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The New Developing Mortgage Market: The Scrap Mortgage Debt Market

fixed rate mortgage

Occasionally during times in your life things don’t go according to plan, the loss of a job, illness or children going to college or university. These factors can take a crippling toll on your finances and ability to keep up with your mortgage repayments.visit the top article!

The first thing to do if you are in this situation is speak to your lender, there may be a clause in your terms which allows for provisions should these instances occur.

Most will assist by giving you some kind of payment break if you can rectify the situation within a few months. However, they won’t be lenient for too long, they want their money back one way or another. Banks are not as open to loan modifications and re-mortgages as they once were, having been burnt before, therefore if you find yourself in a dire situation your options do seem limited.

Now comes the rise of the new developing mortgage market – the scrap mortgage debt market. They will approach the lender and offer to purchase the debt at a reduced rate. Once they have obtained the debt and the bank have signed off on it, all they want to do is foreclose on the property.

They are able to reap sizeable rewards because they purchased the debt below market value, selling at the market rate nets them a tidy profit each time. The bank is also able to collect on the loss though insurance funds, they have no desire to modify a mortgage for the customer as they can make the money back in other ways. So, the owner loses their home because they had an unfortunate run of luck and the lender and mortgage debt buyer both profit.

The market is increasing rapidly and there are no provisions to slow it or quash it. It could spiral out of control, with a deflation in home valuations and a huge problem with people being rendered homeless.read other info coming from http://www.bankrate.com/finance/mortgages/mortgage-analysis-063016.aspx

For customers faced with a foreclosure and challenging a scrap mortgage debt buyer, there is legal advice you can take. Don’t be backed into a corner if these people get aggressive – remember short-term profit is their game. Keep that in mind and know your rights – it’s never over until you look at and discuss all of the options with your mortgage broker or defense attorney. Your mortgage broker, depending on their relationship with your lender may be able to vouch for you and explain your situation rather than it just going through the banks standard process. It may work, it may not, but every option is worth a try if you have reached this stage. They can also go through your entire loan contract terms with you, there may be a clause you have missed which allows you to stay in the property until the situation is resolved.

fixed rate mortgageWith one in ten homeowners late paying their mortgages, this is a scenario which looks only to get worse. The scrap mortgage process is hardly ever going to sit in favor of the homeowner with everybody else standing to make a profit when the property is sold. It’s a complex process and can be difficult to understand – do your research, discover what your rights are and challenge, if you have the time and know how to do so. Once an attorney gets involved in the process in certain circumstances you may not be evicted from your property until the matter is resolved – by this time you may be back in work or recovering from illness and be able to put the matter to bed once and for all.

Relying On a Mortgage Calculator Can Be Risky

Mortgage Calculator

Mortgage calculators are a great way to take into account your borrowing capacity in a couple of simple clicks. Add the amount you want to borrow into the calculator, followed by the length of the mortgage term, plus the interest rate incurred gives you a ball park figure of how much you will have to repay to the lender each month.

But can you rely fully on the mortgage calculator for accurate results? It’s a difficult question, because even though you have chosen your dream property and now you know how much you can afford for your mortgage each month – it should be a walk in the park, yes?

Unfortunately, relying on a mortgage calculator alone isn’t a great idea, the fields are limited plus your lender takes other factors into account. For example, it is unlikely any lender will offer you a mortgage if your credit history is less than perfect. If you have defaulted on payments in the past but managed to pay the debts off and haven’t had any problems since, you may scrape through. You have to be able to prove you are a reliable and trustworthy candidate for them to even consider lending you the funds. The use of a mortgage calculator however accurate, and credit worthy you are today, will not automatically guarantee your loan approval.

Another downside of relying on the mortgage calculator alone is its inability to take into account varying rates over the loan term. For example, you may be offered a 3 year fixed APR at 3.8% but after that it reverts to a variable rate. If at the end of your fixed term, the variable rate is sitting at around 4.5% it can hike a large increase onto your monthly repayments.

This should always be considered. Using a qualified mortgage broker will help you determine what you can afford and also calculate with you how the amounts will alter over time, taking into account your circumstances and loan offer. They will also assist you in completing the paperwork, one small slip in annual earnings, omitting a zero in error will have your entire dreams crashing down around you. Double check all of your paperwork prior to submission and ensure the information you are giving to the lender is 100% accurate.

Mortgage CalculatorMortgage brokers are also beneficial for other reasons, if they have been working in the industry for a while you will find they have good relationships with specific banks and lenders. If this is the case they will perhaps have a loan agreement for a limited period which is unique to them, meaning you won’t achieve the same terms elsewhere. They also become aware of how the lenders credit score your application. Each lender has a specific algorithm which profiles their ideal customer, some are more lenient than others and will offer a mortgage to you if you have a less than perfect credit history. Your mortgage broker will know this and can assist you, taking away any stress of searching for weeks just to be turned down after going through the entire paperwork process.

So, yes, using a mortgage calculator is fine, if used to give you an indication of what you could possibly borrow and the repayments, but remember there are many more factors to consider before you sign on the dotted line. Mortgage brokers Melbourne have been assisting with the customer lending process for years, contact them via www.mortgagebroker247.com.au and they will be able to talk you through everything you need to know.