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Frequently Asked Questions: Home Buying

April 12th, 2017 Posted in learning about money, Property Investment
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There really is a lot going on when we move home. From money changing hands to a full on moving process. It’s a process that brings up a lot of questions. Let’s break down some of the most common questions that are asked when moving home!

1 – How Do I Get A Mortgage?

Well, you need to go to the bank. A mortgage is a loan given to the buyer by the bank so that the buyer can purchase the property from the seller and then pay the bank back. Mortgages are usually paid back over a long term period. To gain access to a larger loan from the bank, you’ll have to pay a bigger deposit, just so the larger amount of money is at least secured in some way. There are plenty of different mortgage providers, so you can shop around. But why would you want to shop around? Aren’t they all just the same? Not really, each lender will add a different amount of interest on top of the repayments, meaning the same loan could be made more expensive.

2 – What Happens If I Don’t Pay Back The Mortgage?

If you don’t pay back the mortgage, your house will be repossessed by the bank. This is because the house is what you have borrowed against to achieve the mortgage in the first place. You’ll also lose your deposit. This isn’t an instant process, but it will be put in action within thirty days of a missed mortgage payment. Within ninety days the bank will have started the foreclosure process, which would be their attempt to repossess the house. This can lead to the bank auctioning off the site to reclaim the money. There are plenty of ways around this – just try to make back the payments. You could also try to sell the house.

3 – What Happens If I Can’t Meet Mortgage Payments?

Frequently Asked Questions: Home Buying - mortgage application image

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Refusing to pay a mortgage and not being able to pay are two different things. If you know that you won’t meet your monthly payment, you need to let the lender know. In almost all cases, a lender would rather you work to meet payments. It means they don’t take a loss on their investment in you. You could switch to simply pay the interest on your mortgage to lower the cost, or work out a new plan. In many cases, help is available for you to seek if you know you won’t be able to meet payments.

4 – Is Buying A Home Better Than Renting A Home?

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Some people rent, some people buy. Many people would say that renting is ‘dead money’ – your cash isn’t going anywhere. However, some people can’t afford to buy, or they might not be ready for the responsibilities that come with home ownership.

When is renting better than home ownership? Well, it’s circumstantial. If you are always on the move – renting might be better. If you don’t want to dive into the world of home maintenance, renting is better. The ‘dead money’ argument, for the most part, is true. Buying homes are solid investments, but a lot of the monthly costs involved with home ownership don’t go towards paying off the mortgage – insurance, tax, energy bills. Don’t kid yourself into thinking that dead money isn’t involved with a mortgage.

What’s more, interest rates are pretty low – meaning that in most cases, a mortgage might be cheaper than renting. This depends on your down payment as well, though.

5 – How Do I Handle The Legal Side?

This is where things get difficult. There are a lot of legal documents and papers that need to be filed when buying a home. While a keen legal eye might get far, it is worth leaving the job to experienced agencies in the field, like www.tbw.uk.com/conveyancing-law/property-lawyers-solicitors-bexleyheath.html who can handle a number of things. These agencies deal with areas such as declaring property boundaries, neighbour disputes, the fixtures included with the sale, building permissions, guarantees, regulation certificates, validate the owner of the property, register the site and much more. Of course, these can be handled by yourself, but it is worth hiring legal help. There are a lot of pitfalls associated with home ownership.

These cover the basic areas of buying a new home and should be more than enough to get you started with your interests. There are a number of areas to branch off into as well – such as researching down payments, mortgages and of course, the complex legal side of home ownership as well.

 

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The Wrong Fairy Tales: Ignore These Mortgage Myths!

April 10th, 2017 Posted in learning about money, Property Investment
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The Wrong Fairy Tales: Ignore These Mortgage Myths! - mortgage sign image

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Very few people are able to buy a house outright. Some people will try to make the argument that this is a problem unique to our financially-troubled times, but the truth is that we’ve rarely not lived in “financially-troubled” times where a lot of people were able to buy homes without assistance from some institution.

Banks and other lenders have been pulling the financial strings of the vast majority of homeownership for a long time, and it will probably continue to be that way for a long time yet. The fact is that, unless you’re pretty darn wealthy, you’re going to need financial assistance to get a home. Heck, even the wealthy need the assistance at times, when you consider modern house prices.

Getting a mortgage is, in all likelihood, how you’re going to get your own home. So it’s important that you’re not falling for any myths about mortgages! Here are some of the most common.

A pre-approved loan is a sure thing

Yes, you should definitely get a mortgage pre-approved before you start shopping for property. But this doesn’t mean that a pre-approved mortgage is the same thing as a mortgage! However, once you’ve made an offer on the place, the lender is going to double-check everything. After all, things may have changed between that pre-approval and the final approval. Remember that prefix: pre-approval. It’s not total approval just yet!

The Wrong Fairy Tales: Ignore These Mortgage Myths! - lender image

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A high income is all that matters

Let’s say you’ve got one person earning $100,000 a year and another that earns $50,000 a year. The first one is going to get the best mortgage rate, right? Well, not necessarily. There are a lot of factors to consider. Ms $100,000 may also be paying about $60,000 in debt every year, whereas Ms $50,000 is only paying maybe $3000 in debt. The latter has a healthier cash flow, so has the upper hand! Another thing to consider is the type of work you do. Ms $50,000 may be a scientist with a steady career ladder ahead. Ms $100,000 may be a self-employed freelancer who could potentially earn much less in the following year!

Your credit needs to be spotless

It’s true that a good credit score is highly desirable if you want a mortgage. But you’re not expected to have a perfect score. But if you have a middling score – and many people do! – then it’s not exactly a deal breaker. In general, a few blemishes won’t hurt you overall as long as you have a steady income and pay your bills.

The Wrong Fairy Tales: Ignore These Mortgage Myths! - credit score image

Image Credit Flickr and Cafe Credit

You need to have 20% saved for a down payment

20% is the amount that always gets thrown around when it comes to saving up money for a down payment on a home. And, yes, that is the best minimum to have if you want the best mortgage rates. But it’s not necessary – after all, that 20% is usually quite a lot of money. There are a lot of good institutions who will give you a mortgage with a down payment of about 5%, for example. Don’t assume you’re doomed if you haven’t saved that magical amount of 20% just yet!

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Prepare Your Money For The End

April 10th, 2017 Posted in Money Tips
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It’s going to happen to us all one day. One of the inevitabilities of life is that it is eventually going to end. When it comes to your finances, some might take the nihilistic approach that gathering wealth doesn’t matter in the grand scheme. Realists, however, realize that when they pass they keep having a huge impact on the lives of those around them. Their finances can play a big role in that, for better or for worse. They also realize that the sooner they get the ball rolling, the better.

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Don’t leave your loved ones footing the bill

One step that everyone should take now if they’re able, is to get themselves a life insurance policy. Without life insurance, the costs of dealing with your funeral and all the other arrangements that have to be made after you pass will be taken out of your estate or even passed on to your family. You don’t want to be a source of even more loss to them after you’re gone. You might think it’s only older people that have to worry about life insurance, but it can be a lot cheaper if you get a start on it earlier. When you’re older, you’re also more likely to have health issues that can limit your life insurance choices further down the line. Take care of it while it’s still easy.

Make sure it goes where you want it to go

Writing a last will and testament is crucial, as is keeping it updated every time your assets undergo a change. But it’s not enough to have just a will. The process of having it executed is a length one with a lot of legal requirements to be fulfilled. A will has to be proven in the eyes of the law to be the legitimate document that it is. Things like creditors and their rights to any assets or wealth mentioned in the will have to be sorted, too. An executor, like probate lawyers from IRB Law, is worth getting on your side early. The sooner you have someone informed and prepared about your will, the smoother they can make the process for your loved ones. Otherwise, arguments over the execution of the will might even cost the whole worth of it.

Get your prep work done early

To make it even smoother for your will to be executed, you should have a whole estate plan ready. Much like finding your net worth, make an inventory of all your physical items, non-physical wealth, credit cards and debts. If you’re part of any organizations like alumni or charitable groups, list them too as many of them have benefits to offer your loved ones. Look at other accounts like your IRA and 401(k) too, to make sure you’re still happy with your selected beneficiary listings on the documents. Regardless of what a will states, those listings take precedence. It’s a good idea to organize your estate at least once a year.

It’s worth getting your estate in motion now rather than later. Not only do you get peace of mind sooner, but it will cost less and be worth more to get it done now.

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Educate Yourself On The Impacts Of A Student Loan

April 9th, 2017 Posted in student debt, student finances
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Educate Yourself On The Impacts Of A Student Loan - graduation image

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While we would love the opportunity to go back in time and use what we know now, we’re not jealous of Millennials in the slightest. Why? Because they are the most indebted generation of college students in history. Part of the reason they are so indebted is because students are naturally inexperienced with money, meaning they take out more loans than they perhaps have to.

This simple form of mismanaging money can have a substantial impact on a person’s life. That is why it so important you know exactly what the minimum amount money you need to borrow is, as well as understand how a student loan can negatively impact your life.

No Grad School

A student loan can massively affect your chances of going to grad school because the average accumulation of student debt is $30,000, which can see them seriously struggle to get their hands on another loan after their undergraduate program or, worse, seriously struggle with repayments.

No Home Buying

Having debts already in place can seriously affect a person’s chances of getting a mortgage. There are numerous reasons for this. Firstly, having substantial debts already can affect your credit score and thus your eligibility for a mortgage, although this can be helped by experts like those at https://www.bestdebtconsolidationloans.com/national-debt-relief-review.php who specialize in debt consolidation. Secondly, you may not be able to afford the monthly payments due to your current repayment plans. And thirdly, having to put money aside to pay back your student loans may see you struggle to save up for the required down-payment.

No Dream Job

When someone applies for a job, a company more often than not will undergo a background check. This will include a person’s criminal record, professional history, and credit checks. In fact, almost 40% of companies will perform a credit check. This may not be a problem if you have a flawless repayment history, but if you have made late payments it will show up and this could be held against you. It could be the determining factor between you and another candidate.

No Good Credit

Most major banks and financial establishments treat a student loan just like any other form of a loan. They call it an instalment loan, which affects your FICO score, something you can read more about here http://www.investopedia.com/terms/f/ficoscore.asp. As such, if you fail to make your repayments on time as set out in your agreement you will see your credit score get affected, and a low credit score can prohibit you greatly. You see, the lower your credit score is the more a lender will consider you to be high risk, and thus it will be harder to extend other lines of credit. This could affect home buying, as we mentioned above, as well as other purchases like a vehicle or a business. It will also affect your insurance premiums.

The world we live in now means that the majority of students have to take out student loans if they want to go to college; it is their only means of affording it. We are not trying to warn you off college. What we want you to understand is the consequences of borrowing money and the importance of being disciplined when it comes to how much you borrow. Less is best.

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The Modern Investments

April 5th, 2017 Posted in learning about money, millionaire mindset, Money Tips, Property Investment
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the modern investments - gold image

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Since the global crash in 2008, the wealthy have been looking for new places to invest their money. Banks seemed like a safe option but for the super rich, they became a worry zone, this was because most banks would only guarantee the safety of set limits of cash. So if you had 500k sitting in the bank and the bank went bust, you would only get 75k of your money back.

Ok, so most of us aren’t sitting around with half a million dollars in the bank. However, that doesn’t mean we can’t draw some inspiration from the High Net Worth Individuals (HNWI) and invest some of our money into the trends they are setting.

Property is always a good place to stash your cash. Firstly you have a tangible asset, something that might lose money but will, at some point make money. You are far more likely to break even over a few decades than end up with a loss. So this could be seen as a safer bet than your bank. The interest rate on savings at most banks is rubbish. Investing money in property and renting it out could see you making a far better return than you were in your savings account. There are two safe options for investing into a property. One is to find any new houses for sale, especially ones which are being built in areas that aren’t currently fashionable. If you find out information about any potential projects in this neighborhood, you may see that house prices will go up. Eg, if there is a new school or business applying for application. This could push up home prices. The other option is to go old. Look for the worst house on the best street, invest a little time and money into doing it up, then sell it.

Another great alternative investment has been the classic car market. You need to stay ahead of the game here, making smart purchases before the rest of the world cotton on. For making smart purchases before the rest of the world cotton on. For example, the BMW Z3 is a cute little car which is set to be a future classic. You can pick one up for a few thousand dollars, in fact, you can find them for under 1000 dollars, you can then invest a little time and love into restoring it, and in 5 years time, you could have a car worth 15,000 dollars.

the modern investments - classic car image

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What about investing in wine, companies like Woolfsung have been advising HNWI on the wine investment sector. Here the idea is that you buy up predicted good years and then stash them away in a cellar for ten years. Most vineyards have a pattern when it comes to years so experts can predict which will be good. Of course, there is always the risk that you may get it wrong, or that you haven’t stored it the right way. Then the wine will be ruined, and you lose the investment.

Check out what the elite pack is investing their money in and see if you can replicate it on a smaller level. You never know, your horse might come in.

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