.“Companies need a trusted adviser who is not necessarily transaction-motivated,” he said, but rather “someone who can serve the role of a fiduciary, who understands the client’s business, can evaluate the marketplace and help the client get its real estate plan in concert with its business plan.”“Companies absolutely need someone who knows more than just real estate,” agreed John Carroll III, senior vice president who covers the suburban commercial real estate market for Colliers Meredith & Grew.Despite the gloomy reports about an economic recession, Boston’s commercial real estate market is faring well.

In trying times, real estate agents willing to cut commission - Baltimore Business Journal:

When it comes to residential real estate these days, it seems everything's subject to negotiation.
That includes the real estate broker's cut on the deal, according to a report issued Monday by Consumer Reports. Based on a recent survey of home sellers, 46 percent of people trying to sell their homes through agents tried to negotiate a lower commission rate. Of those home sellers, 71 percent succeeded in getting the real estate agent to take less.
Haggling, the nonprofit Consumers Union publication noted, didn't mean home sellers were getting less from their agents or were less satisfied with the outcome. Sellers who paid commission rates of 3 percent or lower were just as satisfied with their broker's performance as those who paid 6 percent or more, the report noted.
Despite the nationwide slump in residential real estate sales, 86 percent of Consumer Reports' readers who put their homes on the market made a sale, while only 8 percent gave up and took their homes off the market.
Agents with large brokerage firms scored just as well as independent brokers when it came to customer satisfaction, but the magazine recommends home sellers base their choice of agents on factors that include personal recommendations.
The magazine recommends home sellers price their homes realistically, and drop their asking price between 4 percent to 6 percent if they don't receive an offer within four to six weeks.

In good times and bad times; "these days" and other days; Real Estate Agents have negotiated commissions. It is stated on the contract. Commissions are negotiable.

Some who own a real estate company with offices in Dallas and Austin are most times puzzled by sellers who are so focused on what they are paying and not when they are closing and what they are netting.

However, selling a home in a slowing (Buyers) real estate market offers more challenges to get the home sold for a REALTOR® and a homeowner. This is a time when you want a very skilled REALTOR® giving you and you're home their complete attention. If you are a homeowner that needs to sell my recommendation is to first focus on finding the best REALTOR® and then be sure that REALTOR® has incentive to give you their undivided attention and expertise. REALTORS® are humans and they will respond to incentive like most people. This is not to say a homeowner will not get the best service when paying their REALTOR® a lower commission, but who wants to take a chance on one of their largest investments in order to save a few bucks.

Egele speaks

"I have seen the opposite to be true. I am a local real estate broker, and it seems that when times are slow sellers are more willing to pay full commissions. They just need to get the home sold.When times are good and listings sell in a week it is harder to justify the full commission. Right now homes are sitting and we have been turning down listings that we didn’t think we could sell within 3 months. We have not had sellers asking for discounted commissions, but if they did we would pass because there is no shortage of sellers right now".


Daniel J. Sernovitz, Baltimore Business Journal

Mortgage Loans - secret methods that drive up the cost of your home purchase or refinance (4)

Real Costs of a Loan through a Mortgage Broker

Now we'll give you an idea of how the mortgage broker makes his/her money from a deal. Pay close attention and you will see that there are many ways to skim off the top of a deal. The following are the Real Costs (costs that every loan has and which the broker makes no money on):

• Appraisal
• Title fees: title insurance, recording fees, title paperwork preparation
• A processing fee (cost of hiring employees to process the loan)
• Mortgage insurance (for loans over 80% of the property's worth)
• pre-paid interest
• Credit report fees
• inspection fees (generally termite inspection)

(For a more detailed description of these costs, see our detailed cost section.)

*Gasp*. Yes, that's it. The rest of the fees are split by the mortgage broker and the loan officer. No, I didn't forget about the origination fee.

Mortgage brokers "buy" loans from a bank and "sell" them to customers. Every bank has a "par" rate-- a mortgage rate at which the broker does not have to pay a fee in order to "buy" the loan. An interest rate lower than the par rate would cost the broker money; an interest rate higher than the par rate would pay the broker a commission.

Following so far? If a mortgage broker gave you a loan at the par rate, and only charged you appraisal, processing fee, title and credit report fees, he or she wouldn't make a dime from the deal. Remember, a broker collects no interest from the loan, or the servicing fees. The broker only collects a commissions from the mortgage which actually lends the consumer the money.

Some brokers have limitation on how much a loan officer can charge in fees-- the loan application fee, the origination fee and the points. However, most brokers split the profit earned from every loan with the loan officer. Can you see how it is in the interest of a loan officer to charge you more points and fees? It's money in their pocket.

Of course, the brokers should be paid something for their services. The "normal fees" in the industry are an origination fee (1 point) plus one additional point. What's a point? A point is 1% of the total loan amount. For example, one point on a loan amount of $50,000 is $500 dollars.

The terms of a loan when dealing with a mortgage broker are very flexible. To illustrate this point: Don't want to/can't pay a lot of loan fees? Will it keep you from getting your loan? As a solution, the broker can raise the interest rate on your loan. How does this help? If the loan officer sells you a loan above the par interest rate (the interest rate at which a loan costs nothing and pays the broker no fees), he will receive a commission from the bank selling him the loan. He still gets his money and you pay no loan fees. You will, however be paying these points in the form of extra interest for the life of the loan, which is much more expensive than paying the points up front at closing.

Okay. You can pay a higher interest rate in lieu of points on your mortgage if you can't afford the up-front costs at closing.

In the reverse situation, if you wanted a loan at an interest rate which was lower than the par rate, the bank selling the loan charges the broker extra money for it, a cost he/she passes on to you in the form of points. You will pay higher costs up-front at closing and less over the life of the loan due to a lower interest rate.

When a broker receives points from the bank for charging a higher interest than the par rate, this is called getting points on the backside.

The reverse situation is paying extra points for a lower interest rate. This is called buying down the interest rate.

What if you suspect that your loan officer jacked up your interest rate to get more commission (he received points on the back) and didn't tell you about it? It does happen.

Ask him or her. If you're not satisfied with the answer you can always figure out how much "extra" money the broker received by looking at your closing statement from the title company. Your title officer will gladly point it out. However, at this stage of the game, you're usually signing loan documents and it's too late to do anything about it short of cancelling the deal. If you notice your mortgage company is getting three points on the back (meaning the interest rate you're getting is much higher than the par rate) you can always walk out on the deal. Some loan officers count on the fact that the moving van containing all your worldly possessions is parked outside and you won't do that.

Fees to watch out for

• Points
  Keep in mind, some brokers won't let their loan officers charge less than one point origination plus one point (known in the industry as one and one). But some do. ALWAYS shop around, especially if you have A credit. Some loan officers will charge you less if they know your loan will be a piece of cake to put through the system.

• Application fees
  Application fees are non-refundable and they are 100% pure profit for the mortgage broker. Walk out if they ask for an application fee up front.

  The only exception to this rule: if you have tough credit. In this case, the loan officer will have to do a lot of work before they can tell if your loan will go through. Time is money and they want to be paid for this effort. If your loan gets denied without an application fee up front, the loan officer put in a lot of hours for nothing.

Mortgage Loans - secret methods that drive up the cost of your home purchase or refinance (3)

... contd

The coming legislation?

The Washington Post stated in an article titled Mortgage Brokers Likely to Disclose Fees Under New U.S. Guidelines (Oct 13, 2001) that "An estimated 150 class-action suits are now pending in federal courts around the country pitting groups of borrowers against lenders who paid yield-spread fees to brokers". If plaintiffs, numbering 30,000 in one lawsuit alone, are victorious, the the potential settlement cost is quoted by the Post to be $135 million. Naturally, as such costs could put a good percentage lenders out of business, many are asking for better clarification by Housing and Urban Development (HUD) as protection.

HUD is in the process of recommending new legislation governing the home-buying process. In a press release issued on October 15, 2001, HUD's Housing Secretary Mel Martinez stated some of the key goals of the new legislation:

• Full, upfront disclosure of all costs associated with obtaining a home loan in understandable terms prior to the payment of non-refundable fees. Full disclosure would be a description of the specific services to be performed by the broker, a statement of whether the broker is acting as an agent for the borrower, and the amount of the total compensation to the broker, including any yield spread premium paid by a lender. In addition, HUD believes that the broker should explain the various loan options. The borrower should be informed that he or she may pay higher upfront costs for a mortgage with a lower interest rate, or conversely pay a higher interest rate in return for lower upfront costs. In the latter case, the broker may be receiving a yield spread premium.

• Clarification of Yield Spread Premiums - payments made by lenders for loans with higher interest rates. HUD's statement of policy says that yield spread premiums are legal if the broker actually performs services for the homebuyer, and if the total compensation the broker receives is reasonably related to the total value of the services the broker performs. Disclosure is especially important when borrowers may be paying yield spread premiums. Borrowers should know as early as possible what their settlement costs will be, so that they can shop for the best option.

• Clarification of current HUD policy that states that consumer payments are not legal if they are overcharges, or if no service is provided. HUD is restating and clarifying its policy that excessive and unreasonable fees are illegal under RESPA because they are unreasonable and not a payment for a bona fide service.

  The new policy will make clear that it is illegal for a settlement service provider to mark-up fees when it is making a payment to another settlement service provider, unless it provides additional value to the homebuyer in the process, or when a provider does no work for the fee and charges an unreasonable amount.

• Expansion of RESPA enforcement. Last year, HUD fielded more than 900 RESPA-related complaints, approximately one-third involving kickbacks and other questionable payments.
  

Currently, these measure are not enforceable by law, and are just guidelines. You can do your part and lobby your local government representative.

Mortgage Loans - secret methods that drive up the cost of your home purchase or refinance (2)

...contd

Getting Points on the Back

Also known as "yield-spread fees", points on the back are one of the ways a loan officer makes more funds available to the total loan "kitty." It is essentially a "kick-back" from the mortgage bank the loan officer is buying the loan from, earned by selling a customer a loan at an interest rate that is above the going rate.

Each day, loan officers receive rates from banks for all of their loan programs. Listed for each program is the "par interest rate." The par interest rate is the interest rate at which the broker does not have to pay a fee to "buy" the loan and then sell it to you, nor does he receive a commission for selling you the loan at this rate. You might say that the par rate is "loan equilibrium." Table 3 shows an example of the types of rates a bank might publish to their subscribing mortgage companies every day.

EXAMPLE RATE SHEET ON A 30-YEAR LOAN

	6.5	6.75	7.0	7.25	7.5
15-day Lock	.50	.25	0.00	(.5)	(1.5)
30-day Lock	.75	.50	.25	0.00	(.25)
45-day Lock	1.50	.75	.50	.25	0.00
60-day Lock	2.50	1.00	.75	.50	.25

In the above example, the "par" value for a 15-day lock is 7.0%. The numbers in parentheses are the points returned to the loan proceeds as additional funds to offset the costs of the loan (or as a commission for loan officer). Why would anyone knowingly pay this higher rate? To get a "no-cost loan," which I will talk about next.

For example, if you wanted a $150,000.00 loan, but didn't have enough to cover the loan costs, you could bump up your interest rate to 7.5%, giving you: $150,000.00 x 1.5%/100 = $2,250.00.

This money will be credited to the loan proceeds at closing. What does this mean? It means that if your closing costs are $2,250.00, you won't have to lay out a dime to do the loan. Keep in mind, though, that if you are purchasing a home, you can't just up the interest rate to get your down payment. You must have enough money for the down payment.

And if you didn't know that the rate you were getting was higher than the par rate (meaning you paid full loan costs)? The loan officer gets that $2,250.00. Do some loan officers "forget" to tell you about this little loan surplus? Unfortunately, yes; it is one of the most profitable methods used by loan officers.

No-cost Loans

You've heard of those no-cost refinance loans? Forget it. There is no such thing. A broker must make money on every loan. Many well-intentioned loan officers honestly believe they are giving you a loan for free, but this simply is not the case.

In the example above, I showed you how you could get a loan at an interest rate above the par rate and get points on the back. The points on the back translate to extra funds available to pay the cost of the loan plus pay the loan officer a commission. So what's wrong with this? Nothing, but you are financing the "free cost" of the loan over the term of the loan (usually 30 years), which can double or triple the closing costs (by way of additional interest) as compared to pay the closing costs in cash.

How Do You Know if the Loan Officer is Jacking up Your Interest Rate?

It bears repeating that it is the loan officer who picks the interest rate he is going to sell you and, consequently, the commissions he will earn on the loan. If he is competing with another loan company to get your loan, he may not be greedy and not jack up the rate. But if you don't shop around, don't trust him to be honest. Some loan officers are completely up-front with you, but some aren't. Always shop around, especially if you have "A" credit. Some loan officers will charge you less if they know your loan will be a piece of cake to put through the system.

Take extra caution if you have less than stellar credit and must get a non-conforming loan, as these are typically the biggest target of shady loan officers. Desperate people have been known to have swallowed higher interest rates and 5 points in fees. This definitely is gouging.

contd...

Mortgage Loans - secret methods that drive up the cost of your home purchase or refinance.

There are an enormous amount of fees associated with doing a loan. Most of them are fees that the loan officer and mortgage company cannot control, and are a part of every loan. In the case of the rest of the loan fees, the loan officer is in complete control of how much they will make off of a loan. Unfortunately, the typical consumer is unaware of these costs because they are hidden (legally so) in the loan paperwork and closing documents. However, laws are in the process of being drafted to correct this outright thievery.

In order to understand how a mortgage company makes money on a loan, you first need to understand which of these costs are profitable for the mortgage company. You can read our article on the real costs of doing a loan.

Fees Which Profit the Mortgage Company

The following fees determine the profit on the loan. They are completely under the control of the loan officer or mortgage broker. There is no standard for these fees; the unscrupulous loan officer will try and make as much as possible from you with these fees. After being in the loan business, I watched loan officers gouging their clients every day. It is a rampant, common occurrence. Most loan officers are not paid a salary, they are paid through commissions from every loan they originate that closes. This puts the pressure on them to make as much money as possible, wherever possible. Loan officers typically split the profits (usually 50/50) for each loan with the company for which they work. Therefore, every dollar they can squeeze out of you is 50 cents into their pocket. To originate a loan, the loan officer merely gets a client to fill out a loan application.

• Origination or Application Fees: These are fees for processing the mortgage application and may be a flat fee or a percentage of the mortgage. They usually are equal to one point. In fact, they are just a point called by a fancy name so the loan officer can charge more for the loan.
  
• Points: A point is equal to 1% of the amount borrowed. For example, one point on a loan amount of $50,000.00 is $500.00 dollars. Points can be payable when the loan is approved (before closing) or at closing. For FHA and VA mortgages, the seller-not the buyer-must pay the points. Even if you are not using an FHA or VA mortgage, you may want to negotiate points in the purchase offer. Some lenders will let you finance points, adding this cost to the mortgage, which will increase your interest costs. If you pay the points up front, they are deductible from your income taxes in the year they are paid. Different deductibility rules apply to second homes.
  
• Application Fees: Application fees are non-refundable and 100% pure profit for the mortgage broker. Walk out if they ask for an application fee up front. The only exception to this rule is if you have tough credit. In this case, the loan officer will have to do a lot of work before he can tell if your loan will go through. Time is money and he will want to be paid for this effort. If your loan gets denied without an application fee up front, the loan officer has put in a lot of hours for nothing.
  
• Points "On the Back": These are fees and commissions earned by the mortgage broker by selling you a loan whose interest rate is above the going rate. More about this later in this chapter.

The "normal fees" in the industry are an origination fee (1 "point") plus one additional point. Some brokers have a limit on how much a loan officer can charge in fees-the loan application fee, the origination fee, and the points, but not all. However, there is no absolute hard and fast rules.

...contd.

UK Mortgages -- An Overview

Carrie Reeder

UK mortgages are funded solely by banks, credit unions, or other financial organizations. There is no market intervention by government entities. This means that the mortgage market in the UK is very competitive. This had led to a variety of types of mortgages available to UK borrowers.

Most UK mortgages operate on a variable interest rate. This rate is usually determined by the Bank of England. However, because the market is so competitive, lenders often offer the borrower terms when they can pay a rate that differs from the variable rate. Lenders sometimes offer borrowers a fixed interest rate for a certain period of time before they will have to start paying the variable rate. Another common incentive is a discount rate. A discount rate is a rate that is lower than the variable rate. Discount rates apply for a certain number of years established by the lender. Some lenders offer capped rates. This is the maximum interest rate that the borrower would be required to pay at any time during the term of the loan.

Some lenders even offer a cash-back incentive. Cash-back incentives are based on a percentage of the principal borrowed amount. Borrowers who borrowed $100,000 with a 5% cash back incentive would receive $5000 in cash at the closing of the mortgage.

Because of the need for lenders in the UK to offer competitive rates, they usually have pre-payment penalties. This means that the borrower would be charged a certain dollar amount if they were to pay the mortgage off prior to the end of the loan term.

Another common UK mortgage is a self-certification mortgage. A self-cert mortgage is for people who are self-employed with no means of proving their income. As long as the borrower has a down payment and borrows an amount substantially lower than the value of the home, a lender will offer them a self-cert mortgage. Self-cert mortgages usually have higher interest rates than normal mortgages because of the amount of risk involved for the lender.

Other lenders allow certain borrowers to borrow the full amount of the value of their home. This usually presents a significant risk to the lender should the borrower default on the loan, so 100% mortgages are usually reserved for borrowers with great credit histories.

If you would like a list of lenders that deal with UK Mortgage Loans, let ABC Loan Guide provide you with free information. We also have links to help you find a Low Home Mortgage Rate on your next loan.

Tips On Finding A Good Mortgage Loan In The Uk

Many mortgage loans UK are easy to find. However, not all of them may suit your needs, as there are several factors to be considered when applying for one of those loans available on the fiscal market today. These brief tips intend to aid you in the process of deciding which one of those mortgage loans suits your needs the best.

Consumer Tip:

Before you commence filling out loan applications, check your credit rating. If there are any problems with your credit, you can take a little time to fix them before you start checking out e-mortgages.

Tip number one: Keep in mind that there are several mortgage lenders out there, and each one of these loans providers may offer unique deals.

Be sure to check and compare sufficient lenders before you select one of them, as disparate useful mortgage conditions may represent a significant quantity of lolly on the long term.

For instance, you may find a lot of financiers offering very low initial rates, but hiding high additional costs within the small print. Ask the financier to explain all additional costs, variable rates and remittance conditions, do not only peruse the small print yourself. If you have doubts even after being explained on these important subjects, or if you have a feeling that this particular lender is hiding something from you, just go away and continue looking for more convenient loans.

Tip number two: If you live on a fixed income, it makes sense to select one of the fixed interest rate loans

However, fixed rate loans often comes with higher penalty costs, so if there is a good chance that you will repay the loan before the end of the agreed mortgage term, perhaps considering a mortgage loan that has a variable interest rate but has lower redemption penalties is a much smarter choice.

You should also be aware of the penalties applied when extending the duration of the loan, in case you need additional payback time.

Consumer Tip:

Use the world-wide-web to your advantage. The main reason that the world-wide-web exists is for you to find the information that you are looking for, when you need it. Learn all that there is to know about item options which are available for you through disparate sellers. This will give you a good idea of where you should apply for these types of products. It is one of the best ways to learn more about product cost-price options.

Tip number three: Consider using a mortgage broker.

Although a intermediary will require you to pay for his services, it is wiser to let someone who is experienced in loans handle the process of looking for the best deal for you.

Explain your specific needs to him, and let him find the best loans for you. However, be aware that some mortgage lenders will pay some brokers to be recommended; so it is better to make sure that you are using an independent broker to get you the maximum convenient loans available in the market.

Tip number four: Try to keep the duration of the loan as brief as you can.

If the agreed payback term is too long, you will be paying a lot more lolly in interest, thus the total remittance will be higher. Ask many comfortable mortgage helpful loans businesses for quotes and compare both the four-weekly outgoings (to see if they fit your budget) and the total remittance at the end of the professional loan duration (to get a genuine idea of which deal suits you best).

I hope these four brief hints assist you find the best comfortable mortgage helpful loans saving you many headaches in the future.

"Looking for the best UK mortgages?"

Shop around.

Get quotes from 4 lenders. You may be able to save yourself thousands of pounds by avoiding UK mortgages with high rates and/or high fees. A 0.5% lower rate on a £100,000 loan for 5 years will save you over £1,300 in payments. Try your local bank or credit union, mortgage brokers and internet resources. Don't choose lenders just because they have the lowest rate. Consider the overall cost of your loan.

A mortgage or loan varies according to:

• The amount borrowed;
• The interest rate;
• The type of rate (fixed or variable);
• The term (length in years) of the loan;
• Discount rate for X number of years;
• Deposit (downpayment);
• Associated fees (broker, origination, prepayment etc.);
• Local or national taxes;
• Insurance required by the lender.

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Consider the following advice from the U.S. Department of Housing and Urban Development when applying for a loan:

• Be sure to read and understand everything before you sign.
• Refuse to sign any blank documents.
• Do not buy property for someone else.
• Do not overstate your income.
• Do not overstate how long you have been employed.
• Do not overstate your assets.
• Accurately report your debts.
• Do not change your income tax returns for any reason.
• Tell the whole truth about gifts.
• Do not list fake co-borrowers on your loan application.
• Be truthful about your credit problems, past and present.
• Be honest about your intention to occupy the house.
• Do not provide false supporting documents.
  

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Get a written (emailed of faxed) Good-Faith Estimate. Allow for a reasonable time; 1-2 hours. If they can't do that you may want to question using them. The market can change in minutes. Get a written good-faith estimate of closing costs. A Good-Faith Estimate should show you all of the costs of your loan, including the rate. The cost of a UK mortgages, however, cannot be your only criterion. Is your lender a bank or just a broker? Do they fund the loan for you, or do they rely on others to fund your closing? This can be a very important distinction.

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Do a budget. Make sure you use realistic figures. Keep all of your receipts, or keep a record, for all of the money that you spend for a month. Use that to help you compile the first draft.

Be prepared to review and update it regularly. A coordinated budget allows you to get the most home for your money without beggaring yourself, while getting rid of wasteful spending.

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When interest rates fall: Try and leave your repayments the same as prior to the rate drop. This means you will actually be paying more than the minimum each month. You'll repay your UK mortgages years sooner.

The more rates fall, the sooner you will repay your loan. You will have been paying at the higher rate, so if rates rise again later you may not have to change your repayment.

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Don' t churn your UK mortgages loan. Each time you refinance you'll likely incur closing costs and non-refundable fees. Don't let a lender talk you into rewriting your mortgage just to get a little cash back.

Many people find that they have added £6,500 or more to their debt in order to obtain £3,500 in cash. An example of this is second mortgage loans.

Consumer Tip:

Compare companies. Making sure that you do this before you decide to go with a particular vender is very important. You should also find out what each type of payment option for your product, whether it is a loan, grant, credit card or cash purchase, entails before you decide to apply for it. This will help prevent you from getting involved in something that you do not want to be involved in. Comparing premiums, interest rates and what each type of option entails is very important when comparing marketers.

Good Hints On Getting a Mortgage in the UK

A mortgage is a loan taken out to pay for the purchase of property, usually a house. Due to the size of the loan the lender will usually take security to cover themselves in the event of non payment of mortgage installments; usually they will hold the deeds of the house for this purpose. Mortgages in the UK are usually taken out over 25 years, although with rising house prices pricing first time buyers out of the market this term is often exceeded to 30 or 40 years.

The most important thing to consider when seeking the best mortgage deals for buying a new house is how much you can afford to pay on a monthly basis. Take into account contingencies, what would happen if mortgage interests rates rise to 10% or 15%, what would happen if you lose your job or are incapable of working? Consider the advantages and disadvantages of going for a fixed rate loan over a long period rather than a variable rate loan which follows interest rate fluctuations. Remember to factor in any relevant insurances to cover against eventualities.

Once you know how much you can afford you can begin to look at properties which fit in your price range, and you can get agreement in principle from your mortgage lender of choice that you will get a mortgage.

You have a wide choice of lenders available from high street banks and building societies to specialist mortgage lenders who cater to the self-employed, those with bad credit histories or other niche groups. These higher risk categories will be penalised with higher rates of interest on their mortgage. In some circumstances, individuals may not be able to find a lender willing to lend to them – or a lender may only be prepared to lend a certain percentage of the required amount. Mortgage brokers are well equipped to find mortgages which are tailored to many different situations, if your situation is 'non-standard' you should consider using a broker.

While mortgages for 100% of the value of a home are available, lenders usually prefer to give a lesser percentage and reward buyers who contribute cash by giving them a lower interest rate for the best mortgage deals.

Mortgage Rates Calculator

You have a whole lot of mortgage loan calculators across board to help you out make a right decision of what you really need.

A few of them include:

Mortgage Rates Calculator Home Equity Loan Rate Refinance Loans ...

Mortgage-Calc

Mortgage calculators -- Bankrate.com

Bankrate.com's mortgage calculators can help you figure out how much you can afford, ... Mortgage Calculator. Mortgage Amount:, $, (no commas). Loan Term: ... www.bankrate.com/brm/calculators/mortgages.asp

Mortgage loan Calculators-Interest.com

Mortgage loan payment calculator Calculate your monthly payment and the impact of ... Interest only mortgage calculator An interest-only mortgage provides ... mortgages.interest.com/content/calculators/index.asp

Karl's Mortgage Calculator

Mortgage calculator uses Java to graph, chart and calculate mortgage payments. www.jeacle.ie/mortgage/

BBC - Homes - Property - Mortgage calculator

A quick and easy way to work out your monthly mortgage payments and find out how much you can afford before you borrow. www.bbc.co.uk/homes/property/mortgagecalculator.shtml

RBC Royal Bank - Mortgage Centre

This calculator will show you how much your mortgage payments would be, and how you can save thousands of dollars in interest costs while paying down your ... https://www.royalbank.com/cgi-bin/mortgage/mortcalc.pl

Bloomberg.com: Calculators

Use this calculator to generate an amortization schedule for your current mortgage. Quickly see how much interest you will pay and your principal balances. ... www.bloomberg.com/invest/calculators/mortgage.html

Mortgage Calculator

This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, ... www.yourmortgagecalculator.com

Mortgage Calculators - Mortgagecalc.com

Free mortgage calculator ... Generic Mortgage Loan Calculator · Convertible Balloon Mortgage Calculator · FHA 203(b) vs. Conventional 95% Mortgage ... www.mortgagecalc.com

mortgage calculator, Fixed vs Adjustable mortgage Rate

some related mortgage loan calculators..

Calculate whether a fixed rate mortgage vs. an adjustable rate mortgage will benefit you in the short and long-term.

Adjustable rate mortgages typically have an initial fixed rate lower than that of a comparable fixed rate mortgage. The initial fixed rate period is followed by adjustment intervals.
How long do you expect to stay in your next home?
Consider possible relocation for a job and lifestyle changes, such as a growing family, downsizing of home and so forth.

Say, you need this loan for 3 years,

Is it likely that you'll be refinancing or otherwise paying off this mortgage within 3 years? and you anticipate it would be 2 years for you to refinance this or pay off ,

Recommendation: A 3/1 adjustable-rate mortgage seems right for you.

Here's why:

(1) You've told us that you plan to remain in your home for 3 years.
(2) A 3/1 adjustable-rate mortgage remains at a fixed rate for the first 3 years, then adjusts every year after that.
(3) Since you'll have the mortgage for only the fixed period, you'll get the benefit of the ARM's lower rate without the downside of the possible rate increase.



Note: There are several factors that are generally appropriate to consider when deciding between a fixed-rate or adjustable-rate mortgage. For example, considering how much monthly payment you can afford, whether a result of a tight budget or an expensive home, is a warning flag that you might be looking at the wrong house, not the wrong loan. Except in an environment of excessively high interest rates, the adjustable nature of an ARM represents an increasing, yet unknown, liability in future years. Other factors, such as the amount of the down payment or tax implications, are also generally irrelevant to the discussion of fixed versus ARM. The key factor for the majority of borrowers when deciding between a fixed and adjustable rate mortgage is the period of time you expect to stay in the home and have the loan outstanding.

mortgage calculator

Home Mortgage Calculator

Home Mortgage rates are continuously fluctuating from highs to lows. When the current rates are low, the savvy borrower will look to refinance their home loans so as to save money on interest payments. A mortgage calculator is a tool that allows the borrower the ability to formulate all sorts of payment scenarios to find the best fit for their unique monetary needs.

Adjusting the time frame, the mortgage rate, and the value of the loan, you can postulate and plan for changes that may occur. This helps you to plan ahead for interest rates, so as to immediately pounce of the savings it can produce. The most agreeable distribution of payments can be found for every borrower through the flexibility of a mortgage calculator

Loan Calculators are quite simply a series of mathematical tools, designed to help you understand every mortgage option that is available. Different people's monetary situations require different payment plans. Therefore mortgage calculators help you find the best mortgage plan based on your unique needs. Mortgage calculators are also invaluable tools through which you can plan any type of refinancing that you may find yourself in need of. When mortgage rates drop, loan calculators help you to see the amount of money that can be saved through refinancing.

In real estate business, you can hardly do without mortgage and loans. This is where you need to make use of mortgage calculator.

Shopping for mortgage calculator, you'll find out you might be miss led by some who claim to offer you a friendly mortgage rate, but with the right mortgage calculator you can convincingly get a good deal.