MORTGAGES 101

MORTGAGES 101. What is a Mortgage?. A mortgage is a loan used to buy a property. As with all loans, how much interest you pay depends on several factors: How much you borrow ( the principal ) The interest rate on the loan How long you take to pay it back (the amortization period ).

Share Presentation

Embed Code

Link

• mortgage
• mortgage rate
• variable rate
• interest rate
• lowest mortgage rate
• land transfer tax 0

demetria-norris + Follow

MORTGAGES 101

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

Presentation Transcript

1. MORTGAGES 101
2. What is a Mortgage? A mortgage is a loan used to buy a property. As with all loans, how much interest you pay depends on several factors: • How much you borrow (the principal) • The interest rate on the loan • How long you take to pay it back (the amortization period).
3. How to pay less interest: To pay less interest, • make your mortgage as small as possible. Your costs of borrowing will be lower if you pay at least 20% of the purchase price from your own savings. This cash payment is called your down payment. • If you can’t afford to pay down 20%, you can still buy a house – but you’ll need a high ratio mortgage. High ratio mortgages are riskier, because the lender has more to lose if you don’t pay back the loan and housing prices drop. For that reason, your lender will make you buy mortgage default insurance. (An extra cost).
4. How to pay less interest See: http://www.getsmarteraboutmoney.ca/managing-your-money/investing/real-estate/Pages/video-how-to-get-the-lowest-mortgage-rate-possible.aspx Video
5. Calculating a down payment: If Jesse and Jaydah are buying a home for $230 000 and wish to put a 20% down payment on the purchase price of the home. • How much will the down payment be? • How much will they borrow for the mortgage? Solutions: • .20 X 230 000 =46 000 • 230 000 – 46000= 184 000 Therefore, the down payment is $46 000 and the amount of the mortgage is $184 000.
6. ADDITIONAL COSTS OF BUYING A HOME: When you buy a home there are a number of other POSSIBLE costs – usually these costs depend on the price of the home. They include: • Land-transfer tax: 0.75% • Mortgage Loan insurance premium: 2.75% • Building Inspection: 0.25% • Legal Fees: 1% Determine the total of these costs if a home sells for $130 000?
7. Solution: Land Transfer: 1% of 130 000 = 0.01X130000 = 1300 Insurance: 2.75% of 130 000 = .0275 X 130000 = 3575 Inspection: 0.25% of 130 000 = .0025 X 130000 = 325 Legal Fees: 1% of 130 000 = 0.01 X 130000 = 1300 Total of fees: 1300 + 3575 + 325 + 1300 = $6500 This home could have extra fees of $6500.
8. DEFINITIONS: Amortization period: The time that it takes to pay the mortgage back completely. Term: The amount of time that the mortgage rate is guaranteed for. Variable interest rate: changes over time as the bank of Canada rate changes Fixed rate: a rate guaranteed for a specific amount of time.
9. FIXED OR VARIABLE RATES? Fixed or variable mortgage - which is better? This is one of the most important choices you will make when you get a mortgage. Yet unless you have a crystal ball, there is no way to know for sure what interest rates will do in the future. Remember: no one can tell you for sure if a fixed or variable rate mortgage is a better deal. But here are some things to consider:
10. FIXED RATES: You may prefer a fixed rate if: • you have no plans to sell your home early on in the mortgage term – or are not worried about possible penalties if you do • you think interest rates are going to go up soon • you aren’t comfortable letting your mortgage float with the market. You prefer the peace of mind of knowing your mortgage costs.
11. VARIABLE RATES: You may prefer a variable rate if: • you may sell your home before the end of the term and are worried about penalties • you think interest rates are going to stay the same or drop • you can sleep at night without worrying about rising rates. If rates rise, you have a plan for how you will handle the bigger mortgage payments each month. Video found at: http://www.getsmarteraboutmoney.ca/managing-your-money/investing/real-estate/Pages/video-mortgage-trends-and-rates.aspx
12. Understanding the Language: Tim and Linda are acquiring a mortgage for 3.4% with an amortization period of 25 years and a 5-year term. Explain this in your own words. Use an online mortgage calculator to determine Tim and Linda’s monthly payment. http://www.monstermortgage.ca/calculator/?_kk=home%20mortgage%20calculator&_kt=51431958-3e7b-43f6-902f-02e752b7dc47&gclid=CLyAsa6SyJ4CFQk75QodDA0Epw
13. Most information in this presentation acquired at: http://www.getsmarteraboutmoney.ca/life-events/buying-a-house/pages/default.aspx Practice: p. 445 #1,2,3,5 Reflect : 1st bullet and 3rd bullet.

• Related
• More by User

Reverse Mortgages

Reverse Mortgages. AFCPE Extension Pre-Conference November 19, 2008 Susan E. Cosgrove, AFC Mississippi State University Extension Service. Reverse Mortgage. Introduced in 1989 Special type of home loan Home Equity Conversion Mortgage (HECM) Converts equity into cash.

595 views • 19 slides

alternative mortgages

Detailed info about alternative mortgages including home loans issued by the USDA, energy efficient FHA loans and a life insurance home loan.

344 views • 3 slides

Mortgages

Unit 22. Mortgages. Facilitator Support Materials for Mortgages. Unit Aim. To enable learners to understand robust credit assessment processes for mortgage lending; understand different types of mortgages and different methods of repayment available to borrowers. .

389 views • 13 slides

Reverse Mortgages

Agenda. What is a Reverse Mortgage?Who offers Reverse Mortgages?Who Qualifies?TypesReverse Mortgage vs SellingReverse Mortgage Calculator. What is a Reverse Mortgage?. A mechanism for a family to realize part of the equity on its fully-paid principal residence while continuing to live in it d

588 views • 23 slides

Home Mortgages

Home Mortgages. I want to explain some things about the home mortgage Excel file you have. First off, the whole output is often called the amortization schedule. Amortization is a word that was made up by folks who amortize - bank accounting types – good folk, make great neighbors.

236 views • 5 slides

Reverse Mortgages 101

. . Reverse Mortgages: The Right Choice for Some . 80.6% of older households (headed by people 62 ) own the home they live in 72% of those homes have no mortgage$2 trillion locked up in equity among 62 58% of older owner households meet HUD definition of low income (< 80% of median)

389 views • 19 slides

newfoundland mortgages

Newfoundland mortgage brokers are accredited professionals who are here to guide you through every step of your home buying experience. Your satisfaction is our priority.

178 views • 5 slides

Mortgages

Mortgages. Put a roof over your head, without it later caving in on you. Calculating Mortgage Payments. A house is typically the largest purchase you will ever make, so it makes sense to make an informed purchase . Mortgage Assignment.

445 views • 25 slides

Mortgages

Mortgages. Agenda. Start time: _____ Break time: _____ (10 minutes) End time: _____ Please set phones to silent ring and answer outside of the room. Factors Regarding Buying a Home. Mortgages. This module covers:

578 views • 44 slides

Mortgages

Mortgages. Dependencies. Investments in real estate need lended long term capital Long term loans need collateral ( mortgages ) Mortgages need a real estate market. Legal Requirements for a Mortgage System. Secure Ownership and a Real Estate Market

271 views • 12 slides

MORTGAGES

MORTGAGES. Residential Remortgages Buy To Let Debt Consolidation First Time buyers. PROTECTION. Life Insurance Income Replacement Critical Illness Cover Family Protection Home Insurance. EQUITY RELEASE. Equity Release. What is it? What is it used for? H ow does it work?

497 views • 32 slides

REVERSE MORTGAGES

REVERSE MORTGAGES. Bobby Donaldson www.bobbydonaldson.com 980-722-5487. TO HELP SENIORS STAY IN THEIR HOMES. To qualify, you must be a least 62 years old, own your home as your primary residence and have equity in it.

354 views • 20 slides

Mortgages

Mortgages. Cameron Stewart (thanks to Shae McCrystal and Jim Helman ). Definition. What is a mortgage? Difference between old system mortgage and Torrens system mortgage Waldron v Bird [1974] VR 497 – 3 features of a mortgage Promise to repay money Absolute assignment of property

1.21k views • 82 slides

MORTGAGES

MORTGAGES. 7. 7.1 Mortgage Lending 7.2 Mortgage Loan Processing 7.3 Mortgages and the Law 7.4 Government-Backed Loans. Lesson 7.1 MORTGAGE LENDING. GOALS. Define the term mortgage Identify several types of mortgages. WHAT IS A MORTGAGE?.

738 views • 35 slides

Reverse Mortgages 101

Reverse Mortgages 101. Presented by:. Southern California Story. BEFORE. AFTER. How Can A RM Help A Client?. Southern California story Before the Reverse Mortgage No ceiling/holes in roof/home should be condemned Monthly income less than $700/month

532 views • 24 slides

Reverse Mortgages

Reverse Mortgages. What is a reverse mortgage?. Traditional ways to receive cash from your home:. How is a Reverse Mortgage Different?. You can receive the cash from your home in several ways:. When DO you pay back the loan? Typically, only when you:.

625 views • 38 slides

Mortgages

Mortgages. Rachel Tseng, Pat Schoening, Anthony Volpe, Brendan Carpenter. Are you ready to make your move from renting to owing?.

976 views • 80 slides

International Mortgages Kevin Sewell Mortgages

Established in 1992. Kevin Sewell Mortgages is an independent UK and international mortgage brokers Authorised & Regulated by the Financial Conduct Authority and is entered on the FCA Register.

189 views • 8 slides

Mortgages York

Mortgages Locate your household home with the assistance of loan providers who treat you like among their very own. We provide many house mortgage programs, consisting of first-time property buyer specials and also building and construction car loans. Apply online currently!

FIXED MORTGAGES VS ADJUSTABLE RATE MORTGAGES

There are various types of mortgages available in the market, and the more you know about them the better are the chances to choose the right one. https://www.spencersavings.com/loans/mortgages/investment-property-mortgages/

110 views • 10 slides

MORTGAGES

MORTGAGES. 7. 7.1 Mortgage Lending 7.2 Mortgage Loan Processing 7.3 Mortgages and the Law 7.4 Government-Backed Loans 7.5 The Mortgage Crisis. 7.1 MORTGAGE LENDING. GOALS. Define a mortgage. Identify several types of mortgages. TERMS. Mortgage origination Mortgage

594 views • 58 slides

MORTGAGES

MORTGAGES. 7. 7.1 Mortgage Lending 7.2 Mortgage Loan Processing 7.3 Mortgages and the Law 7.4 Government-Backed Loans. Lesson 7.1 MORTGAGE LENDING. GOALS. Define the term mortgage Identify several types of mortgages. WHAT IS A MORTGAGE?.

369 views • 35 slides