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The Five Best Home Mortgage Servicing Plans to Secure in 2015
No. 5: Home Affordable Refinance Program (HARP)
HARP is believed to be the only refinance program that allows individuals will little or no home equity to cash in on the benefits and low-interest rates. HARP was created by Obama's government in an attempt to assist thousands of struggling Americans with home mortgage repayment. The HARP has been reviewed to allow for the incorporation of more Americans, and continued relaxation of the interest rates.
HARP is offered in two categories/sections with respect to homeowners’ needs. The first HARP program section seeks to rescue individuals who are no longer capable of servicing their mortgage payment. This section of HARP creates modifications in the homeowner’s monthly payments so that he/she can remain current of the loan repayment schedule. The program frequently values the homeowner’s income, after which the homeowner’s monthly payments are adjusted to level 42% of the homeowner’s monthly income.
The second section of HARP seeks to rescue those individuals who can keep up with their monthly payments, but their property has lost value to an amount lower than the worth of the original mortgage. Such deficits present a scenario where the homebuyer is “underwater”. As such, the program modifies monthly payments to more moderate amount that is more realistic. There are several restrictions that diminish the applicability of this second section of this program.
No. 4: Buy-to-let Property
In this situation, an individual secures a piece of property/premise, and lets it out for profits making purposes. The property can be achieved through a three distinct means. The individual can buy the property with his saving, bank loan, or mortgage contract. When the person buys the property with his/her money, there is little to no pressure to find tenants to make monthly payments. However, in the situation an individual has borrowed a bank loan, or signed a mortgage agreement there is the need for the buyer to find a tenant(s) for the purpose of future debt settlement.
Employing a buy-to-let mortgage in this investment venture introduces some risks. For instance, when a homeowner wants to the sell the property but it has depreciated below the original mortgage amount. The owner will be required to service the deficit in the repayment amount. Furthermore, if the tenant(s) vacates the premise, the homeowner will still be expected to maintain the mortgage on a monthly basis without failure.
There are two advantages that make buy-to-let mortgages worth it. If the plan is successful and the homeowner acquires tenants who pay a monthly fee higher than the monthly mortgage payments, the individual lakes in some income and is still able to meet his monthly mortgage payments. The other advantage is that on completion of loan repayment the person acquires full ownership of the property.
No. 3: Paying Ahead on Mortgages
Payment Ahead is a technique under which homeowners make double payments on their regular mortgage payments. By so doing the owners reduce the loan repayment duration by a number of years or months. As such, these double payments act as investments that reduce the total amount of interest required on the loan. For instance, a mortgage to be paid in 20 years with 12% interest is kept to a payment period of nine years through double payments. The Homeowner eliminates all the interest payments that would have been done from year ten onwards.
Easy Mortgage Repayment
No. 2: Self-Managed Superannuation Funds (SMSF)
This type of superannuation funds allows you to make an investment on desired project. The investor pays regular amounts into a fund that is devised to create returns that will enable him/her to secure a worthy home mortgage. For every SMSF balance, there is a corresponding maximum loan amount that can be awarded to the SMSF contributor. As such, an individual who makes regular contributions to an SMSF can secure a loan that he/she can use to offset a pending mortgage. Here are SMFF Balances and loans awardable;
Importance of home Mortgages
No. 1: Investing to pay off interest-only mortgages
With these mortgages, the homeowner only makes regular payments to offset the interest on the mortgage and nothing on the original loan. As such, the original mortgage will have to be reimbursed in whole at the end of the loan period. For instance, a $200,000 interest-only mortgage will be paid back in 25 years (maturity date) with a capital amount of $200,000.
Therefore, is there need to invest money towards the repayment of this loan upon maturity. Some of the avenues through which homeowners can invest include;
• Cash Savings via bank savings accounts
• Pension plans under favorable pension schemes
• Stocks and shares preferably with large companies
• Bond investments; indexed bonds would be most suitable
• Other assets and property like real estate
• Endowment policies with reputed insurance firms
• Unit trusts