Key to Choosing Life Insurance

Term Life Insurance

There are various forms of term life insurance available. The main feature of term life insurance is that it offers death protection, protection for a stated time period, referred to as a term.

Term life insurance is the easiest to understand. It's very simple, and it was intended to provide temporary life insurance for people who have a limited budget available. Term life insurance can be purchased in relatively small amounts.

A good use of term life insurance is to buy a large amount that would cover a loan. For example a loan on the home, a mortgage as that is a temporary and defined time period. For paying off the mortgage, the loan is a short range loan to fulfill a short range goal. This is a good idea to use during the child rearing years.

A term life insurance policy can be renewed once the term is ending. To continue it will continue add higher premiums as the insured is older at the time of renewal. In most states the insurance can be renewed as late as age 85 or 95.

The Advantages of Term Life Insurance.

Term life insurance is affordable. The premiums can be adjustable, which means the company may raise or lower them at some point that's been specified in the policy based on changes in the policy owners life.

Even though term life insurance can be renewed, at the time of renewal the policy owners life is probably at a different age and his health may be different so the terms of payment may be higher.

While term life insurance does not have the greatest long lasting benefit it serves a valuable purpose in the short term. It's easy to understand and easier to afford than other life insurance products.

A term life insurance policy can be converted to a permanent life insurance policy within the same insurance company to age 75.

Mortgage Loan – Loan to Value Ratio Explained

The loan to value ratio is an important aspect of your mortgage application. This ratio affects your approval status and the interest rate you qualify for. Here is what you need to know about loan to value ratios.

The loan to value ratio represents the part of home you are financing against the total value of the property. Mortgage lenders have specific guidelines for lending at a certain value of this ratio. If you are outside of the guidelines for a particular lender’s loan to value, your mortgage application will be denied.

Calculating Loan to Value is easy. Simply divide the total amount you wish to borrow by the value of your home. For example, if your home is valued at $180,000, and you are applying for a $120,000 mortgage loan you divide $120,000 / $180,000, and your loan to value ratio (LTV) is .66 or 66%.

The higher your loan to value ratio is, the less equity you own in your home. Mortgage lenders consider high loan to value ratios to be a greater risk. If your loan to value ratio is greater than 80% your mortgage lender may require you to purchase Private Mortgage Insurance as a condition for approving your loan. This insurance protects the lender from losses if you default on your mortgage.

If you are applying for a mortgage with a high loan to value ratio, expect the lender to charge you a higher interest rate for the loan. To avoid higher interest rates and private mortgage insurance you should save money for a larger down-payment. Use a mortgage calculator when shopping for your mortgage to help determine exactly how much mortgage you can afford. To learn more about finding the right mortgage for your situation, register for a free mortgage guidebook.