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An 80 20 Mortgage – What Is Meant By This Term And Why Are They All That Are Available?
80 20 mortgages, and 75 25 mortgages are all that seem to be available these days. The reason for this is the policies of Fannie Mae and Freddie Mac have ruined the concept of creative financing. These agencies pushed way too many shady loans and because of this, they and the taxpayers and all future borrowers were burnt. So, we are left with the more traditional 80 20 mortgages. This is true even for people with great credit ratings. This article explains all about it.
A mortgage where 80% of the value of the property will be loaned to the buyer is known as an 80% 20% mortgage, or sometimes simply, an 80 20 mortgage. Throughout the years 2006 and 2007, the parameters of mortgages that were written were ridiculous. Some people were able to borrow more money than the property they were buying was worth. These people actually came out of their closings with their new homes and extra money in their pockets. Besides this, some people with extremely low credit ratings were able to buy homes without making any down payment!
The Wisdom of Bob Dylan
It has been said, people who rent don’t take as good care of their dwellings as people who own them. This makes sense because people who buy homes have a vested interest in making their property as valuable as possible. However, to quote Bob Dylan, “when you ain’t got nothin’, you got nothin’ to lose.” So obviously, when people were able to buy homes without using any of their money, these people became, essentially, renters. This is because they had nothing invested, so they had nothing to lose.
Irresponsible Lenders and Borrowers Have Hurt the Economy
When these people who had nothing to lose, were defaulting on their mortgages in great numbers, it became a problem for the economy. So the government, in its infinite wisdom, essentially gave more money to these people so they wouldn’t have to be foreclosed upon. This simply made matters worse because with this money there were no incentives attached for these people to try to make their properties more valuable and pay them off.
Putting Money Down Encourages Responsibility
Insisting borrowers pay 20% or 25% of the value of the properties they are buying erases Bob Dylan’s sentiments from the equation. These people who must take their hard-earned money to pay toward their homes now have incentive to take good care of them and to pay them off. Unlike people who bought homes with no money down, these people stand to lose $ 100,000 of their money if their houses become foreclosed properties. Therefore, it is logical they will do their best to avoid having their homes foreclosed. This is a good thing for the economy in general.
Some think it is cruel to revert to past policies which make it more difficult for first-time buyers to purchase their own homes. At first glance, it may look like these people have a point. However, how did people purchase their own properties throughout history and more pertinently, throughout the 40s, 50s, 60s, 70s, 80s, and most of the 90s? The answer is; people who want their own homes very badly will work hard and sacrifice to purchase them. These are the kind of responsible people who should own homes; not people who just plain don’t care.
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Help for Repaying Quick Loans (Page 1 of 2)
Quick loans are intended to provide short-term funding for emergency situations, such as an unexpected car breakdown. They are not intended to serve as long-term financial solutions. As such, quick loans typically have very short repayment periods, ranging from one week to as long as 30 or 35 days.
However, you may run into a situation where you are unable to make payments as scheduled to payday lenders. Although this situation can be unnerving, you should not panic, and you should definitely not attempt to hide from your creditors. There are options available that will allow you to repay the loan with minimal harm to your credit report, and without being made bankrupt. The key is to act quickly and decisively, and to reach out for help from third parties if you need it.
Dealing With Payday Lenders
If you have quick loans that you know you cannot pay off, your first move should be to cancel any direct debit authorizations, standing orders or recurring payments. This will prevent the payday loan company from attempting to withdraw funds from your account, thereby avoiding an overdraft. Your second move should be to should be to contact the lender directly. Explain your circumstances as transparently as possible and express your desire to work out alternate payment arrangements that are mutually acceptable.
Many lenders will offer you the opportunity to “roll over” the principle of the loan and pay only the interest if you cannot pay in full. Resist the temptation to accept such an offer, especially if you know that you will be unable to make payment in full whenever the next due date occurs. Instead, be prepared to present alternative arrangements that you have worked out that will allow you to repay the loan without “roll overs.”
Working Out Pro-Rata Offers
Pro-rata offers are based on making payments based on your available disposable income. The pro-rata system is the system used by the courts to determine what debtors can reasonably afford to pay. Most reputable creditors, including many lenders of quick loans, will accept repayment plans based on a pro-rata system.
For instance, you may have available disposable income of £200 a month to pay toward your debts, but you owe £2,000 to Payday Lender A and £1,500 to Payday Lender B for a total debt of £3,500. You would first multiply what you owe to Lender A by your available income for a total of £400,000. Divide this figure by £3,500 for a result of £114 to pay per month to Lender A. Then, multiply what you owe to Lender B by your available income for a total of £300,000. Divide this result by your total debt of £3,500 for a total of £86 per month to pay to Lender B.
Contact an Outside Intermediary Agency
If one or more of your lenders refuses to accept your pro-rata offer or alternative repayment plan, get help from an outside intermediary. Several organizations such as StepChange Debt Charity, National Debtline, and Citizens Advice (for England, Wales and Scotland) offer free advice to borrowers and will negotiate alternative payment arrangements with creditors. You can often work out a satisfactory repayment plan through one of these agencies without the need to take on the expense of creating a debt repayment plan with a commercial debt management company.