Getting The Best Deal On Cheap Mortgage Payment Protection Insurance

by Simon Burgess

If you want the best deal on cheap mortgage payment protection insurance then without a doubt the only way to go is by purchasing shopping around and getting the cover independently from a specialist provider. A specialist provider can not only help you to make substantial savings when it comes to the premiums charged for the policy, but will also be able to ensure you get the policy most suited for your needs and, if they are reputable, should provide free advice.

When looking for a policy, never be tempted to take what the high street lenders and banks offer you when you take out your mortgage without first doing a bit of research. The cover doesn’t have to be taken alongside your mortgage regardless of the pressure techniques the lender might use to persuade you it does. While it’s true some lenders will insist that you do take out cover to protect the loan, you can choose where to buy the cover from. High street lenders in the majority simply don’t have the experience needed when it comes to selling mortgage payment protection and, as recent finings from the Financial Services Authority have proved, sales techniques are very poor. This has led to wide spread mis-selling of policies and has left many unfortunate people not being able to make a claim on their policy when needed.

All policies will have exclusions and these are often hidden in the small print and these are what you should be aware of when it comes to taking out the policy. A mortgage payment protection policy is taken out to ensure that if you should come out of work through an accident, prolonged sickness or unforeseen unemployment then the cover will provide a tax-free monthly income which means you can still pay the mortgage. However there are certain illnesses which are excluded and medical conditions that you have at the time of taking out the policy will normally be excluded, this is why it’s important that you check the small print of a policy.

When it comes to getting the best deal on a mortgage payment protection insurance policy then you simply have to go independently to a specialist for it, this is probably the only way to get a quality product while making savings on your premium.

Simon Burgess is Managing Director of the award-winning British Insurance (http://www.britishinsurance.com), a specialist provider of low cost income payment protection insurance (PPI), mortgage payment protection insurance (MPPI) and loan payment protection insurance.

For more News, Articles, Guides, Tips, Tricks and various Mortgage And Loan Products information... visit our site at http://www.mortgage-and-loan-info.com.

Avoiding PMI - Private Mortgage Insurance

by Max Hunter

PMI - a recurring, monthly, unwelcome guest. It sounds similar to and is about as welcomed as a similar acronym. PMI is private mortgage insurance. This insurance policy is paid for by the homebuyer when the amount of their primary mortgage is greater than 80% of the value of the property.

You will note that the term 'primary mortgage' was used. This is for a specific reason. It is not the total of all mortgages and home loans on the property that is evaluated, but rather the amount of the primary or largest mortgage on the property that can trigger PMI.

PMI is calculated by taking 0.5% of your primary loan balance and dividing it by 12 (12 monthly payments). For example, if your primary mortgage is $200,000 and you are required to pay PMI, your mortgage payments would be an additional $83.34 per month. For most homebuyers, this additional premium is a considerable financial burden to undertake.

There are ways around PMI for those homebuyers unable to put down 20% or more on their new home. Mortgage lenders have created loan packages which include two or more home loans that when combined exceed the 80% threshold, while no one of the loans exceed that threshold. Typically there is a primary mortgage and either one or two home equity loans taken out simultaneously which are 81% - 100% (or sometimes more) of the home value. This affords the homebuyer to put less than 20% down, or perhaps put nothing down at all while at the same time eliminating the need to pay PMI.

If you know you are going to be putting less than 20% down on the purchase of your home you should immediately speak to your home lender about avoiding PMI. A good home lender will inform you about these types of packages. Though the rules on these packages may differ from state to state, the vast majority of states allow for these types of loan packages.

When you review this type of package you will note that there will invariably be a different interest rate on the mortgage than there is on the home equity loan(s). The mortgage rate may have a slightly lower interest rate or perhaps even a considerably lower interest rate. You should be able to calculate what the monthly payments would be for the combined loans and then determine if it comes out less than a single mortgage with PMI. Obviously, a good lender is only going to present you the package if the payments are cheaper than a single loan with PMI.

You are able to refinance the loans at any point and combine them into one payment. You would only do this when the value of the home is more than 20% above of the amount you will mortgage. As the value of your home increases through home improvements or time, you can receive an appraisal and speak to your home loan professional to determine if refinancing the loans into one loan makes sense.

These types of loans are often referred to as 80-10-10 loans or 80-15 loans, among other names. An 80-10-10 loan is a mortgage at 80% of the amount to be financed and than two home equity loans at 10% each. You will likely find that all three loans will have a different interest rate with this type of package. 80-15 loans are similar but would be the main loan at 80% and a secondary loan at 15% with the buyer putting down the additional 5%.

It is important to note that when financing 90% - 100% of a home, or more, the appraisal will play a key role in the loan approval process. If the appraisal does not come out at a pre-determined amount, the lender may feel that the transaction is not a sound one. You may need to go back and renegotiate the purchase price of the home or run the risk of being denied the mortgage. Most real estate contracts, however, do have a clause in them that allows the buyer out of the contract if they are denied a mortgage. You will want to speak to the lawyers and real estate agent in advance if you are planning for applying for this type of loan. Some contingency clauses in contracts specify a maximum percentage of a loan you need to qualify for and if you are denied for a loan at a higher percentage you are not protected by this clause.

It is important for you to have all of this information in place before you start your home search. By knowing how your financing is going to be handled you will be able to make sure you are protected in the transaction and you will also be able to negotiate a better deal since your financing has been completed or is close to being completed. The key is knowing in advance what percentage of the value of the home you are able to and willing to put down on your new home.

Max Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any type of credit issue please visit us at http://www.homeloanave.com

For more News, Articles, Guides, Tips, Tricks and various Mortgage And Loan Products information... visit our site at http://www.mortgage-and-loan-info.com.

Mortgage Payments Vs Rent Payments

by Max Hunter

There is an age-old debate on whether or not it makes more sense for people to rent or buy. Though it is hard to really understand why there is a debate at all. You will definitely hear arguments from both camps that appear logical but if you do a little digging you may find that some of the arguments are thin at best.

The simple fact of the matter is you are always better off making a mortgage payment over a rent payment if you can afford to do so. It is not uncommon for mortgage payments to actually be lower than many rent payments are. So the key is to understand an important, fundamental difference between making a rent payment and making a mortgage payment.

Rent payments are made on a monthly basis for the most part. That money gives you the right to live in the house or apartment for the specified period of time, typically one month. You receive no other tangible benefits from that rent payment. It does not improve your credit score, it does not produce equity, it simply gives you the ability to live in the residence.

A mortgage payment, first and foremost, also gives you the ability to remain in the residence, however, it does much more than just that. First, the mortgage payment helps you build equity in your home. Equity is the difference between what you owe on the property and what the property is worth. That equity can be used for many things including debt consolidation, home improvements, extra funds, etc. Equity becomes a powerful tool in your overall financial plan.

Mortgage payments also include interest payments which can be tax deductible, helping your overall bottom line at the end of the year. Rent is not tax deductible in most cases. Your mortgage payments will also help improve your credit score if you continue to make payments on time. Mortgage payments are tracked if your lender reports the loan, which most lenders typically do. Your overall financial outlook can improve dramatically with an increased credit score resulting from on-time mortgage payments.

Some will argue that you are tied down to a home if you buy it, while renting gives you more flexibility. Though it is important to remember that if you rent a residence you are typically obligated for a specific period of time, typically a year. If you own a home, however, you are able to sell and relocate any time you wish, or you can rent the residence and relocate any time you wish. This is an important and fundamental difference between the two. It is true, however, that how quickly you are able to sell your home will depend on the location, its value, its condition and the market at the time of the sale. You do have the flexibility, however, to sell anytime you find a willing and able buyer.

One time where renting may seem like a more logical choice than buying is if you are going to live in a particular area for only a short period of time. In order to determine if it makes sense to rent or buy in this type of situation you really need to analyze your overall financial plans. You need to get a full understanding of any and all costs associated with you buying the home, the likelihood you would be able to sell it or rent it when you were relocating from the area, etc. For some, even in a short term situation the better financial decision may be buying, especially if they are able to rent it and build equity on their tenant. This may, however, impede them buying a second home, though if they have adequate credit and income they may not have any problem buying the second residence as well.

It is difficult to come up with a scenario that makes renting the clear cut right decision. It seems in most situations buying, if an option for you is the better decision financially. Though consulting with a mortgage professional is the only real way to help determine these things as they can give you a clear understanding of what is and what is not possible for you. Your financial advisor can also assist you in making this decision.

Owning your own home has many non-financial benefits as well, however, only you can evaluate those. You know what is and what is not important for you. You know what obligations you are comfortable having and which you are not. The key is to evaluate your personal situation rather than listen to those who are convinced that one or the other is right for you.

Max Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any type of credit issue please visit us at http://www.homeloanave.com

For more News, Articles, Guides, Tips, Tricks and various Mortgage And Loan Products information... visit our site at http://www.mortgage-and-loan-info.com.