MORTAGES

Publicado por sam - 19/08/07 a las 05:08:43 am

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You need to exercise special care in choosing a home mortgage, because if differs from other loans in several important respects. Most often, a mortgage is the largest loan that you will undertake. A seemingly small difference in interest rates can therefore involve a very large amount of money. In addition, its term – often as long as 30 years – saddles you with a payment schedule almost as long as your working life. And last, since the home serves as collateral, mortgage loans are extremely secure from the lender’s point of view.

Traditionally, banks would not write a mortgage for more than 80% of the appraise value of a home, reasoning that a buyer who contributed the remaining 20 percent had a large enough investment to motivate him or her to avoid foreclosure if at all possible. Seguir leyendo MORTAGES…

What About Loans?

Publicado por sam - 14/08/07 a las 09:08:30 am

Repayments of borrowed money have become permanent items on the personal budgets of most people. Today the typical house-hold debt totals more than $23,000 and the total consumer debt in United States amounts to $2 trillion – about $1.5 trillion in mortgage debt, $192 billion in auto loans, $175 billion in personal loans, and $104 billion in credit card debt.

One reason for this high level of indebtedness is that before 1987, the interest on all consumer debt was tax-deductible, making the true cost of borrowing significantly lower than the actual interest rate of the loan. The Tax Reform Act of 1986, however, phased out the tax deductibility of interest on all consumer loans with the exception of mortgage loans (including home-equity loans) on the first and second homes, and by 1991 the tax-deductibility of non-mortgage interest was be eliminated entirely. As a consequence, borrowing has become increasingly expensive.

Borrowing: Some PROS and CONS

Although the traditional American value system views being in debt negatively, the fact remains that debt, undertake prudently and rationally, can help the borrower achieve goals that would be unattainable otherwise. A mortgage loan may be used to acquire a home that can increase in value while providing the buyer with more comfortable living conditions. Seguir leyendo What About Loans?…