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When a homeowner takes out a mortgage loan, he is in effect offering his real property as collateral for the loan.  Borrowers are required to obtain a mortgage insurance but it has to be remembered that this insurance is different and separate from home insurance which most financial institutions will also require.  There is a specific reason why this is so and that is protection.

Having both insurance coverage protects both the creditor and the borrower.  A mortgage insurance ensures that the balance of the mortgage will be paid in the event of untimely death of the borrower or any other situation that may arise that will effectively prevent the borrower from being able to pay such as a very serious illness.  This is beneficial to both parties since the creditor gets paid while the property used as collateral is kept by the borrower or his heirs.

A home insurance is intended to cover the loss that may be incurred by homeowners in case of damage due to fire or other reasons.  This is beneficial to the homeowner since it would cover the replacement of cost in such eventuality.  The coverage however may vary depending on the choice of the homeowner.  Creditors are likewise interested in having a home insurance since the property is the one being used as security.  It makes sense therefore that they would be interested in protecting their interests as well thus the seeming double requirement for insurance coverage.

Technically, these are two different insurance coverage meant for different purposes.  Most homeowners would feel burdened by having to pay for two insurance policies but such is the price of protection and approval of a desired loan.  Lenders need to protect themselves thus the need to require them.

Many mortgage providers will offer or even require borrowers to get the home insurance from them as well.  Homeowners should know that it is not necessary to do this.   In fact, they should shop around for better deals with different insurance companies.  Although buying home insurance from mortgage providers might seem to be the most convenient option, it may also be the costlier option.

In taking out a mortgage loan, homeowners should understand the implications of the transaction.  Entering into it without fully understanding the process might lead to unrealistic expectations.  The clearer the terms and conditions, the easier it is to abide by the terms and conditions of the loan without risking the loss of the property.

About the Guest Blogger

Shawn is a professional insurance consultant specializing in different types of homeowners insurance.

It cannot be denied that many families are still renting a home today for varied reasons. But if you think hard about it and considering the current housing condition, you may be better off buying a house that you can call your own. There are certain areas in the U.S. now where home prices are very affordable and mortgage rates are low making it an ideal situation to purchase that dream home.

It’s true that a couple or family needs to have a budget ready in order to buy a residential property. You may not have that yet but there are some things you have to know now that can help you prepare for that major buying decision sooner or later.

Mortgage

The mortgage is a primary consideration. To qualify for a home mortgage loan, a lender normally takes into account the so-called three C’s – credit score, capacity and collateral. If you have been paying your credit card bills and other debts on time, you can be sure to gain a high score. Another thing you have to make sure is you have a steady income, savings and some investments to get the nod of the lender. Lenders usually weigh in the home value and your financial capacity before they approve a loan application.
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Home financing is a means of obtaining your desired house when current resources cannot facilitate outright cash outlay.  Financing allows consumers to enjoy owning a house while making regular payments for a specified period of time.  This privilege comes with a condition that interest is paid usually as regular payments are being made.  The arrangement makes sense for both the lender and the borrower since each accomplishes their specific purpose in the transaction.

There are different ways to go about it.  Home Equity Financing is one.  In-house Financing is another while Owner Financing is another but a remote option and of course, there is the traditional home loan.   A Home Equity Loan uses a home’s equity as collateral and is quite similar to a traditional home loan.  A specified amount is borrowed which is to be paid in monthly installments including the interest.  Home equity lines of credit is an entirely different arrangement even if it also involves using home equity as collateral.  Lines of credit function more like a credit card which provides for a revolving balance instead of a lump sum amount provided in loans.

In-house Financing is an option open to borrowers who may have less than perfect credit ratings.  We are all familiar with the rigid requirements presented by banks and other financial institutions which may make it impossible to obtain a loan.  Real estate developers usually provide this option to enable them to close more deals.

Owner financing is not a popular option among sellers because it requires them to pay off the existing mortgage as well as the obvious preference for up-front cash.  Some owners may offer this option because of the higher interest they are paid and their right to foreclosure.  On the borrower’s side, they can use this option as a temporary arrangement while they are working to obtain a regular loan from a bank.

If you have been a homeowner for a long time, the chances are that you have gone through at least a couple of mortgages. More often than not, homeowners change mortgages or refinance their homes. This action could be due to a variety of reasons – none of which are relevant to this post. What I want to bring up today is the question of storing mortgage papers.

Of course, it is but natural and sensible to keep copies of t hem in storage. It is utter nonsense to throw papers away that have something to do with your ownership of a house or property. But what if you have had several mortgages over the years? Naturally, the first, second, and even third mortgages may be outdated and not applicable to your current situation. It is only the most recent mortgage – the one that you are actually paying off that matters.

Given this situation, would it be safe to assume that the old papers can be disposed of? Now why would I be asking such a question? Why not just keep all the mortgage papers and records in one safe place in case you might have need of them in the future? That is a good point BUT what if you do not have enough space to store all that junk? Would throwing them out be an option then?

The answer is yes. Once you have paid off the older mortgages (which is normally the case when you refinance or get a new mortgage), then they do not apply anymore. That means that the papers are not good for anything – except for the recycling center, perhaps.

What do you think?

A house is one of the most expensive things that the average person can ever buy. It involves long time commitment and a great degree of planning. Of course, mortgage is always part of the whole process. In the previous post, we took a look at some common mistakes that people make when it comes to mortgage. Let us take a look at a few more in order for you to avoid them.

Taking out too big of a loan
I have heard this rationale applied to many other types of loans. The person would think that since he or she is borrowing money anyway, he or she might as well go all out. Perhaps, in the future, his or her income will increase and it will be easier to handle the loan. Some people think this way when it comes to mortgages. But let me tell you, this is a surefire way of getting mired in debt.

Spending money does not stop at the moment of purchase. It is quite expensive to maintain a house, especially if you want to do it properly. And why wouldn’t you want to maintain your house the right way? Regular and proper maintenance will only increase your comfort and the value of your property anyway. So, instead of borrowing too much money, just borrow what you need and use your money on more immediate needs.

Settling for the first deal
This applies to so many other things when shopping – you do not settle for the first thing that you see. There are so many mortgage providers in the market today. They are all competing for YOUR business. Shop around, compare terms and prices, and try to get the best deal possible.

This may not be the best of times to apply for a mortgage. Then again, many Americans are feeling a renewed sense of hope after the results of the elections came in. If you are looking for a mortgage right now, I encourage you to do so carefully and avoid these mistakes.

Leaving your credit as is
Believe it or not, a lot of people actually just hope and pray that their credit will be good enough to get them a good mortgage. The truth is that you need a more than decent FICO score to get a decent deal on mortgage. Please do not leave your mortgage dealings to chance. Pay close attention to your credit and try to rectify errors in it before you apply for a mortgage. You will certainly appreciate the difference it will make.

Not looking into various deals for first-time home buyers
If you do not know it yet, the government has various programs for first-time home buyers. These programs are run in different levels – state or city, even county. If you are buying a house for the first time, I suggest strongly that you look for these deals. It won’t require much effort but the rewards are tenfold.

Thinking that pre-approved loans are not necessary
Ok, maybe they are not necessary but having a pre-approved loan will make you a priority in the eyes of real estate agents. Do not make the mistake of thinking that pre-qualified and pre-approval mean the same thing. The former is an unwritten thing – no guarantees – while the latter means that you really do have a loan ready for the purchase.

(to be continued)

Last time I said that “The most common way to get people’s attention and to invite them to your yard sale is simply by putting up yard sale signs.” Today I’ll be giving more tips on what to do when making a ward sale sign.

2. Use arrows - Always make sure that your signs have arrows that point people to the RIGHT DIRECTION. Last time the yard sale sign illustration was a perfect example of a very clear sign using huge easy to read fonts and contrasting colors. However, if you notice, it didn’t have any arrows. Aside from merely using arrows make sure that the direction the arrow points to is clear, especially if the road splits in several directions.

3. Place signs in strategic locations – A clearly written sign with clear arrows are useless if they are not strategically located. Place the yard sale signs on corners/bends. This is not so important in dead ends but very important in intersections and forks.

4. Keep it clutter-free – You can offer additional info such as your address in smaller letters but DO NOT list down all the great items you have on sale. However, if you are putting up a yard sale sign near an antique shop you might want to places antiques for sale. Just showcase one item/item class for each sign WHEN APPROPRIATE.

If you want to have a successful yard sale the first thing you should make sure is that your “junk” is still worth buying. They may not be in the best condition but things need to still be serviceable or those that do not work any longer should be salvageable. Assuming that the stuff put out for sale can still be sold the next thing you should make sure you do to have a successful yard sale is to find a way to attract your costumers.

The most common way to get people’s attention and to invite them to your yard sale is simply by putting up yard sale signs. When making a yard sale sign make sure that:

1. It can be seen clearly – What this means is that you should make the signs and the lettering on the signs large enough. This also means that you should write in a clear handwriting. It is best to use block letters. You should also choose colors that easily gets attention. Large clear white letters on a black or red backdrop should work. There is no best color but just make sure that the letters contrast against the background.

Another aspect that shouldn’t be overlooked would be the placement of the signage, If you want it to be seen clearly then post it somewhere prominent enough. Place it eye level or slightly above eye level. You should also place it in posts/walls where there aren’t too many other signs posted, otherwise your sign will “get lost” behind all that clutter.

to be continued…

When it comes to buying a real estate investment property, the first deal is the hardest.

I know that financing your first investment property can be a major pain. The first time is by far the scariest and hardest. After you get over this fear and hump it you are on your way to success. It’s like this with lots of things in life. Travel,girls, and just about everything worthwhile. You have to take a risk, put yourself out there and be prepared for success.

Check your credit score early and often to make sure there aren’t any mistakes or issues you need to address before hand. This will save you many headaches going forward.

Next decided what kind of property you are looking to purchase. I would recommend the under 10k variety near a big city like Louisville,Kentucky or Detroit,Mi.

Get your paperwork in order.Your bank or credit union will need all your paperwork such as bank statements, paycheck stubs, and all your financial records. So go ahead and get it all organized so they can look it over. Keep this all together and up to date.

I’d recommend hiring a real estate attorney to get all your paperwork organized and give you strong advice on moving forward.

Next, get prefinanced.

This will save you time and headaces with realtors. Next head on out and get your fixer upper.

1. Pick up a part time job consulting in your field.
2. Have a garage sale and sell anything you don’t need.
3. Cut up your credit cards and just use cash.
4. Make money online in your spare time.
5. Eat out less.

While these five ideas might seem like no brainers to most of you. They are really not the norm in our society of spend more than what we have. Keeping things simpler and living more like our grandparents did during the depression is definetly a step in the right direction.