TOP 5 THINGS YOU SHOULD KNOW ABOUT MORTGAGE AS A HOMEOWNER
Being a homeowner is one of the expensive investments you will make in your lifetime. Even at that, owning a home doesn’t imply knowledge about mortgages. It may seem like you know everything about mortgage because you’ve bought a home, but that is nowhere near true. This article will help you understand mortgage as a […]
Being a homeowner is one of the expensive investments you will make in your lifetime. Even at that, owning a home doesn’t imply knowledge about mortgages.
It may seem like you know everything about mortgage because you’ve bought a home, but that is nowhere near true.
This article will help you understand mortgage as a homeowner.
WHAT PERCENTAGE OF YOUR MONEY GOES TOWARDS INTEREST
Sometimes called blended payments, some mortgages are combined repayments of the principal as well as the interest. The moment you start paying off your mortgage, part of the repayment will go towards the interest, not the principal. As time goes by, the principal of your loan starts to decrease. What that means is that what you owe in interest will decrease, while the amount that goes towards the principal increases.
That is why adding a huge sum payment at the beginning usually makes sense, and also makes a significant difference when it comes to your mortgage.
As a homeowner, it will only be right to know how much you will be paying in interest over the life of your loan.
GET A MORTGAGE INSURANCE NOW!!
Do you have a high ratio mortgage? If yes, it means that you have a down payment of less than 20%. If this is so, then you are required to get mortgage insurance.
Mortgage insurance will protect your lender in case there is a default from your side, and, more importantly, some loan providers or mortgage firms usually have programs that borrowers can take advantage of. These programs help homeowners who are experiencing financial difficulties work with the insurer to help establish alternative means to help you keep your home. In the end, getting mortgage insurance will protect you and your lender too.
YOUR LENDER WON’T ALWAYS GIVE YOU THE BEST DEAL AT A RENEWAL
The normal thing that homeowners do when they want to renew their mortgage is that they meet up with the same lender that currently held their mortgage. No one says it’s a bad thing. Some homeowners renewed their mortgages without “renegotiating” the terms. Negotiating different terms than the one they were given in their renewal statement is a good thing to do but most lenders don’t want you to switch lenders and as a result they are not out to help you or give you the best deal.
Just make sure the next time you are planning to renew your mortgages, negotiate a different term with your lender.
A MISSED MORTGAGE PAYMENT DOESN’T MEAN FORECLOSURE
Missing a mortgage payment is not a good thing, but not everything is within our control. If that is the caseand you find yourself in a situation where you can’t pay for your mortgage in one month, it’s alright. It doesn’t mean you will get an eviction notice. Before a homeowner can get an eviction notice, you not payinghas to go on for a very long time.
WHAT COMES WITH A DEFAULT?
Even if missing a mortgage payment for a month or two won’t mean you losing your home, it’s still good to know the consequences of defaulting on your payment.
If you have a default in payment, there is no beating around the bush, you will lose your home, and the money you paid before that, all of it will be gone. Yes, all of it.
First, you will get a call from your lender, informing you that you need to plan to settle the arrears you have at hand.
Don’t ignore the calls of your lender, it’s a bad idea. You will only be looking for trouble by doing so.
They have the power to repossess your house in minutes, sell it to someone else and recover the outstanding balance you owe.
With this knowledge, you should have a good idea of what it is to be a homeowner.