Life Insurance For Mortgages

The dream of owning a home is becoming very allusive these days. Although everyone would like to have a home that is paid for free and clear, many people are forced to assume mortgages that will be paid over 25 or 30 years into the future.

Everyone is constrained to a certain degree by their budget. Yet there is a way to pay off the existing mortgage on your home quicker and save money in the process.

Almost all mortgages have built into them an Accelerated Payment Clause. This allows the borrower to pay more than the minimum amount of the monthly mortgage payment.

To do this you simply remit more to the lender than the usual mortgage payment every month. The benefit to this is that every extra dollar paid against the mortgage will lower the outstanding balance of the mortgage. This increases the equity in your home faster over time. Also, by lowering your outstanding balance, you will save on interest charges.

Here is a good example based on the scenario of an average family.

If you are an average family of four making 50,000 a year, let us assume that you are saving annually at the same rate as most Americans. This rate of savings as reported by our government is about 4% of your income every year. This would mean that you are putting 2000.00 in the bank every year for future purposes. This comes out to around 167.00 a month.

Right now you are probably receiving less than 1% Annual Percentage Rate (APR) on your passbook savings.

Why not take 100.00 of this money that you would normally save and pay down the mortgage on your home ahead of time? The following example shows why this is in your best interest.

If you take out a mortgage on a house for 200,000 at a 6% fixed rate, and the contract calls for repayment in monthly installments over 30 years, your monthly mortgage payment would be 1,210.56.

If you paid an extra 100.00 dollars per month toward the amortization of your mortgage, you would add 1,200.00 to the equity in your home every year.

In this scenario, the total amount paid to buy your home over the life of the mortgage would be 435,798.89. When you add 100.00 to your mortgage payment every month you would save 46,360.13 in interest charges over the life of the mortgage. You would also be able to retire your mortgage earlier.

You would be able to trim 38 monthly payments off your repayment of the mortgage. So the mortgage would be paid off 3 years and 2 months sooner if you use this repayment method.

In short, what this strategy does is shift your money from passbook savings only (2,000.00 per year), to paying 1,200.00 on your mortgage, and saving 800.00 directly into your bank account each year.

To sum up the benefits of using this method, the borrower in the example above saved 46,360.13 in interest on their loan, and accumulated 21,923.85 in passbook savings ( 67.00 per month X 1% APR X 322 months ). This equals 68,283.98 in accumulated savings over 26 years and 10 months (This is the actual time it would take to pay off the original 30 year mortgage).

If the family would have put all of their money (167.00 per month) in a passbook savings account only, they would have accumulated 54,646.35 over the same period of time.

So this family would have actually saved 13,637.63 more by using this accelerated payment method. And they would have also paid off their mortgage 3 years and 2 months earlier than normal.

This method can be used in any situation where the mortgage has an Accelerated Payment Clause built into it. It will work best if you are consistent with the amount that you pay on your mortgage every month. Any change in the amount of monthly repayment of the mortgage will affect the amount that you will actually save.

Check with your banker to find out if your mortgage allows for Accelerated Payments. Then you can use this strategy to save a lot of money on your mortgage and own your home sooner.

You may copy this article and place it on your own website, as long as you do not change it and include this resource box including the live link to the Credit Repair Advice site.

The dream of owning a home is becoming very allusive these days. Although everyone would like to have a home that is paid for free and clear, many people are forced to assume mortgages that will be paid over 25 or 30 years into the future.

Everyone is constrained to a certain degree by their budget. Yet there is a way to pay off the existing mortgage on your home quicker and save money in the process.

Almost all mortgages have built into them an Accelerated Payment Clause. This allows the borrower to pay more than the minimum amount of the monthly mortgage payment.

To do this you simply remit more to the lender than the usual mortgage payment every month. The benefit to this is that every extra dollar paid against the mortgage will lower the outstanding balance of the mortgage. This increases the equity in your home faster over time. Also, by lowering your outstanding balance, you will save on interest charges.

Here is a good example based on the scenario of an average family.

If you are an average family of four making 50,000 a year, let us assume that you are saving annually at the same rate as most Americans. This rate of savings as reported by our government is about 4% of your income every year. This would mean that you are putting 2000.00 in the bank every year for future purposes. This comes out to around 167.00 a month.

Right now you are probably receiving less than 1% Annual Percentage Rate (APR) on your passbook savings.

Why not take 100.00 of this money that you would normally save and pay down the mortgage on your home ahead of time? The following example shows why this is in your best interest.

If you take out a mortgage on a house for 200,000 at a 6% fixed rate, and the contract calls for repayment in monthly installments over 30 years, your monthly mortgage payment would be 1,210.56.

If you paid an extra 100.00 dollars per month toward the amortization of your mortgage, you would add 1,200.00 to the equity in your home every year.

In this scenario, the total amount paid to buy your home over the life of the mortgage would be 435,798.89. When you add 100.00 to your mortgage payment every month you would save 46,360.13 in interest charges over the life of the mortgage. You would also be able to retire your mortgage earlier.

You would be able to trim 38 monthly payments off your repayment of the mortgage. So the mortgage would be paid off 3 years and 2 months sooner if you use this repayment method.

In short, what this strategy does is shift your money from passbook savings only (2,000.00 per year), to paying 1,200.00 on your mortgage, and saving 800.00 directly into your bank account each year.

To sum up the benefits of using this method, the borrower in the example above saved 46,360.13 in interest on their loan, and accumulated 21,923.85 in passbook savings ( 67.00 per month X 1% APR X 322 months ). This equals 68,283.98 in accumulated savings over 26 years and 10 months (This is the actual time it would take to pay off the original 30 year mortgage).

If the family would have put all of their money (167.00 per month) in a passbook savings account only, they would have accumulated 54,646.35 over the same period of time.

So this family would have actually saved 13,637.63 more by using this accelerated payment method. And they would have also paid off their mortgage 3 years and 2 months earlier than normal.

This method can be used in any situation where the mortgage has an Accelerated Payment Clause built into it. It will work best if you are consistent with the amount that you pay on your mortgage every month. Any change in the amount of monthly repayment of the mortgage will affect the amount that you will actually save.

Check with your banker to find out if your mortgage allows for Accelerated Payments. Then you can use this strategy to save a lot of money on your mortgage and own your home sooner.

You may copy this article and place it on your own website, as long as you do not change it and include this resource box including the live link to the Credit Repair Advice site.

When shopping for term life insurance, you want to find the right amount of insurance coverage at a reasonable price with a company you can trust. But for many people, getting started is the hardest part. That’s where the following Life Insurance Checklist can help.

1. What you would like your policy to achieve?
Ask yourself what it is you want your life insurance to do. For example, do you want to have insurance coverage that will:

Pay funeral arrangements?
Pay the outstanding balance owing on a mortgage and other debts?
Offset the loss of your income? And if so, for how long?
Contribute to the future education of your children?
A combination of all or part of the above?

Knowing what you would like to accomplish with your life insurance policy and approximately how much you need to achieve these goals will help you determine how much life insurance you should consider purchasing. Online life insurance calculators are available to help you put a pound value on the amount of coverage you need.

2.Who would you like to insure under the life insurance policy?
Most insurance companies offer a variety of life insurance products to suit your lifestyle and family needs. You can get an insurance policy on your own life, or you can get one policy for both you and your spouse (called a joint life insurance policy). The most common joint life policy provides coverage when the first partner dies, leaving the life insurance benefit to the surviving spouse.

3.How long will you need life insurance?
Consulting a psychic isnt necessary, although it does require that you estimate the timing of your life insurance needs. For example:

When will your mortgage be paid off? The amortization period of your mortgage will often determine how long your term life insurance policy should be.
When will your children be finished school? One day they’ll finish their education and having enough life insurance coverage to pay their educational expenses won’t be necessary.
When are you planning to retire? You will have less income to replace at that time.

Knowing how long youll need life insurance coverage before you begin shopping will ensure you’re comfortable with the life insurance product you end up purchasing. Online tools are available to help you figure out which term for your life insurance policy is most recommended for people with similar lifestyles.

So now that you’ve got the how much, who and how long questions answered, youre ready to shop.

1.Compare life insurance quotes from multiple companies:
It pays to shop around because life insurance rates can vary considerably depending on the product you choose, your age, and the amount of coverage you request. This is the easy part, because with the Internet you can compare life insurance quotes easily, online, anytime.

2.Which life insurance rate has been quoted standard or preferred?
There are two basic life insurance rate groups you should know about when shopping for life insurance coverage: standard rates and preferred. Standard life insurance rates are the rates the majority of Canadians qualify for, while about one third of the population is eligible for preferred rates.

Preferred life insurance rates are typically offered to very healthy people and means you may pay a smaller premium than most. Usually preferred rates are offered only once the results of the medical information and tests are known. It will depend on your blood pressure, cholesterol levels, height, weight, and family health history. But preferred rates are worth it. They could save you up to 30-35% off your quoted premium.

When comparing prices, make sure you’re comparing ‘standard to standard’ or ‘preferred to preferred’ life insurance rates. If you’re not sure, ask the broker. It would be disappointing to find out you were quoted preferred rates at the beginning, only to find out you don’t qualify for them later.

3.Review the life insurance broker’s availability:
How easily can you get a hold of the broker? What are their hours of operation? Whether it is through their website or telephone, the life insurance broker should be easily accessible to you should you ever have questions or need to speak to them about a change in your life insurance needs. Look for toll-free numbers and extended hours of service as guides.

4.Review the medical information required to obtain the policy:
Typically the more medical information you provide, the better the price. For a policy that asks few or no medical questions, you can bet the premium is higher for the same coverage then a plan asking for more information. Depending on the company, your age, and the amount of coverage you want, you could be asked to provide blood and urine samples. To obtain the samples, a nurse will visit at not cost to you.

5.Consider a life insurer’s financial stability and strength:
A company’s financial stability is something to consider if you are planning on making a long-term purchase like life insurance. There are organizations out there, like A.M. Best, that evaluate insurers and provide a rating on their stability and strength.

6.Ask about renewal options and requirements:
Once the initial premium is set, it is usually guaranteed for the length of the policy (often 10 or 20 years). But what happens when the policy expires? Most policies are renewable until you are 70 or 75 so don’t forget to ask your broker if you will have to take a medical to renew your policy. While your premiums will be higher on renewal, find out if they will also be guaranteed to remain level for the second term of the policy.

7.Confirm the policy can be cancelled without penalty:
Most term life insurance policies can be cancelled at any time without penalty. Make sure to check with your broker to see if the life insurance company has any unusual cancellation policies.

8.consider the conversion options and restrictions for the policy:
As your life changes so do your life insurance needs and you may want the option to convert your coverage some day.

To convert a term life insurance policy means to transfer all, or part of, the death benefit of the policy into a permanent life policy without a medical. For example, say you originally bought a term policy to protect a mortgage and child. Once the mortgage is paid and the child grown, you might find it desirable to convert the policy into one that will give you a new level premium for the rest of your life, and a death benefit that is guaranteed not to expire as you age.

When you purchase your life insurance policy, find out if there are any limitations on your age at the time of conversion. In most cases, you have the option of converting up until you are 60 or 65. As well, ensure you are given several options of the type of policies you can move into, the more the better.

Final tip choose a life insurance broker you trust:
While it doesn’t necessarily impact the type of policy you choose to purchase, a rapport with your broker is critical in feeling comfortable with the life insurance policy you buy and the information you’ve received.

When shopping for term life insurance, you want to find the right amount of insurance coverage at a reasonable price with a company you can trust. But for many people, getting started is the hardest part. That’s where the following Life Insurance Checklist can help.

1. What you would like your policy to achieve?
Ask yourself what it is you want your life insurance to do. For example, do you want to have insurance coverage that will:

Pay funeral arrangements?
Pay the outstanding balance owing on a mortgage and other debts?
Offset the loss of your income? And if so, for how long?
Contribute to the future education of your children?
A combination of all or part of the above?

Knowing what you would like to accomplish with your life insurance policy and approximately how much you need to achieve these goals will help you determine how much life insurance you should consider purchasing. Online life insurance calculators are available to help you put a pound value on the amount of coverage you need.

2.Who would you like to insure under the life insurance policy?
Most insurance companies offer a variety of life insurance products to suit your lifestyle and family needs. You can get an insurance policy on your own life, or you can get one policy for both you and your spouse (called a joint life insurance policy). The most common joint life policy provides coverage when the first partner dies, leaving the life insurance benefit to the surviving spouse.

3.How long will you need life insurance?
Consulting a psychic isnt necessary, although it does require that you estimate the timing of your life insurance needs. For example:

When will your mortgage be paid off? The amortization period of your mortgage will often determine how long your term life insurance policy should be.
When will your children be finished school? One day they’ll finish their education and having enough life insurance coverage to pay their educational expenses won’t be necessary.
When are you planning to retire? You will have less income to replace at that time.

Knowing how long youll need life insurance coverage before you begin shopping will ensure you’re comfortable with the life insurance product you end up purchasing. Online tools are available to help you figure out which term for your life insurance policy is most recommended for people with similar lifestyles.

So now that you’ve got the how much, who and how long questions answered, youre ready to shop.

1.Compare life insurance quotes from multiple companies:
It pays to shop around because life insurance rates can vary considerably depending on the product you choose, your age, and the amount of coverage you request. This is the easy part, because with the Internet you can compare life insurance quotes easily, online, anytime.

2.Which life insurance rate has been quoted standard or preferred?
There are two basic life insurance rate groups you should know about when shopping for life insurance coverage: standard rates and preferred. Standard life insurance rates are the rates the majority of Canadians qualify for, while about one third of the population is eligible for preferred rates.

Preferred life insurance rates are typically offered to very healthy people and means you may pay a smaller premium than most. Usually preferred rates are offered only once the results of the medical information and tests are known. It will depend on your blood pressure, cholesterol levels, height, weight, and family health history. But preferred rates are worth it. They could save you up to 30-35% off your quoted premium.

When comparing prices, make sure you’re comparing ‘standard to standard’ or ‘preferred to preferred’ life insurance rates. If you’re not sure, ask the broker. It would be disappointing to find out you were quoted preferred rates at the beginning, only to find out you don’t qualify for them later.

3.Review the life insurance broker’s availability:
How easily can you get a hold of the broker? What are their hours of operation? Whether it is through their website or telephone, the life insurance broker should be easily accessible to you should you ever have questions or need to speak to them about a change in your life insurance needs. Look for toll-free numbers and extended hours of service as guides.

4.Review the medical information required to obtain the policy:
Typically the more medical information you provide, the better the price. For a policy that asks few or no medical questions, you can bet the premium is higher for the same coverage then a plan asking for more information. Depending on the company, your age, and the amount of coverage you want, you could be asked to provide blood and urine samples. To obtain the samples, a nurse will visit at not cost to you.

5.Consider a life insurer’s financial stability and strength:
A company’s financial stability is something to consider if you are planning on making a long-term purchase like life insurance. There are organizations out there, like A.M. Best, that evaluate insurers and provide a rating on their stability and strength.

6.Ask about renewal options and requirements:
Once the initial premium is set, it is usually guaranteed for the length of the policy (often 10 or 20 years). But what happens when the policy expires? Most policies are renewable until you are 70 or 75 so don’t forget to ask your broker if you will have to take a medical to renew your policy. While your premiums will be higher on renewal, find out if they will also be guaranteed to remain level for the second term of the policy.

7.Confirm the policy can be cancelled without penalty:
Most term life insurance policies can be cancelled at any time without penalty. Make sure to check with your broker to see if the life insurance company has any unusual cancellation policies.

8.consider the conversion options and restrictions for the policy:
As your life changes so do your life insurance needs and you may want the option to convert your coverage some day.

To convert a term life insurance policy means to transfer all, or part of, the death benefit of the policy into a permanent life policy without a medical. For example, say you originally bought a term policy to protect a mortgage and child. Once the mortgage is paid and the child grown, you might find it desirable to convert the policy into one that will give you a new level premium for the rest of your life, and a death benefit that is guaranteed not to expire as you age.

When you purchase your life insurance policy, find out if there are any limitations on your age at the time of conversion. In most cases, you have the option of converting up until you are 60 or 65. As well, ensure you are given several options of the type of policies you can move into, the more the better.

Final tip choose a life insurance broker you trust:
While it doesn’t necessarily impact the type of policy you choose to purchase, a rapport with your broker is critical in feeling comfortable with the life insurance policy you buy and the information you’ve received.

If it is your first time applying for a mortgage, there are a number of terms you should know. Educating yourself on the various mortgage terms you will run into will help you make better decisions when deciding which home you want to purchase. When you sign a mortgage contract, your home is used for collateral and it is your responsibility to make sure your payments are made on time each month.

The first term you should know is principal. The principal is basically defined as the amount of money you borrow for your home. Before the principal is provided you will need to make a down payment. A down payment is the percentage you will put towards the principal. The amount of the down payment will often depend on the cost of the home. Once you pay off the principal, the home is yours.

The next term you will need to know is interest. Interest is a percentage that you are charged to borrow a certain amount of money. Along with the interest rate, lenders may also charge you points. A point is a portion of the total funds financed. The principal and interest makes up the majority of your monthly payments, and this is a method that is called amortization. Amortization is the method by which your loan is reduced over a given period of time. Your payments for the first few years will cover the interest, while payments made later will be applied towards the principal.

A portion of your mortgage payments can be placed in an escrow account in order to go towards insurance, taxes, or other expenses. The next term you will hear a lot is taxes. Taxes are the amount of money that you have to pay to your state or government. When it comes to your home, these are known as property taxes. These taxes are used to build roads, schools, and other public projects. All homeowners must pay property taxes.

Insurance is another important term that you will hear in the real estate community. You will not be allowed to close on your mortgage if you don’t have insurance for your home. Home insurance covers your home against floods, fire, theft, or other problems. Unless you can afford to repair your home if it is damaged, it is usually a good idea to get insurance for your home. If your home is located within a zone that is known for having floods, federal laws may require you to have flood insurance.

If the down payment you put towards your home is less than 20% of the total value, you will often be charged additional premiums on your insurance by the lender. This is done to protect you in the event that you default on your loans and fail to make payments. Without this, many people would not be able to afford a house. Once you have paid off about 78% of the home, the lender will stop charging you insurance premiums.

These are the basic terms you will need to know before your purchase a home. Understanding these things will allow you to avoid many of the pitfalls that exist in the real estate field. You want an interest rate that is low, and you should always try to get a fixed interest rate if possible. This will allow you to focus your income on making payments towards the principal, and this will help you pay off the loan faster. A mortgage is an important part of your financial picture, and you want to make sure you pick a home that you can afford. If you fail to make your payments, you may lose your house.