Our Real Estate Blog
Lower mortgage rates make it feel sensible and smart to take out a second mortgage. Doing so, gives you more equity. It enlarges your real estate footprint. Unless you rent out upscale properties, places like beachfront houses and condos in a major metropolis, taking on more housing debt could set you back.
How you might open up and live after you put your mortgage behind you
It could leave you with no other choice except to work longer hours or take on another job to cover the second mortgage. You'd gain more property, another investment that could serve you financially in ways that you don't expect.
You'd also be missing out on a lot of freedom. There's so much to gain from a mortgage free life. Check this out. Pay off your mortgage and you could:
- Pick a spot on the map that you are excited about visiting and exploring, pack your bags and head off for that very place.
- Visit your adult children three to four times a year. Enjoy day trips in cities that your children reside in. It's a great way to get out, meet new people and learn.
- Return to school and get the graduate certificate, license or degree that you want.
- Cut back on the numbers of hours that you're working. Pull back on your overtime, potentially shifting your work hours downwards from maybe as many as 80 hours a week to 40 or fewer hours a week.
- Pursue your art. Go out and buy the art supplies that you need to launch your art career. Take to the road to tour and share your art with people who are looking for what it is that you create.
- Build a foundation, an avenue that you can use to support and strengthen others potentially for generations.
- Switch careers and finally start working the job that you love, the work that generates joy and peace from deep within you.
- Support other artists, students and people who are starting out in a career or pursuing an art or dream with the money that you once used to pay your mortgage.
- Gift friends and family with handmade items like cards, floral arrangements and decorative poetry.
Your house shouldn't hold you hostage
You don't buy a house to have something expensive to keep paying on for years. You buy a house to have a reliable place to live, a comfortable place that you can payoff and enjoy living without a mortgage or rent. There's so much that you can do after you pay off your mortgage.
Instead of working to pay down your largest expense, you can use your income to travel. You can build your retirement savings or invest in your foundation. You can explore hobbies and talents that you've been putting off using since you were a kid. In a nutshell, after you pay off your mortgage, you can enjoy rewarding changes that have rich short and long term effects.
Whether you’re a first time homebuyer or a seasoned homeowner, the terminology of mortgages can be confusing. Since buying a home is such a huge financial decision, you’re also going to want to make sure you understand every step of the process and all of the conditions and fees along the way.
In this article, we’re going to explain some of the common terms you might come across when applying for a home loan, be it online or over the phone. By learning the basic meaning of these terms you’ll feel more confident and prepared going into the application process.
We’ll cover the acronyms, like APRs and ARMs, and the scary sounding terms like “amortization” so that you know everything you need to about the terminology of home loans.
ARM and FRM, or adjustable rate vs fixed rate mortgages. Lenders make their money by charging you interest on your home loan that you pay back over the length of your loan period. Adjustable rate mortgages or ARMs are loans that have interest rates which change over the lifespan of your loan. You may start off at a low, “introductory rate” and later start paying higher amounts depending on the predetermined rate index. Fixed rate mortgages, on the other hand, remain at the same rate throughout the life of the loan. However, refinancing on your loan allows you to receive a different interest rate later down the road.
Amortization. It sounds like a medieval torture technique, but in reality amortization is the process of making your life easier by setting up a fixed repayment schedule. This schedule includes both the interest and the principal loan balance, allowing you to understand how long and how much money will go toward repaying your mortgage.
Equity. Simply state, your equity is the the amount of the home you have paid off. In a sense, it’s the amount of the home that you really own. Your equity increases as you make payments, and having equity can help you buy a new home, or see a return on investment with your current home if the home increases in value.
Assumption and assumability. It isn’t the title of a Jane Austen novel. It’s all about the process of a mortgage changing hands. An assumable mortgage can be transferred to a new buyer, and assumption is the actual transfer of the loan. Assuming a loan can be financially beneficial if the home as increased in value since the mortgage was created.
Escrow. There are a lot of legal implications that come along with buying a home. An escrow is designed to make sure the loan process runs smoothly. It acts as a holding tank for your documents, payments, as well as property taxes and insurance. An escrow performs an important function in the home buying process, and, as a result, charges you a percentage of the home for its services.
Origination fee. Basically a fancy way of saying “processing fee,” the origination covers the cost of processing your mortgage application. It’s one of the many “closing costs” you’ll encounter when buying a home and accounts for all of the legwork your loan officer does to make your mortgage a reality--running credit reports, reviewing income history, and so on.