Real Estate Remains A Strong Investment – Mortgage
Real Estate Remains A Strong Investment
W. Troy Swezey
Opportunities to make big, quick profits in residential real estate tend to come and go in cycles. When a local market is hot, families may find it possible to buy a house at an attractive price, fix it up, and watch its value rise in just a few years.
When the same local market is at the low end of the appreciation cycle, reaping a profit on the family home can take a good deal more time but the reward can be just as satisfying if price and location and carefully considered.
Even in uncertain economic times like these, history shows that real estate is one of the soundest investments a family can make. During the Great Depression of the 1930s when the stock market plummeted as much as 89 percent, housing prices dropped only 39 percent. According to most of the research on housing trends, prices continually stay at the same level as, and most often appreciate faster than, the rate of inflation. Housing prices actually rose an average of 10 percent during the recessions of the mid-1970
Mortgage Prepayment Penalties – Just Say No – Mortgage
Mortgage Prepayment Penalties - Just Say No
Jakob Jelling
One of the most common terms found in a new home loan is a prepayment penalty. This type of penalty says that if the borrower pays off the loan early, commonly during the first five years of the loan, then the borrower will be responsible for paying an additional amount of money, typically about six months interest on 80% of the mortgage balance. Sub-prime market loans will typically carry prepayment penalties more than standard mortgage loans.
You may plan on keeping the house for the entire duration of the prepayment penalty, and be tempted not to worry about it much. But sometimes life circumstances change, so its wise to avoid any type of prepayment penalty if you can. A typical prepayment penalty might equal five months worth of monthly loan payments, so its worth checking on. Of course, you should always ask before you sign if a new loan has a prepayment penalty. In fact, ask the lending officer to point out to you in the document where a prepayment penalty is discussed.
Most items in a loan are subject to negotiation. If you havent signed loan papers yet, and you find that your loan has a prepayment penalty, you might offer to pay an additional closing point or so to see if it can be removed. The key at this stage is that if you agree to the prepayment penalty, you should try to find ways to reduce either the amount, the term, or both as much as possible.
If you already have a loan, you are bound by the terms of the document, unless you can negotiate them. There are perfectly legitimate reasons why you may want to pay off a note early - most often, due either to refinancing or selling the house. You may be able to contact your lender to see if they will waive the prepayment penalty if they are able to provide refinancing. If interest rates have dropped a lot, and you cant get out of the prepayment penalty, it may be worth rolling that amount into a new loan. And of course, try to get the new loan without a prepayment penalty.
About The Author
Jakob Jelling is the founder of http://www.cashbazar.com. Visit his website for the latest on personal finance, debt elimination, budgeting, credit cards and real estate.
Book Summary: What Is The Emperor Wearing – Mortgage
Book Summary: What Is The Emperor Wearing
Regine P. Azurin
This article is based on the following book:
What Is The Emperor Wearing
Truth-Telling In Business Relationships
Butterworth-Heinneman
ISBN 0-7506-9872-1
217 pages
This book is inspired by the popular tale