We have all heard about banks wanting you to come in and get a pre approved mortgage but watch out because things are not as cut and dried as they seem.

Although on the surface it looks like your guaranteed to get a mortgage this is simply not the case. Through recent experience from helping a friend get there first home and after spending thousands on getting all the right checks done and confidently knowing they had a pre approved mortgage from a bank for thirty thousand more than we actually required. I thought it was a done deal then at the last minute the bank pulled out!!!

They stated 2 reasons for this.

1 He was a seasonal worker ( which they new before pre approve the mortgage)

2 They didnt like the area the house was in. ( even though my friend was paying exactly what there valuers said it was worth)

In this lies a very valuable lesson.

Do not spend any money on reports and valuations with out the bank first agreeing to the mortgage on the particular house you have chosen to buy.

This was a $2000 thousand lesson.

Do not fall into the same pre-approval mortgage trap

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This Lady thinks that now that President Obama has arrived she won’t have to worry about here mortgage bills or her petrol bills.
I seriously hope that she does not represent the norm of America, because if this is the case then the average american is seriously deluded.

Yes Barrack is now the president but he still has no control over the actual running of the country. It will take him years of resistance just to get the most simpilist of policies through mean while the average american will lose everything.

Learn how to structure a mortgage loan to your benefit & avoid paying unnecessary interest.

Incredibly most people could save thoudsands off their mortgage payments if they re-looked at their loans and checked:

Interest Rate, Loan Period, Repayment amounts. In most loans if you were able to pay beck more than required without any penalty, you can save yourself rich!

Part 1:

This is also a great way to learn the cost of interest. You need to know four things first.   The initial balance, the fixed interest rate, and the loan term, and the repayment frequency ( Weekly, fortnightly, monthly etc)

Let’s say you just purchased a brand new home theater package worth $12,000. Your interest is say 9%, the loan period is 4 years, and the repayment frequency is each month.

The easiest way to think about this is simply:

You have a fixed term loan and you make monthly payments.  Therefore the interest amount each month will be one twelfth of the annual interest rate.  Take your calculator and divide your annual interest rate by twelve.

I.e: 9% annually dived by 12 = 0.75%

Monthly interest rate = 0.75%

The best way to set up your mortgage is to work out wether you are going to be able to pay any extra off your mortgage and if so How much.

This Figure will depend on your individual circum stances. My first mortgage was set up with 25% of the mortgage floating and 75% of the mortgage fixed for 2 years.

This compromise allowed me complete freedom to over pay a decent amount of my floating mortgage with out any penalties whilst paying bare minumum off my fixed mortgage which won’t change for 2 years.

When choosing your mortgage type it is important to look at crucial factors in your life like whether your financial position is likely to change due to kids or job change or many other factors.

This is important because you may be in a position to pay more off than is needed and if your mortgage is fixed it limits your flexibility or on the other hand if you are struggling to pay your mortgage as it is and you have a floating mortgage when interest rates go up you may not be able to pay which means your could lose your house.

The best and by far most efficient way to pay your house off quickly is to have a compromise.

Floating mortgages are the most flexible of all mortgages.

A floating mortgage allows you to pay off more than the banks need with out any penalties  and it is because off this it can accelerate the pay off of your mortgage dramatically.

The down side to a floating mortgage is that you are exposed to any change in interest rates, this can cause a real problem if you are over exposed to the banks but is less of a problem if you are over paying your mortgage.

See my article on Fixed Mortgages to compare the different types of mortgages and find out which suit s you and your family the best,  a

Fixed interest rate mortgage or floating interest rate mortgage ?

• Ever had trouble getting a loan before or can’t get a standard loan?

• Do you have to take out a personal loan at all? (Borrowing without security should be a last resort if possible.)

• Self employed, newly arrived in the country or have  poor credit?

If banks won’t lend to you, consider the options of building societies and credit unions or even the booming “low doc” loan market.   

Low-doc companies like to pride themselves on a “non-conformist” type approach to the lending business. (Often attracts higher interest rates)

• Looking for a car loan?

Consider smaller lenders such as smaller or community banks, credit unions and other smaller financial institutions offering competitive interest rates.

Like this Tip?  Try these:

Avoiding high interest rates or      Don’t pay more than you should.

Errors happen,  it’s that simple.  Anecdotal evidence from the US is suggestive of reported errors rates as high as 50%

Often, it is simple mistakes, such as an or the incorrect balance brought-forward, or wrong interest rate that can be costly and almost always in favor the lender.

Accounting mistakes happen all the time, and when computers make them due to human input error they can be replicated many, many times.

Summary:

• Always keep a close eye on your loan statements, and check the interest rate, balance brought forward, and ensure all payments made are acknowledged at the right billing time.