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TrainingPro, the national leader in mortgage education and preferred online education partner of the Colorado Association of Mortgage Brokers, is now an approved mortgage education provider in Colorado. One of the first online mortgage education providers in the state, TrainingPro offers the required 40 hours of approved curriculum in online and live class format. TrainingPro is approved by the Colorado Division of Private Occupational Schools (DPOS) and PSI, the content approving body.

According to Senate Bill 07-203, all mortgage brokers in Colorado must be licensed with the Division of Real Estate before January 1, 2009. One component of this licensure is the successful completion of a 40-hour mortgage training requirement conducted by a state-approved mortgage education provider. All mortgage brokers who currently maintain a Colorado mortgage broker’s license must complete this licensing education and pass a state exam by January 1, 2009.

According to Part 9, Section 12-61-902 of the Colorado Mortgage Broker Licensing Act, a mortgage broker is defined as: “an individual who negotiates, originates, or offers or attempts to negotiate or originate for a borrower, and for a commission or other thing of value, a residential mortgage loan to be consummated and funded by a mortgage lender.”

TrainingPro’s 40-hour mortgage education course, “Mortgage Basics: Increasing Knowledge, Creating Opportunities,” is a comprehensive pre-licensing training program that addresses the fundamental laws, concepts and practices involved in the mortgage industry. The course includes 19.5 hours of federal and state mortgage laws, 16 hours of mortgage basics and 4.5 hours of business and trade practices.

“TrainingPro is excited to begin offering its proven mortgage training curriculum to the mortgage professionals in Colorado,” said Christopher Nickerson, CEO of TrainingPro. “We are proud to provide two training options for this new mortgage training requirement – online and live – to cater to different learning styles. We fully support the state’s initiative to enrich and elevate the mortgage industry through education and will be available to help and guide Colorado mortgage brokers through the process.”

TrainingPro is the preferred online education partner for the Colorado Association of Mortgage Brokers (CAMB). Together, TrainingPro and CAMB are working to provide the highest quality solution for mortgage training in the state. CAMB members are invited to receive a discount off of the 40-hour online course by visiting www.TrainingPro.com/camb.

Colorado is the 32nd state to approve TrainingPro as a mortgage education provider. TrainingPro is also approved in Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Minnesota, Mississippi, Montana, Nevada, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Texas, Utah, Washington, West Virginia and Wisconsin.

Mortgage education courses can be purchased through the TrainingPro web site at www.TrainingPro.com or by calling an account representative at 1-877-878-3600.

About TrainingPro

TrainingPro is the national leader in mortgage education. Its mission is to elevate and enrich the mortgage industry through its innovative compliance solutions and comprehensive educational programs. With extensive experience, a proven training platform, and superior client service as its foundation, TrainingPro is the educational partner for small and large mortgage corporations as well as state industry associations and the National Association of Mortgage Brokers. TrainingPro was listed on the 2006 Inc. 500 list, conducted by Inc. Magazine, as one of the fastest growing companies in the nation. For more information about TrainingPro, please visit www.TrainingPro.com.

Few people have the cash lying around to pay for a piece of real estate in its entirety. In order to become a homeowner, you’ll need to apply for a mortgage – a loan that allows you to purchase real estate. However, when you budget for your monthly mortgage payments, that

principle and interest of your mortgage loan aren’t the only things that you’ll need to include in your financial plan. You may also be required to purchase lender’s mortgage insurance, which is also sometimes called private mortgage insurance or PMI. Private mortgage insurance is an unexpected expense for many first-time real estate owners. Don’t get surprised be this expense!

Private mortgage insurance is meant to protect the lender, not you. If you should stop making payments of your mortgage, your lender has the right to begin foreclosure proceedings. However, this is not the best-case scenario, as lenders aren’t in the business of owning property. They need to sell as soon as possible, and depending on the market, this often means that they sell way below market value. If that sell price doesn’t cover the amount left on your mortgage, the lender can case in the private mortgage insurance policy you’ve purchased. This will cover the rest of the cost of the house to ensure that the lender does not lose any money in the long run.

Not everyone has to buy private mortgage insurance. It depends on the terms of your mortgage. Usually, mortgage lenders ask that you pay about 20% of the total property’s cost in the form of a down payment. However, if you don’t have a lot of money saved up, it is still possible to get a mortgage. This is where the private mortgage insurance comes into play. Usually, you are required to pay for an insurance policy for the lender until you’ve completely paid off that 20% of the mortgage’s principle.

Sometimes, the terms are a bit different, depending on the circumstances. For example, if you have a jumbo mortgage (a very expense loan for a high-priced property), you may be required to keep your private mortgage insurance property for a longer amount of time. Or, if you have an interest-only mortgage payment plan, in which you don’t pay on the principle right away, you might not have to carry the plan until the mortgage’s principle is paid of at 20%.

What kind of rate can you expect when it comes to private mortgage insurance? That depends on your specific situation. For some people, the monthly premium will be fairly low. For others, it might be fairly high. However, no matter what kind of premium you have to pay, the important thing is that you are prepared to pay it. Some of the main factors that come into play when insurance agents are determining your private mortgage insurance rate are the following: how much you did pay in a down payment, the total price of the loan, the type of property you are purchasing, and your credit score. The more likely you are to pay the mortgage in full, according to these standards, the more likely you are to get a lower insurance rate.

Some people have successfully avoided the need for private mortgage insurance by using the piggyback loan strategy. With this kind of mortgage lender, you’re using more than one loan in order to pay for the real estate. You make a 20% down payment, but only by using a second (piggyback) mortgage to pay for part of that down payment. So, you might have an original loan for 80%, a second loan for 10%, and a 10% out of pocket down payment. This way, you avoid the need for private mortgage insurance.

However, the cost for private mortgage insurance might actually be lower than what you pay for the interest on your second loan, depending on the factors listed beforehand. This used to be rare, but today, private mortgage insurance is tax-deductible. That means that it is now less expensive for some homeowners to get private mortgage insurance than it is for them to go for the second mortgage loan. This law will be in effect until at least 2010. It doesn’t apply to mortgage agreements signed before January 1, 2007.

Although private mortgage insurance doesn’t affect everyone, for many people, this is an expense they have to pay. Be prepared for it. If you are going to purchase a home using a mortgage, it is important to understand your expenses before you sign on the dotted line.

What Are Mortgage Backed Securities?

Mortgage backed securities are securities that are backed by the principle and interest payments on a group of mortgage loans. Lenders group together mortgages and the money that is repaid by the borrowers’ pays investors in the mortgage backed securities.Why Do Mortgage Lenders Issue Mortgage Backed Securities?

There are a variety of reasons that lending institutions issue mortgage backed securities rather than holding the mortgage themselves. Most lenders have a limited amount of liquid assets. By selling mortgages they are able to free up money in the short term to make additional loans.

Another reason that mortgage lenders sell off their loans as mortgage backed securities is to minimize their risk. Although every effort is made to establish the creditworthiness of an individual before a loan is made, circumstances can change. If a borrower defaults on his mortgage, the lender will have unplanned for expenses just in dealing with repossession and selling of the property. Adding in the lost principal and interest, and a small, local lender could find themselves in a financial mess very quickly.

When a lender sells a mortgage as a mortgage backed security, they receive their money up front, both the loaned amount and a percentage of the loan as their fee. The investors in a mortgage backed security then receive income each month, as the borrower pays back the principal plus interest on his loan.Types of Mortgage Backed Securities

There are a variety of mortgage backed securities. The majority of mortgage backed securities are issued by the Government National Mortgage Association, otherwise known as Ginnie Mae, the Federal National Mortgage Association, or Fannie Mae, and the Federal Loan Mortgage Company, or Freddie Mac. These are all groups sponsored by the federal government. While Ginnie Mae is backed by the full faith and credit of the government, and guarantees its investors that they will receive their payments, both Fannie Mae and Freddie Mac have the authority to borrow from the Treasury, which makes them relatively safe investments as well.

In addition to the government agencies, brokerage firms and banks often offer mortgage backed securities. These are known as private-label securities.Are Mortgage Backed Securities Risky?

Mortgage backed securities are not generally considered a risky investment. To obtain a mortgage, the borrower must go through a qualification process that assures the bank or lending institution that the loan will be paid back. The group who sets up the mortgage backed security will then group mortgages together in order to sell. By pooling the mortgages together, the risk to the investor is minimized. One borrower, who defaults on a loan, or, conversely, pays the loan off early, depriving the group of years of interest payments, will have less of an effect when he is a member of a large group. The same borrow, particularly one who defaults on a mortgage, can cause a real financial shock to a small lending institution.Do Mortgage Backed Securities Make a Good Investment?

All investment decisions are extremely personal, and will depend on your personal needs. Decisions on investments are best made with help from a financial advisor. For someone who would like a monthly income, a mortgage backed security can make a good choice. A mortgage backed security, particularly one sold by Freddie Mac, Fannie Mae, or Ginnie Mae, can be excellent investment vehicles. In general, the greater the amount of loans held in a mortgage backed security, the safer the investment, because the risk is spread over more people.

Before investing in a mortgage backed security, you should find out your expected rate of return. While this can vary, it is nice to know what investors have been receiving. Remember, it is not only loan defaults that can affect your income from a mortgage backed security, but also prepayments and principal only payments. The income from the security is figured on full payment of both principal and interest over the life of the mortgage, typically 15 or 30 years. Any action taken by anyone holding a mortgage in the security can affect your income. It is important to be clear about this with the person you purchase the security from.

Mortgage backed securities are an excellent development for borrowers, lenders, and investors. No matter what group you are in, it is important to understand exactly how they work and what you can expect. By doing that, you are better able to make a wise financial decision.

If you are looking to buy your own home you need to get a mortgage to finance the deal. A mortgage is a type of loan that is usually spread over 25 years, although shorter and longer term mortgages are available. This loan then is repaid in monthly instalments which are arranged by whoever a person takes their mortgage out with. The house is yours as soon as you have your mortgage in place, however once your final instalment has been paid you will then get the deeds to your house. This means that you legally own the house outright.

Why are there so many types of mortgages?

There are various types of mortgages such as repayment, interest only, endowments and bad credit mortgages. Depending on your circumstances you will get a mortgage to suit yourself. There is no right or wrong mortgage and what is good for one person is bad for another, it is down to the individual to decide what is the best for them.

Different types of mortgages

There are many different kinds of mortgages and here are some of them on the market..

• 100% mortgage – these are mortgages where the lender gives the borrower the entire amount of the house, this is good if you have no money to put down. As well as 100% mortgages there are also 75%, 80% and 90% ones. The plus points of a 100% mortgage is that you don’t need to provide a deposit, however as you are borrowing 100% of the cost of the house you may find that the repayment term is longer and the payments are higher.

• Capped – this is where the monthly mortgage amount is capped at a certain price. If the interest goes above this price you will still only pay the capped amount, and if it falls you pay less. A capped mortgage is a very good if you want to know exactly how much you will be paying for your mortgage each month. However, there are not many lenders who will offer this type of mortgage.

• Endowment mortgages – this type of mortgage pays off the interest on the loan and is supposed to pay out a lump sum at the end of the loan period which should be enough to pay off the outstanding balance. Unfortunately this rarely happens and as a result these are not very popular today.

• Repayment mortgages – these are one of the most popular kinds of mortgage. With a repayment mortgage the interest and capital is paid off with a person’s monthly mortgage payments. This means that at the end of the loan the house being mortgaged will belong to the person who has taken out the mortgage. Repayment mortgages are ideal if you want to pay off your mortgage in full within a given timescale. Payments on these however can be higher than other mortgages.

• Bad credit, or sub prime mortgages – if a person has a bad credit score such mortgages may be their only option. Sub prime mortgages are becoming more commonplace today as the number of people with a bad credit score is increasing. Plus points for bad credit or sub prime mortgages are that they enable people who may have had a difficult time financially get on the property ladder. As a result though the payments will be high and so will the interest rate as borrowers are classed as being a risk. If the payments are made on time it is possible after a while to switch to a better mortgage.

With so many types of mortgages available it really is wise to do as much research into them as possible before opting for any particular one.

The choice and diversity of mortgage packages being offered to borrowers has increased dramatically in recent years to cater for the modern mortgage market. Most high street lenders offer some find of flexible or offset mortgage in their product range. Below is a quick guide to some of the main types:

Flexible Mortgages

Essentially a flexible mortgage is a secured loan that can be repaid in varying amounts. The interest is calculated on the fluctuations of the outstanding balance and while a flexible mortgage has a higher interest rate, the ability to make overpayments and lump sum payments means the mortgage can be paid off earlier.

Offset Mortgages

Offset mortgages basically use the interest from your savings account against the interest charged on your mortgage. Usually your mortgage provider will combine your mortgage and savings account into a single account. Each month, the amount you owe on your mortgage is reduced by the amount you have in your account, before working out the interest due on the mortgage.

Current Account Mortgages

Current account mortgages have been around for well over 10 years in the UK and are a type of flexible mortgage. Current account mortgages work by combining your mortgage and current account into a single account, usually with the same financial institution. The balance is calculated daily and the home owner only pays interest on the balance. Any saved income you have in your current account at the end of the month is automatically deducted from the mortgage debt you owe.

Flexible Loans

A loan for building a home is known as a ‘self build mortgage,’ and there are several different types of self build mortgages currently available in the market place. Recently, home buyers who want to build a property for themselves or for investment purposes opted for flexible loans. A self build mortgage is different from a traditional mortgage. The money is released in stages and to acquire a self build mortgage, the providers will want to see plans, timescales and the end-value of the property as well as enthusiasm for the project.

Self Cert Offset Mortgage

A self cert offset mortgage combines the benefit of declaring your own income with the freedom of an offset mortgage that allows over payments, lump sum payments, under payments, and payment holidays.

Offset Tracker Mortgages

Offset tracker mortgages are relatively new in the market place. They combine the benefits of an interest rate that tracks the Bank of England’s base lending rate, with the ability to ‘offset’ the interest earned on savings and current account against the interest charged on the mortgage.

Flexible Tracker Mortgages

Flexible tracker mortgages offer the benefits of two types of mortgages rolled into one. The mortgage not only offers financial control due to different repayment options, the mortgage interest rates tracks the Bank of England Base Rate.

Cheque Book Mortgage

A cheque book mortgage main feature is that it is designed to be user friendly. All your savings, debts and mortgage are rolled into one account, with the same financial institution, for easy management of your finances, and the mortgage is flexible, which is an attractive feature for many borrowers.

Discount Offset Mortgage

A discount offset mortgage is an offset mortgage with a discount on the standard variable rate of interest for a set amount of time.

Conclusion

With such a wide array of mortgage products available it’s important you shop around and seek the advice of an independent mortgage broker. Understand the features, benefits and negative aspects of each option so that you are equipped with the knowledge to select the package that best suits your specific personal circumstances.

We all know that putting extra payments down on your mortgage is going to pay off your mortgage faster and save you money. But what not everyone knows are the little insider tips that allow you to know to the penny, EXACTLY, when to use them to pay off your mortgage, how much to make them in, and exactly what you’ll save as a result.

See, it’s really NOT about how many you make, or how often, or even how much you make them in. When you’re trying to pay off your mortgage faster their is only one thing that matters.

Timing.

You see mortgages are structured pretty creatively. Mortgage companies tell you that you’re only paying the 5-7% rate, but they never explain what that really means. Our mortgage payments are almost completely wasted on interest at the beginning of our mortgage. This is what makes it so difficult to pay off your mortgage.

What it means is that a $4000 payment may only $250 of principle. The entire rest of that payment goes to PURE INTEREST. It’s basically burning a hole in your pocket when it should go to pay your mortgage off.

Now, here’s how to beat it. If you make a $250 principle payment on its own… right before you make the $4000 payment then guess what? You just completed that entire payment without wasting $3750 on interest. You moves you amortization down the line to pay off your mortgage. Sure, you’ll still have to make a $4000 payment, but you pay your mortgage off $3750 earlier and it only cost you $250! That’s how banks think.

If you could get $3750 for every $250 you put in, how many times would you do it? As many as you good and you wouldn’t just pay your mortgage off, it’d evaporate.

If this doesn’t quite make sense yet then grab a copy of your amortization schedule or The Mortgage Loophole Report and analyze how they’ll pay off your mortgage. You’ll see.

So…Catch #1 – If you make a small prepayment at the beginning of the term, you’d pay off your mortgage MUCH earlier than you would by making a bigger principle payment at the end of your mortgage.

When you put the money in at the end you don’t even pay your mortgage off as fast or save near the amount of interest because most of your payment is going to principle anyway. As you pay off your mortgage they weaken. Your mortgage pay off time literally depends on this.

So, the secret to pay off your mortgage is to understand the way a mortgage amortization has been structures to accommodate certain methods to pay off your mortgage. Catch #2 – Although you probably realize that this information is important to pay off your mortgage you probably won’t be able to apply it the the extent that you wish you could. Honestly, if you had all the extra cash to pay off your mortgage with, then you’d have made a bigger down payment on your home. It’s not until most of us have already been trying to pay off our mortgage that we start to get the extra cash to put towards the pay off.There is a solution.

There is a “mortgage loophole” that home owners are finally realizing and using to pay off their mortgage. It truly is a revolution in the mortgage industry to help people pay off their mortgage. Don’t expect your local bank to tell you about it. They not only don’t want you to pay off your mortgage early but they haven’t been spreading the news among their mortgage brokers.

Anyway, I’d better stop upsetting banks with this insider information. Hopefully you can apply this information to pay off your mortgage immediately before your mortgage begins to amortize.

Also, if you truly want the keys to pay off your mortgage lightening fast and save big bucks, then grab your free copy of The Mortgage Loop Hole Report.

There are hundreds of lenders in the UK with countless mortgage offers and every mortgage lender guarantees low interest rates and excellent customer service. As all mortgage offers can’t be the best, how will you choose a right mortgage for yourself? Before proceeding further let’s first understand what is a mortgage? A mortgage is a loan procured by a buyer from a lender to pay for a house or a piece of a property. As collateral, the lender holds the ownership of the property, until the buyer repays the mortgage. Here are few tips on choosing the right mortgage:- * Your Mortgage goal: Your mortgage goal will describe the amount of money you need, the monthly payments you can afford to pay, the repayment term and other fees. With multiple mortgage options available, it will also be wise to decide whether your want to go for an adjustable rate mortgage or a fixed rate mortgage. * Shop around: Talk to multiple lenders specialising in mortgages. You can also choose to take the help of mortgage adviser in getting the right mortgage deal for you. Understand from him the various mortgage options. One renowned company, the Money Ferret can help you to get connected with qualified mortgage advisers to suit your requirements. * Evaluate and Choose: Evaluate every mortgage option advised by the lender or the mortgage adviser. Is it satisfying your mortgage goal? Is it the right mortgage for you? If yes, then instruct your adviser or contact the lender and complete the formalities.The Money Ferret aims to save you money by advising you on how to get the right mortgage. Their team of experts has more than 25 years of experience in the personal finance market. With thousands a myriad of mortgage loans from the full range of mortgage lenders, they understand that choosing the right mortgage, one that will best suit your requirements, is very difficult and time consuming. That’s why they help you get a qualified mortgage adviser who can help you find the right mortgage loan for you. The mortgage advisors are qualified to help you get the best deal on all types of mortgages. Whatever be your situation or credit history, they will make their best effort to get you the required mortgage on the best of terms and at lowest possible interest rates.

100% Mortgage – This is when you borrow the full property value from a mortgage broker. This type of mortgage requires no deposit or down payment, and is therefore popular with first-time buyers. However, because of the credit crunch, 100% mortgages are hard to come by.

Adverse (or bad) Credit Mortgages – These are, as the name suggests, available to people with a low, or nonexistent, credit score. These are increasingly hard to come by, and usually have a very high interest rate attached. It’s better to rent and work on improving your credit score before applying for a mortgage. They are also known as sub-prime mortgages.

Base Rate Tracker – Interest rates on all mortgages fluctuate, but a Tracker mortgage will vary depending on the base rate set by the Bank of England. For example; if the deal you find offers base rate plus 0.75% for life, you will always pay exactly 0.75% over the base rate, whatever it is. The advantage of this is that if the base rate goes down, so do your repayments, and quicker than with a standard variable mortgage (covered below).

Capped Rate Mortgage – Another rare deal, the capped mortgage guarantees that you will not pay more than a pre-determined amount of interest on your repayments over a set period of time, no matter how much they go up. The admin fees on this type of mortgage are usually higher than on more standard deals, but there is the advantage of knowing, at least for a few years, that your payments won’t rise above a certain level.

Current Account Mortgages – Relatively new on the mortgage market, this type of mortgage, often called a combined mortgage, works like a bank account. You get a fully functioning bank account with direct debit facilities, chequebook and statements, and your earnings are paid into this account. The amount of the mortgage is also paid into this account, and it works like a big overdraft – you can borrow money from it to pay for holidays etc, but this theoretically gets repaid as your wages are paid in. the temptation is to borrow a little too much when faced with such a large amount of cash, so this is only really good for those who can manage their money well!

Divorced Mortgages – Some lenders recognise that a couple in the midst of divorce, or a newly divorced homeowner, may need special assistance. Therefore, certain mortgages come with a fixed interest rate for up to 5 years, with an interest free period for the first few months. For the new divorcees buying a home, alimony payments can be calculated into the income when determining a mortgage limit. These mortgages are often 100% deals, and are only offered to divorcees.

Endowment Mortgage – These mortgages are linked to the Stock Market. Often called an ‘interest-only’ mortgage, your monthly repayments only cover the interest due; the idea being that your investments will do well enough to pay off the whole capital at the end of the term. Of course, if your investments fail to make you money, you could be faced with a huge debt at the end of the term.

Fixed Rate Mortgage – Like all mortgages, this has good and bad points. You get a fixed monthly payment amount for a set term – usually between 1 and 5 years – and during this time you are guaranteed to pay that amount no matter what happens to interest rates. It’s good because you know exactly what you’ll be paying for that term but at the end, you might be in for a nasty shock if rates have risen substantially. In addition, if rates drop below the rate you’re paying during your fixed term, you’ll be paying more than you would on a different type of mortgage.

Flexible Mortgage – This type of mortgage deal has massive benefits as it allows you to vary your mortgage payment amounts, under- or over-pay as needed, and even miss payments altogether if you need cash for a holiday or Christmas. Potentially you could save thousands in interest if you pay off this type of mortgage early, as there are no repayment penalties as with other deals. But again, you need to be responsible with this as the interest will keep mounting up during a payment holiday.

Guarantor Mortgages – A guarantor is a person who acts as a kind of financial backup for a borrower. In the case of mortgages, the guarantor would be responsible for repayments should the borrower default. It’s a huge responsibility which involves a lot of trust on both sides, but for a first-time buyer it can be a good solution to a first mortgage. A guarantor needs to prove that they could afford your repayments as well as their own commitments in the event of a default. Most lenders will look favourably on an applicant with a guarantor, so it’s worth securing one even if you don’t foresee any problems.

This concludes part one of the mortgages guide. Part two will cover more mortgages such as offset mortgages and the classic repayment mortgage.

Investment Mortgage – More commonly known as a buy-to-let mortgage, this type of deal involves getting a mortgage on a property which you intend to rent out to someone else. Instead of being calculated according to your income, an investment mortgage is calculated based on the projected income from your investment, for example a house being rented out as student accommodation. A BTL mortgage deposit is typically 10%, and is available is a repayment or interest-only option.

Key Worker or Shared Ownership Mortgages – These are a newer type of deal which allows someone in rented accommodation from a Council or housing association to purchase part of the property they occupy, while still paying rent on the other half. This option is also available for ‘key workers’ such as nurses, teachers or police officers, who are typically on lower incomes. First-time buyers can also benefit from these schemes, as there are some which allow part-purchase of new homes from participating builders.

Offset Mortgage – If you have substantial savings, an offset mortgage can be a great way to keep your repayments to a minimum. It takes the amount you have in a savings account and counts this towards you total mortgage debt and therefore reduces the amount you owe. When you earn interest on your cash savings, you avoid paying interest on the equivalent amount of your mortgage. The principle is similar to a current account, or combined mortgage (see part 1).

Overseas Mortgage – This is self-explanatory; it’s a mortgage you take out on a property abroad. It typically involves more work and potentially higher admin costs, and of course if you’re planning on renting out the property to tourists you need to make sure the demand is there. But if you choose the location carefully you could reap the rewards and recoup your initial costs. Different countries have different property laws so you’re better off consulting with a specialist overseas mortgage broker before making any final decisions.

Pension Mortgage – This is a form of endowment mortgage, with the repayments going towards paying the interest each month. But instead of investing directly in shares, a pension mortgage requires you to pay an additional sum into a pension plan to cover the capital at the end of the term. This is still tied to the Stock Market and therefore cannot guarantee to cover the whole capital at the end. Payments into the pension plan must be kept up regardless of other financial hardships if the final sum is to stand a chance of clearing your capital, but as a pension plan is not legally accessible until after the age of 55, some of the temptation to spend it is removed. One major disadvantage this has over a repayment mortgage is that there is no opt-out; you’re tied to the deal until you reach retirement age. Potentially this could mean a term much longer than the standard 25 years, and therefore more interest would be paid.

Repayment Mortgage – We come to the mainstay of the mortgage industry, and the most common type of deal. A repayment mortgage is the only way you are guaranteed to have full ownership of a property at the end of the term, provided you’ve kept up with repayments. The amount you pay each month on this type of mortgage is used to pay off part of the interest and part of the capital, so there is nothing left to pay at the end of the mortgage period. The early years of a repayment mortgage are mainly spent paying off the interest and only a small amount of the capital, but this is often preferable to other types where you pay off nothing but the interest.

Remortgage – If you’re part-way through paying off your mortgage, and find you need a large amount of cash for repairs, renovations or perhaps even a holiday or wedding, you could remortgage your home and release some of the equity on it. This often involves switching lenders to find a better deal i.e. a lower interest rate, or perhaps taking out a new mortgage for the full property value and using this cash to pay off your current, lower, one. But be careful if you decide to do this, as there may be an early repayment penalty on your existing mortgage.

Self-certification Mortgage – Often assumed to be only for the self-employed, this type of mortgage is useful for anyone who cannot guarantee or prove an exact income amount or do not wish to disclose their total annual salary. People such as seasonal workers or freelancers, or perhaps company directors who do not have a fixed annual salary are all eligible for a self-certification mortgage. Other than the standard credit checks, there are no checks made on your financial status, income or employment record, so it stands to reason that a good credit rating is necessary for this mortgage.

Standard Variable Rate Mortgage – An extremely common type of mortgage, this takes its interest rates from the base rate like a tracker mortgage, but charges a higher additional percentage. So, the interest rate you pay will fluctuate when the base rate does, but you may pay 2% over instead of 0.75% (see part 1 of this guide for more details on base rate tracker mortgages). In addition, any drops in the base rate won’t necessarily pass benefits to you straight away, as the interest on these mortgages tends to be calculated monthly or annual rather than daily. Those with poor credit scores will end up paying a higher additional percentage than those with good credit histories.

It’s important to remember than none of these mortgages are mutually exclusive. For example, you could have overseas mortgages with capped rates, or remortgage from a tracker base rate to a standard variable rate. In all circumstances, it’s best to seek expert advice and shop around for the best rates.

There are a variety of factors that affect mortgage rates. Mortgage rates are tied to the fed rate, but they are also affected by supply and demand. At a time that home sales are high, mortgage rates may creep up, while sluggish home sales may prompt financial institutions to cut mortgage rates. Because the majority of people who will purchase a home will take on a mortgage, mortgage rates have a great deal of influence over home sales. The widespread affect that mortgage rates have on the economy means that everyone, from the consumer to the president of the United States, has an interest in them. While it would seem that low mortgage rates are always better, economic principles also come into play. The complicated combination of federal rates, lending institutions competing for customers, credit scores and adjustable versus fixed rate mortgages combine to make mortgage rates sometimes complicated to understand.

How do Mortgage Rates Affect Home Sales?

Mortgage rates affect the sale of homes in a variety of ways. On the most basic level, lower mortgage rates increase the amount of home a person can buy for the same monthly payment. With lower interest rates, the prospective home buyer can purchase a more expensive home. There is, however, a converse reaction. When mortgage rates are low, and homes are selling quickly, it becomes a seller’s market. This means that the price of homes may creep up, effectively cancelling out the benefit of the lower mortgage rate. As the price of homes increase, there may be less competition among buyers, and, interest rates may drop. This cycle can play out over and over, and attempting to time your loan application to the low point in a cycle is not realistic. Many lenders, however, will allow you to lock in a low rate, but agree to convert your loan application if rates lower before you close on your home.

Current Mortgage Conditions

The sub-prime lending situation has led many people to feel gun-shy about the prospects of buying a home. They hear talk about mortgage rates adjusting and fear that they can be caught in the same situation. If you are concerned about the mortgage crisis, but are considering buying a home, it helps to understand exactly what happened and how you can make sure that it doesn’t happen to you.

When you purchase a home, you have a choice between an adjustable rate and a fixed rate mortgage. The interest rate on a fixed rate mortgage is typically higher than that of an adjustable rate mortgage. However, an adjustable rate mortgage does not remain constant. While you can typically lock in a low initial rate, after a period of time it adjusts, often higher. When the rate adjusts, it changes the amount of your monthly mortgage payment.

Many people were enticed into the prospect of an adjustable rate mortgage because of the lower payments. When their mortgage rates adjusted, many attempted to refinance their mortgages into fixed rate mortgages, to lower their monthly payments. However, they often found that, because they had purchased their homes during a seller’s market, they owed more on their homes than the homes could be appraised for. This meant that it was not possible for the consumer to refinance their homes. This left the consumer with little choice, either losing the home to foreclosure, trying to arrange a short sell, or continuing to struggle under the monthly mortgage.

What you Should Consider Before Buying a Home

Before you buy a home, you should consider how current mortgage rates will affect you. The first point to realize is that the best way to insulate yourself from high mortgage rates is to have a steady income and excellent credit. With these two attributes, you will qualify for the best rates available. Even if you believe that you are years away from purchasing a home, it pays to keep an eye on your credit, pay bills on time, and keep your unsecured debt low. By doing this, when the time comes to buy a home, you will be in the best financial shape possible.

Another consideration is knowing where the market is. If the market is high, homes may be overpriced. If mortgage rates are high as well, you will be able to afford much less house than in years when mortgage rates, and the housing market, is lower. Of course, no one knows exactly where the bottom of the housing market is, and mortgage rates can only go so low, so at some point you need to commit to buying a home. To ensure your financial security at this time it makes sense to opt for a fixed rate mortgage, spend less than you actually qualify for, and have a cash cushion in your savings account.