EFFECTS OF INFLATION ON YOUR MORTGAGE IN UNITED STATE AND INDIA

INTRODUCTION

  Do you have an idea the impacts the inflation have on the prices of the house in the market? Inflation is a monster which should be fought right back and center by the government for it has negative impacts on the economy. In a country that experiences uncontrollable rates of inflation it would lead rise in prices of the houses in the country. United State is in record for recording rise in the prices in the years 2008 which discouraged many buyers to buy the houses.

 Exactly what are the effects of the inflation on the prices of then various mortgages? This is common question that many people ask themselves when a country is experiencing some level of inflation in the country. At time a customer may be willing buy a house either in the United State or India but end up withdrawing due to the prices at which the mortgage is charged by the lender. I firmly believe that this article will be help you have a good understanding of the impacts inflation have in the mortgage:

 Rise of mortgages rates in US and India

 Overvaluing of house in both USA and India

 Rise of mortgage rates in the market

 The main effect of the inflation in the market would be the increase in the mortgage rates in the market. For instance, if the inflation rates would increase in more than 2% in the country economy it would have some impacts in the mortgage rates in the market.  Inflation has negative effects with the interest which would be the cause of the rise in the mortgage rates in the market. In the United States market an increase in the inflation rates would get reciprocated in rates of the mortgage in the country. On the other hand the same effects of inflation on the loan rates would get experienced in the Indian market.

 Rise in the mortgage rates would mean the rise in the prices of the house in the market.  In the situation where the interest would continue to raise in the market it would means that the customer in the market who will be looking for new mortgage in the market would part with more prices in both India and United State. Banks in India have developed some measure which helps to regulate the rise of the inflation rates in the country hence ensure the prices of the house in the market get regulated.

Overvaluing of the houses in the market

 The result of high inflation in the market would lead to overvaluation of the houses in the market. The rise in the inflation rates in the market would cause the loan rate to rise thus making the lender to overvalue the houses in the market. For instances the mortgages crisis in the US in the year 2008 caused the lenders in the market to increase value of the houses thus discouraging the clients to buy houses in the market.

 Many of the lenders in the market wishes to makes some handful profits in the course of selling the mortgage thus making them to take advantages of the rise in the inflation rate in the market. If the houses are overvalued in the market it would means that the buyer would pay more than what he or she is expected to pay in the market.  Most of the lenders would be making super profits in the expenses of the buyer in the market who are buying the mortgage. For instance if the interest rates in the United  State is 3% it  would  means the lenders  would set the prices of the house at higher  prices to ensure they make good profit. The same case would apply in India and the borrower would be looking to makes some super profits in the market.

 Remedies Of Inflation on the mortgages prices

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  Acquire fixed rate mortgages

Acquire fixed rate mortgages

 Mortgages rates are usually affected by the rise in the inflation rate in the market but that could be resolved by taking the fixed rate mortgages rather than flexible mortgages.  The fixed   mortgages will acts as insurance in case there is rise in the rates of the inflation in the market. When an investor is considering taking the fixed mortgage they would agrees on the interest rates with the lender before taking the mortgages plans. This plan would help the investor to secure his or her mortgages plans against the rise in the interest rates in the market.

 The idea of the fixed rate mortgages would apply both in the US market and also in the India if effective plans could be set by the government in defense of the rise in the inflation rate. For instance if the clients is willing to take a mortgages in the market he or she would approach the banks and the expert would calculate the expected rates by the banks and advise accordingly. However it is important for any the potential investors in the market to consider choosing the best lenders in the market who will offer the best mortgages plan for their clients.

 Conclusion

 Inflation is inevitable in the mortgage market since it is determined by factors beyond the market control. The government needs to introduce some fiscal policies in the market which would regulate the rate of the inflation in the market. In the mortgages market there are e various macroeconomic factors which influences the mortgages rates at any given time in the market.  Inflation rates affect both US and India mortgages in one ways or the other hence there is need for the government to develop all the necessary measures which would help reduce the rise of the inflation in the market.  There exits some avenue which could be used by the lenders to ensure the customers in the market do not suffer big blows when there is rise in the inflation.  For instance insurance covers would help to reduce the rise in the mortgages rates in the market.

REASONS WHY UNITED STATE MORTGAGE DOMINATES IN THE MARKET COMPARED TO THE INDIAN MORTGAGE

INTRODUCTION

Do you plan to buy a house anytime soon?  If the answer to the question is yes, the next move should be to consider the best lender who will arrange for you the best mortgage loan plan for your income. In the market, there are different countries which have mortgages for their clients, but the essential thing for any clients is to consider the best mortgage plan which the customer would consider. In the market, the two standard mortgages are the Indian and United State; however, the US mortgage continues to dominate over the Indian based mortgage.

   There are various criteria which are common in all the mortgages plans irrespective of the country which the plan is made. They include the lending interest's rate and the duration period under which the borrowers are expected to repay their debt. Mortgages are the most pleasant and convenient way for anyone to own a home. Having these facts in our mind, I believe this article will be helpful to you to make consideration of the best mortgage to consider in the market. 

 THINGS TO CONSIDER BEFORE APPLYING FOR ANY MORTGAGE

Level of Income

Credit Rating

Value of the house

ü LEVEL OF INCOME

 Your income is what the lender will consider, and also it will be used to services the long term loan.  Before someone would consider making any move to obtain a mortgage in the United States and India, he or she should consider his or her level of income.

The loan eligibility in many lending banks is based on a particular formula. However, the generally accepted norms are that the monthly payment should not exceed  28% of the client's gross income. The monthly payments should be $ 1,166.66 while the annual should be $ 14,000. When it comes it lending the lender can multiply up for times of your salary annually.

ü  VALUE OF THE HOUSE

 Every house has value, and the buyer should always assess the value of the home before considering the mortgage plan. Through valuation, one would ascertain if indeed he or she can manage to repay the house comfortably.  The values describe the amount quantified for the house, which will get covered by your mortgage. For instance, if you have saved $ 50,000 and you want to obtain a home worth $ 200,000, one will require to borrow $150,000.

ü CREDIT RATING

 Every lender in the market has some crediting rate history; one should consider the crediting rate before applying for the loans from such lenders. After reviewing the rating, the client would be in an excellent position to make the decisions on whether to proceed with the mortgage plan.

 The most common credit policy which is used is FICO scores, which would mean your score will keep on differing depending credit rating reports.  If the clients have high credit scores, it will qualify the customer for a loan. In the market, the lower the credit score, the higher the chance you will pay your mortgages and vice versa. 

REASON WHY UNITED STATES DOMINATES OVER INDIAN MORTGAGES

·       US lending rates Cheaper

·        Repayment period.

·       United State mortgages are well  structured

UNITED STATE LENDING RATES ARE CHEAPER

In the United States market, the lending rates are usually cheaper compared to the Indian based mortgage, thus making them favorable to many customers across the globe.  Due to the favorable lending rates in the country, it has led to a strong driving force in the market.  In the country, the average lending rates for the mortgages is set between 3 to 4.5%. On the other hand, the Indian bank usually charges its customer averages rates of between 10 to 12 % per year. Every customer would consider United State mortgage compared to the Indian if lending rates are the considerations. 

 For the Indian bank's lenders to be competitive like their counterpart in the US, they need to review the lending rates and lower the rates. With the reduction in the lending rates, it would make the Indian mortgages to be attractive and thus increase the number of customers who seek for a mortgage plan. However, the progress of the economy would determine the lending rates which are set by the regulating body in the country.

  LOAN REPAYMENT PERIOD

 Every mortgage has a duration period similar to any other long term loan. In the United States market, the repayment period for the mortgages is usually 360 months, which is equivalent to 30 years. The loan term is convenient for any customer who is seeking for the mortgages plan. On the other hand, Indian mortgages have a loan term of 20 years, which is ten years or less compared to the US.

Most of the clients in the market would consider the US mortgages because its repayment period is longer; hence, the installment would get distributed over a long period, thus reducing the amount paid.  The mortgage plans will be favorable to both high-income earners and also the middle-income earners, unlike the Indian mortgage.

·       UNITED STATE MORTGAGES IS WELL  STRUCTURED

United States mortgage market is well structured and regulated in a manner, thus reducing any form of malpractices in the market. For instance, the market has all sort of regulation and rules which ensure all the banks and other stakeholders in the industry adhere to the set rules in the market. Rules and regulations ensure that the mortgage plans stages get adhered with a lot of concern. 

In one way or the other, the rules cover, among other areas such as application time and also the agreements which are significant impediments to the growth of the market.  On the other, the biggest competitor of US mortgages is Indian mortgages, which are less structured and have fewer regulations.

 CONCLUSION

Buying a house should be done through a mortgage plan due to the benefits it accrues to the client who considers this plan. For instance, one would pay for the house at a more extended period, thus allowing one to consider some essential things in life, which also needs money. In addition to that, one would get access to the right home, which would have been only a dream.  United State mortgage is more favorable compared to the Indian mortgage; hence, any customer in the market should consider taking these mortgages when or she wishes to have a home under his or her name.

 Mortgages market could get determined by the progress in the economy of the country in several ways. For instance, in the United States, the economy is doing well compared to the Indian economy hence making then the United States, lenders to lend loans with cheaper interest rates.