Nomura to Pay US$480 Million to US Over ‘Fraudulent’ Mortgage-backed Securities

NEW YORK: Nomura Holdings Inc has agreed to pay US$480 million to resolve civil claims by the U.S. government that it misled investors in marketing residential mortgage-backed securities, U.S. authorities said on Tuesday.

Nomura knowingly bundled defective mortgage loans into marketable securities from 2006 to 2007 and misled investors about their quality, authorities said. The settlement stems from an investigation by federal prosecutors in New York.

“This settlement holds Nomura accountable for its fraudulent conduct in connection with its residential mortgage-backed securities offerings, which caused substantial harm to investors and contributed to the financial crisis of 2008,” said Richard Donoghue, the U.S. Attorney for the Eastern District of New York, whose office conducted the probe.

Nomura said in a statement it did not admit any wrongdoing in connection with the settlement, and disputed the allegations.

Authorities accused Nomura of falsely telling investors that it conducted extensive due diligence on the home loans that it securitized, when in fact they did not comply with underwriting guidelines or relied on fraudulent appraisals.

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Nomura continued the practices despite warnings from its due diligence staff, who warned that Nomura was “turning into the lemming of the mortgage business” and dealing with “extremely dysfunctional” loan originators, authorities said.

Nomura’s misconduct caused “significant losses” for its investors, including retirement funds and university endowments, according to Donoghue’s office.

Nomura was previously ordered to pay a total of US$839 million together with Royal Bank of Scotland Plc in a lawsuit brought by the Federal Housing Finance Agency, which has acted as conservator of mortgage agencies Fannie Mae and Freddie Mac since their 2008 takeover by the federal government after the collapse of the U.S. housing market.

Source:    Brendan Pierson in New York; Editing by Dan Grebler and Jeffrey Benkoe, Reuters

Vancouver Leads Canada’s First Home Sales Decline in Five Months

Canadian home sales declined for the first time in five months as activity in Vancouver and Toronto weakened.

Sales in Vancouver fell by 1.5 per cent in September and benchmark prices declined 1.2 per cent, the Canadian Real Estate Association said Monday. In Toronto, the nation’s biggest city, sales fell 0.5 per cent and benchmark prices rose 0.1 per cent.

Activity across the country fell by 0.4 per cent, bringing the 12-month decline to 8.9 per cent, according to the Ottawa-based realtor group. Sales fell in about half of the country’s real estate markets, with buyers and sellers still being influenced by rising mortgage rates and tougher qualification rules introduced at the start of the year, CREA president Barb Sukkau said.

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Some markets nonetheless saw sales increase in September, including an eight-per-cent rise in the Fraser Valley.

Sukkau says rising mortgage rates and the new mortgage stress test will continue to influence the balance between supply and demand with most markets expected to “become even more restrictive” in months to come.

The group’s chief economist, Gregory Klump, adds that time will tell how these factors will play out for certain cities.

“In markets with an abundant supply of homes and slower sales activity, buyers have the upper hand when it comes to negotiations over price,” he said in a statement. “However, in places where buyers are keen to make a purchase but there’s a shortage of homes for sale, sellers are in the driver’s seat when it comes to price. It will be interesting to see how supply and demand respond to rising interest rates amid this year’s new mortgage stress test.”

The mortgage stress test came into effect in January, adding downward pressure on property values that were still adjusting to other newly introduced measures such as a 15-per-cent foreign-buyer tax in Ontario.

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TD Economics says the report points to a more “moderate pace” for the Canadian housing market in the coming quarters.

“This is consistent with our forecast calling for resale activity to rise at a more moderate pace in coming quarters, as increasing borrowing costs and stretched affordability conditions in key markets keep a lid on demand,” bank economist Rishi Sondhi said in a note.

The real estate association says the national average price for a home sold in September was just under $487,000, up 0.2 per cent compared with a year ago.

Excluding the Greater Toronto and Greater Vancouver areas, the average price was just over $383,000.

Source:  VancouverSun

Trump’s US-China Trade War Boosts Risks for Australian Housing Market

The Donald and Doncaster may not often feature in the same sentence, but Donald Trump’s incipient trade war with China is a growing risk to housing in the eastern Melbourne suburb, according to Fitch Ratings.

And it’s not just Doncaster, either. Concerns about a housing downturn that have become the biggest worry for fixed-income investors in Australia in the ratings agency’s latest six-monthly survey indicate that a hard landing in China’s economy triggered by a trade war, or further local credit curbs could hit dwelling values across the country.

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“Investors have become more concerned about the impact of trade wars on China,” said Fitch Australia managing director John Miles. “If we were to see a hard landing in China that could impact on Australia and lead to downward pressure on house prices.”

The downturn that pushed dwelling prices in Australia’s east coast-dominated market down 2.7 per cent over the year to September was result of locally driven credit curbs targeting investors in particular and triggered a jump in concerns about the housing market in the October 2018 Fitch  KangaNews  Australian Fixed-Income Investor Survey.

The survey does not forecast a housing crash. The vast majority of respondents (97 per cent) expect unemployment – one possible trigger of weakness – to remain below 6.5 per cent through to mid-2020.

But housing market concerns are now regarded as a high risk to Australian credit markets by 50 per cent of respondents – making it the greatest concern – up from 29 per cent just six months earlier.

Second was the withdrawal of cheap credit globally (39 per cent) as central banks wound back their quantitative easing programs.

A hard landing in the Chinese economy was the third-highest risk (at 28 per cent, little change from six months earlier), followed by “adverse developments in one or more emerging markets” (22 per cent) and then “US presidential impact”. As many as 14 per cent of respondents listed the latter point as a high risk.

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With so many ostensibly separate issues – the mercurial US head of state, trade policies and emerging markets – connected, Australia, and its dependence on the Chinese economy could well mean global jitters shake domestic bricks and mortar. Fitch had not formed a view, however, on the routes by which a China hard landing would feed through, Mr Miles said.

“Whether it’s a trade impact or whether it’s poor economic management in China that leads to a downturn … that can have an impact on Australia given its trade ties,” he said.

Source:  Just News Viral

Housing UK: Average Asking Prices Barely Rise As Landlords Abandon The Property Market

AS NEWS this morning that the average asking price of property rose by just one per cent over the last month, the lowest monthly rate of increase at this time of year since 2010, indications are that a storm is brewing in the UK property market – but not just as a result of possible no-deal Brexit.

The slowdown, as reported today by property search portal Rightmove, suggests that the currently subdued conditions are as a result of a weakening at entry level, where the price of properties with two bedrooms or less which are normally the ideal rental investment, are falling in some areas.

That’s because due to changes in the way that buy to let investors will be taxed from next year, many are holding off purchasing further properties or indeed are beginning to exit the sector altogether.

As recent figures from lending trade body UK Finance indicate, mortgage approvals for new buy to let purchases are currently down by 14 per cent compared to a year ago and reduced by 53 per cent compared to three years ago.

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The changes to the way that landlords are taxed, otherwise known as Section 24, was actually announced in the 2015 Budget by the then Chancellor, George Osborne.

Whilst it’s been public knowledge for some time – buy to let investors have been paying additional stamp duty on their purchases since 2016 – it’s estimated that as many as half of all landlords in the UK with buy to let mortgages are unaware that they will soon have to pay more tax on their rental income, with the effects ostensibly starting in January 2019 and increasing over the next few years as the amount payable to the treasury increases.

Many industry commentators have suggested that spring 2019 will see a significant amount of properties owned by landlords hitting the market as they realise that buy to let is no longer a viable investment for them, spurred on by their self-assessment statement in January which, for many, may be the first inkling of what’s in store.

Brian Murphy, Head of Lending for Mortgage Advice Bureau suggested that creating reduced demand from investors was perhaps in the government’s plan all along, explaining that: “Many in the industry have long held the view that the introduction of increased taxation on landlords was partly designed to create this very situation, and help to enable more First Time Buyers to purchase their own property due to lack of competition with landlords for the same properties.

“So, to that end, more stock at entry level with prices softening may assist that strategy.”

Brian went on to say: “Obviously, the introduction of the reduction in mortgage interest rate relief, which is a phased process, doesn’t affect those landlords who aren’t leveraged.

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“However, for those who do have borrowings against investment properties and who haven’t as yet taken measures to mitigate their tax position, the additional tax that they will be paying from the next year may make it less viable for them to stay in the sector.”

Of course, the upside in all of this is that those at the very start of their home ownership journey might now have a better chance of getting their foot on the ladder, due to a combination of more suitable properties on the market, lower pricing and as of last year, an exemption on stamp duty.

Miles Shipside, Director of Rightmove, commented on the report’s findings: “With the government using the tax system to try and help first time buyers while deterring out-of-favour landlords, prices in this sector have been subdued as intended.

“That gives aspiring first time buyers an autumn opportunity to negotiate a favourable deal. The story at this time of year for the last five years has been an average autumn bounce of 1.6 per cent in the price of property coming to market.

“Whilst all regions have seen a monthly rise, this year has a more subdued narrative with only a one per cent uplift.

“While the backdrop of political uncertainty and stretched buyer affordability remains the same, this month has price drops at the bottom of the market dragging down the national average.”

Miles added: “While landlords were hit with a three per cent stamp duty surcharge on property purchases back in April 2016, in contrast most first time buyers were effectively awarded stamp duty-free status in November 2017.

“The fall in prices at the bottom of the market during what is, traditionally, a busier time means that those keen to sell need to price accordingly, which gives an opportunity for those stamp duty-free first time buyers to negotiate harder.”

At the coal face, Robert Lazarus, MD of Paramount Properties in North West London, observed: “There’s a better opportunity for first time buyers coming in to the market at the minute compared to a couple of years ago, especially if they’re looking for a one bed flat.

“Before the additional stamp duty on second homes came in we were selling 20 per cent of these flats to landlords which was driving prices up, and now we’re selling less than five per cent of them to landlords, giving first time buyers the first pick of new stock that comes on.”

Another layer to this complex picture would be the rumoured introduction in the Autumn Budget of capital gains tax relief for landlords who sell to long-term tenants.

If true, this could generate a unique opportunity for those who want to exit the sector to work with those who want to buy, thus creating a win-win scenario for both parties.

However, with latest research from the National Landlords Association suggesting that as many as a fifth of all landlords may leave the sector over the next two years, potentially removing up to 980,000 privately rented properties from the UK’s housing stock, the upwards pressure on rents that this shift in the market might create is not to be under-estimated.

Good news for landlords with a long-term investment view, but not so positive for those who, out of necessity, have to rent their home rather than buy.

Source: Louisa Fletcher,

Protest In Hong Kong Over Housing On Artificial Islands

Thousands took to the streets in Hong Kong Sunday to protest a government plan to build new housing on artificial islands, claiming the “white elephant” project will damage the environment and line the pockets of developers.

he government’s proposal to reclaim 1,700 hectares (4,200 acres) of land around Hong Kong’s largest outlying island, Lantau, has been touted as a solution to the pressing housing shortage in the city – notorious for being one of the least affordable markets on the planet.

City leader Carrie Lam said new residential units on the proposed artificial islands could accommodate 1.1 million people in the coming years, and pledged to reserve 70 percent of them for public housing.

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But critics say the massive projects are too costly and will also destroy the environment – especially marine life – with many also expressing frustration over the lack of public say in the plans.

There is no official figure for how much the islands will cost, but some campaigners have put the figure at HK$800 billion (US$102 billion).

Protesters chanted “We don’t want white elephants!” in Sunday’s march, joined by children holding up their own illustrations of Lantau’s famous Chinese white dolphins – whose numbers have plunged due to recent construction and reclamation, according to environmentalists.

“There are many ways to find land in Hong Kong, but (the authorities) don’t want to cross the property developers,” said 52-year-old Mr. Chan, referring to the government’s reluctance to take back the vast land banks held by developers.

For some, the project should be rejected for its environmental impact alone.

“This shouldn’t be controversial. Once you’ve destroyed the environment, that’s it,” said accountant Mrs. Wong.

Mr. Chan and Mrs. Wong only provided their surnames.

City officials are promoting the future metropolis of Lantau, which is linked to the mainland with a mega-bridge, as a gateway to the world and to neighbouring Chinese cities. Hong Kong’s international airport – also partially built on reclaimed land – is located just off Lantau.

This is not the first time a mega infrastructure project has sparked outcry in the city.

Hong Kong’s new high-speed rail link to the mainland and the soon-to-be-opened bridge connecting the city with Macau and Zhuhai have also proven divisive.

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Supporters say the multi-billion-dollar projects will boost business, while others claim they are politically driven and costly white elephants aimed at blurring the boundaries between Hong Kong and mainland China as Beijing tightens its grip over the semi-autonomous city.

Prominent democracy activist Nathan Law, who joined Sunday’s protest, said the government’s use of public funds to “ardently” pursue mega-projects rather than welfare programmes such as universal pension shows its lack of will to improve people’s livelihoods.

“This is how an undemocratic government who doesn’t need to be accountable to the people performs,” Law told AFP.

Sierra Leone Cancels $300 Million Airport Deal With China

Sierra Leone’s President Julius Maada Bio (L) shakes hands with China’s President Xi Jinping during the Forum on China-Africa Cooperation at the Great Hall of the People in Beijing on September 3, 2018.

Sierra Leone has nixed plans to build a controversial, $318 million airport outside the capital of Freetown with a Chinese company and funded by Chinese loans.

The mega project, which was due to be completed in 2022, had been commissioned by the previous president Ernest Bai Koroma in March this year.

Its cancellation comes amid cooling enthusiasm in both Pakistan and Malaysia for Chinese loans backing large-scale infrastructure projects in recent months.

But Sierra Leone’s decision is the first time an African government has canceled an already announced, major China-backed deal.

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“After serious consideration and diligence, it is the Government’s view that (it) is uneconomical to proceed with the construction of the new airport when the existing one is grossly under utilized,” said a letter from the country’s Minister of Transport and Aviation to the project’s director, published in local media.

Speaking to the BBC on Wednesday, Sierra Leone’s Aviation Minister Kabineh Kallon said the current airport would be renovated instead.

“I do have the right to take the best decision for the country,” he said. It’s unclear if there are any financial penalties associated with canceling the deal.

Foreign Ministry spokesman Lu Kang told reporters Thursday the cancellation didn’t indicate any rift between China and Sierra Leone, claiming the project had only been in an exploratory phase.

“When cooperating with African countries that include Sierra Leone, China has always adhered to the principles of equality-based consultations and win-win cooperation,” the spokesman said.

“I don’t think this particular project should be overblown as an indication of problems between the Chinese and Sierra Leone governments.”

SOURCE: CitizenTv

Singapore Tops New World Bank Human Capital Rankings

In top-ranked Singapore, the earnings potential was 88 per cent of potential, while in the US, productivity and earnings were measured at 76 per cent of potential. PHOTO – Veem

Singapore is the best country for developing human capital, according to a report released by the World Bank on Thursday (Oct 11).

It ranked first out of 157 economies, beating South Korea, Japan and Hong Kong into second, third and fourth positions, respectively.

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Singapore’s effort to invest in its human capital will allow children born today to fulfil 88 per cent of their potential to be productive when they grow up, given that they get a full education and enjoy good health.

The report noted that Singapore’s human capital index (HCI) measure is higher for girls than boys.

The 2018 Human Capital Index, part of the Washington-based lender’s initiative to help economies improve their investment in people, was launched at the start of the IMF-World Bank meetings.

It measures how well economies are developing their human capital based on five indicators – the probability of survival to age five, a child’s expected years of schooling, test scores, adult survival rate, and the stunting rate among children.

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Some 56 per cent of all children born today will lose more than half of their potential lifetime earnings if governments do not take appropriate steps to prepare for a healthy and educated population.

World Bank Group president Jim Yong Kim called for economies to enhance their human capital, which is the sum of the knowledge, skills and health, among other things, that people gain throughout their lives.

“Policies to build human capital are some of the smartest investments that countries can make to boost long-term, inclusive economic growth,” he said, pointing out a quarter of children are likely to fail to meet their full potential because of malnutrition and diseases that cause stunting.

“If a country’s children grow up unable to meet the needs of the future workplace, that country will find itself incapable of employing its people, unable to increase its output, and utterly unprepared to compete economically,” Dr Kim added.

He also took note the success of Vietnam, among the best performers in South-east Asia, as an economy that manages to improve its educational outcome through increased expenditure – following the paths taken by other Asian peers, such as China, South Korea, Japan and Hong Kong.

Vietnam ranked 48th in the index, with its population set to achieve 67 per cent of their future economic potential. Indonesia, however, only ranked 87th, and it will see its population realise 53 per cent of their potential.

Dr Kim said that Indonesia is one of the “early adapters” of advice suggested by the World Bank to climb the index, pointing out a 20 per cent allocation of spending in the state budget for education. However, he said, that Indonesia still needs to work on some issues, such as reducing stunted growth among children.

Home sellers slash prices, especially in California

A home awaits sale at a reduced asking price  in Glendale, California.

After three years of soaring home prices, the heat is coming off the U.S. housing market. Home sellers are slashing prices at the highest rate in at least eight years, especially in the West, where the price gains were hottest.

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In the four weeks ended Sept. 16, more than one-quarter of the homes listed for sale had a price drop, according to Redfin, a real estate brokerage. That is the highest level since the company began tracking the metric in 2010. Redfin defines a price drop as a reduction in the list price of more than 1 percent and less than 50 percent.

Home Sales Declining in Southern California  

“After years of strong price growth and intense competition for homes, buyers are taking advantage of the market’s easing pressure by being selective about which homes to offer on and how high to bid,” said Taylor Marr, senior economist at Redfin, in a release. “But there are some early signs of a softening market, and the increase in price drops may be another indicator that sellers are going to have trouble getting the prices, and the bidding wars, that they may have just months ago.”

Critical shortage remains

There is still a critical shortage of homes for sale, especially on the lower end of the housing market, but supplies did increase annually in August for the first time in more than three years, according to the National Association of Realtors. At the same time, the increase in the median home value is now in the 4 percent range, rather than the 6 to 8 percent range where it has been for the past two years.

“While inventory continues to show modest year-over-year gains, it is still far from a healthy level and new home construction is not keeping up to satisfy demand,” said Lawrence Yun, chief economist for the Realtors. “Homes continue to fly off the shelves with a majority of properties selling within a month, indicating that more inventory — especially moderately priced, entry-level homes — would propel sales.”

That may be true on a national level, but in California, where home price gains were in double digits, active listings were 17 percent higher in August compared with August 2017, and sales dropped to the slowest pace in two years, according to the California Association of Realtors. California home prices were still up 5.5 percent annually, but that is down significantly from recent gains, and the median number of days it took to sell a home rose from 18 to 21.

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California ‘market shift’

“While home prices continued to rise modestly in August, the deceleration in price growth and the surge in housing supply suggest that a market shift is underway,” said Leslie Appleton-Young, senior vice president and chief economist at the California Realtors group. “We are seeing active listings increasing and more price reductions in the market, and as such, the question remains, ‘How long will it take for the market to close the price expectation gap between buyers and sellers?'”

The price gap may close even more quickly if mortgage rates continue their trend higher. The average rate on the popular 30-year fixed mortgage loan is up more than a quarter of a percentage point in the past month and is knocking on the door of 5 percent, a level not seen in nearly a decade.

Diana Olick

We need more flexible housing for 21st-century lives

The Great Australian Dream, underpinned by private home ownership, is a concept from the 19th and 20th centuries. Our housing stock was, and continues to be, designed and built for people who lived in previous centuries. The result is housing that discriminates and excludes, and that is becoming increasingly unaffordable. We need 21st-century housing that responds to the needs of 21st-century living.

The Australian Housing and Urban Research Institute (AHURI) report on 21st-century housing careers points to factors that are unique to 21st-century lives and which have direct  impacts on housing. The greatest of these impacts is the risk society, a term originally defined by sociologist Ulrich Beck. As the AHURI report observes:

Change within economic and social structures has eroded the certainties of the previous Fordist or industrial society and resulted in a process of “individualisation” where individuals and households are increasingly confronted by the risks – and opportunities – of a rapidly changing social and economic environment.

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These risks come in many forms: limited opportunities for ongoing employment, an ageing population and the uncertainty of old age, or separation and divorce from a partner. All these factors can significantly alter housing circumstances.

Without digging too deeply into the literature on Australian housing in the 21st century, it seems obvious that workforce casualisation and the gig economy are incompatible with 30-year bank loans for a fixed asset such as a house. Existing approaches to housing, from apartments to detached dwellings, are too inflexible. Instead, we need options for housing that are more flexible and can accommodate the risks associated with 21st-century living.

This might go some way to explaining the popularity of the Tiny House Movement. Tiny houses provide the flexibility required in 21st-century lives. They are mobile, can be packed away and stored, and are assets that can be liquidated much more easily than a house.

However, small living is not for everyone. There are design-led solutions for flexible housing that don’t require people to move into cramped quarters.

Two examples of flexible housing can be found in Brisbane.

One Room Tower (2017) in West End, designed by Phorm architecture + design with Silvia Micheli and Antony Moulis, is an addition to an existing inner-city house. Instead of adding to the house in the traditional manner, One Room Tower is a detached pavilion carefully designed with an open layout. The extra space can be adapted to provide many different uses to suit the needs of its inhabitants.

This innovative design, which provides much-needed flexibility, recently won a Queensland Architecture Award.

Another example is in the suburb of Clayfield. Two Pavilion House (2014) was designed by Kirsty Volz and David Toussaint. The house is split into two pavilions joined by a communal outdoor space and an internal courtyard.

This design provides flexible modes of occupation: it can be occupied as a single detached three-bedroom dwelling, or as a two-bedroom house with a self-contained bedsit. The result is a house that can be occupied by a multigenerational family, provide rental income, incorporate a home office, or a second living area.

It’s not just room layouts that provide the flexibility in these houses. They require careful consideration in the design process to develop. Things to be considered include: the sequences of access (entering and leaving a house and/or room); the adjacencies of rooms, so as to maintain privacy, security and adequate fire separation; and the provision of services such as kitchens, bathrooms and laundries, some of which can be shared.

Both of these houses provide for flexible living arrangements while still complying with the requirements of building regulations.

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A growing number of housing solutions are meeting the need for multigenerational housing, providing accommodation for ageing parents or adult children. Granny flats are a good example.

However, some of these solutions do not meet building regulations. It is a concern if these houses fail to provide adequate health and safety, fire separation, or security to protect belongings. Carefully designed, fit-for-purpose dwellings that safely provide options for multiple and varied occupancies are needed.

It is also time for some local authorities to re-evaluate regulations, and consider how these might safely match the need for flexible and adaptable accommodation.

Flexible, “loose fit” housing will provide greater diversity in accommodation. And, by doing so, it will be more inclusive of a broader cross-section of society – diverse housing for a diverse society.

Flexible housing also has the potential to be a design-led solution to housing affordability, by adapting housing to suit the needs of everyone in the risk society.

Existing housing stock is designed around the numbers of bedrooms and bathrooms that appeal to the market and so fails to be responsive to what people need from housing in the 21st century.

Kirsty Volz

Home Mortgage

Home Mortgage is a loan given by a bank, mortgage company or other financial institution for the purchase of a primary or investment residence. In a home mortgage, the owner of the property (the borrower) transfers the title to the lender on the condition that the title will be transferred back to the owner once the payment has been made and other terms of the mortgage have been met.

A home mortgage will have either a fixed or floating interest rate, which is paid monthly along with a contribution to the principal loan amount. As the homeowner pays down the principal over time, the interest is calculated on a smaller base so that future mortgage payments apply more towards principal reduction as opposed to just paying the interest charges. In order to estimate the total cost of your monthly mortgage payments, it’s beneficial to use an online mortgage calculator.

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Home mortgages allow a much broader group of citizens the chance to own real estate, as the entire sum of the house doesn’t have to be provided up front. But because the lender actually holds the title for as long as the mortgage is in effect, they have the right to foreclose the home (sell it on the open market) if the borrower can’t make the payments.

A home mortgage is one of the most common forms of debt, and it is also one of the most advised. Mortgage loans come with lower interest rates than almost any other kind of debt an individual consumer can find.

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Home mortgages range from 10 to 30 years and the two main types of home mortgage loans are fixed rate and adjustable rate. In a fixed-rate mortgage, the interest rate and the periodic payment are generally the same each period. In an adjustable-rate home mortgage, the interest rate and periodic payment vary. Interest rates on adjustable-rate home mortgages are generally lower than fixed-rate home mortgages because the borrower bears the risk of an increase in interest rates.

To obtain a mortgage, the person seeking the loan must submit an application and information about his or her financial history to a lender, which is done to show the lender that the borrower is capable of repaying the loan. Sometimes, borrowers look to a mortgage broker for help in choosing a lender. When the borrower and the lender agree on the terms of the home mortgage, the lender puts a lien on the home as collateral for the loan. This means that if the borrower defaults on the mortgage, the lender may take possession of the house, which is called foreclosure.


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