In the housing world usually most houses have mortgages. A Mortgage or A Deed of Trust with a Note is a lien against that property. However legitimate mortgages are not a problem. They technically are clouds, but they are so common that it’s just expected for them to exist. And they are easy to remove; they just need to be paid off before property ownership transfer.

Actually in many states any other lien except for government liens will be wiped out when buying Tax Liens and later foreclosing on them or when buying Tax Deeds. Make sure you check with the county officials and the statutes for your state. But if your state is one of them, then you can easily go and pretty much disregard mortgages. They just mean that the property is more likely to be redeemed because the entity holding the mortgage will not let the property go for taxes and rather redeem it themselves. But in that case you get your money back PLUS a great interest rate (usually).

When buying properties directly from the owner, you will need to find out the pay-off amount so you can determine if this property is worth your efforts. This is easily obtained by having the seller sign a simple form authorizing you or the title company to talk to the lender to get the figure, and then basically as part of the closing process you pay, or the title company pays, it off (and of course that amount is subtracted from what the seller gets for the property).

By: Jack Bosch

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In this day and age of rising costs and low housing affordability, various schemes have arisen to assist first-time-buyers get onto the property ladder. One is these is 100% mortgages, which provide enough funds to the borrower to purchase a property outright.

This eliminates the need for a deposit as 100% of the property’s purchase cost is funded by the lender by way of a mortgage. Essentially 100% of the value of the property is mortgaged, leaving no equity in the property on the date that it is purchased.

The main benefit of 100% mortgages is that the borrower will not be required to put down a deposit. This can allow people with only a small amount of savings, such as first-time buyers, the opportunity to get a foot on the property ladder.

Instead, any savings that have been accumulated can be used to pay for purchasing costs such as legal fees, stamp duty, and mortgage application and brokerage fees. Any remaining funds can be saved for furnishing and fitting out the property and to keep aside as an emergency fund.

While the prospect of not having to fund a deposit may be attractive, 100% mortgages have several terms and conditions that mortgages of lower Loan-to-Value (LTV) ratios do not.

These include a higher interest rate, a higher loan balance resulting in more interest to pay, a limited number of lenders to choose from, stricter lending criteria, tie-ins and early repayment charges, and mortgage Indemnity Guarantees (MIG) or Higher Lending Charges (HLC).

In addition to these extra terms and conditions, 100% mortgages also enhance the risk of negative equity. Negative equity occurs when the value of a property is less than the balance of all finance, such as mortgages and secured loans, held over it. A decline in the value of the property below this balance will result in negative equity.

Despite the disadvantages, 100% mortgages have become popular in recent years due to rapidly increasing property prices and the inability of first-time-buyers to save for the deposit necessary to apply for more traditional mortgage products.

More recently, mortgages with LTVs higher than 100% have begun to emerge. These mortgages also provide cash-back funds to the borrower to help pay for purchasing costs such as stamp duty and legal fees.

While high LTV mortgages can provide a short-term solution for getting a foot on the property ladder, careful consideration should be given before applying for 100% mortgages, or higher, as they can be risky.

By: Michael Sterios

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Reverse Mortgages were created with the purpose of giving retired Senior Citizens, age 62 or older, a steady income. The senior citizen must also live in his/her home. This income is derived from the equity of the home by a lender. The lender is not reimbursed until the time the home is sold. One caution about reverse mortgages is that the APR on reverse mortgages is usually higher than that of a traditional mortgage. There are three types of reverse mortgages.

The first type of reverse mortgage is Single Purpose reverse mortgage. Single Purpose reverse mortgages are usually granted to those with low to moderate incomes usually by the government. The purpose of this type of mortgage is to help the homeowner pay for things involving the home and property such as taxes, improvements, and/or repairs.

The second type of reverse mortgage is Home Equity Conversion Mortgages (HECM) also known as federally insured reverse mortgages. This loan is backed by HUD (Housing and Urban Development). This type of loan is pricier than the Single Purpose loan but does not require single purpose use. HECM loans require that you meet with a counselor to discuss costs, risks, and possible alternatives including choosing one of the other two types of loans.

The third type of reverse mortgage is proprietary. The companies that have created them insure these loans. They are very similar to the HECM reverse mortgages in that they are pricier than the Single Purpose loans and follow the same guidelines in determining who qualifies for one and how much. Proprietary reverse mortgages differ from HECM loans because they do not require meeting with a counselor before applying for one.

Both reverse mortgages however determine the amount you may borrow from assessing factors such as age, home value, location, and interest rates. To determine which reverse mortgage is right for you, you should contact a loans officer knowledgeable of reverse mortgages or a HECM counselor.

By: Milos Pesic

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It’s another day in the mortgage world. Yes, I’m still here. I haven’t left the business although alot of my colleagues have. There are still mortgages available it’s just the variety is not as good as it once was. There are still Jumbo mortgages out there but can you qualify for them? A jumbo loan is a loan over $417,000. It is not backed by Fannie Mae or Freddie Mac.

There have been major changes in this market lately. First of all let me say that alot of the Jumbo mortgages that are out there were produced by stated income/stated asset products. What that means is that the borrower never had to prove their income or prove that they had any assets. This product was strictly credit score driven. If your credit score was high enough you could be approved for a stated income/stated asset mortgage. The stated income program was really started for business owners that may have a high income but end up writing everything off so they don’t have to pay as much to the IRS. As underwriting guidelines loosened during the early 2000’s the product then morphed into a stated income program for W-2′d employees too. This was a big mistake for lenders as there is no reason for this program because W-2′d employees usually don’t end up writing anything job related on their taxes. During the hay day all it took was for one lender to start offering a new product and most of the other ones jumped right in. Right now there aren’t any lenders offering a Stated Income W-2 wage earner mortgage.

But, enough of that, let’s get back to the main question, are Jumbo Mortgages still available? Oh yes they are if you can show your income. Well wait a minute, they are still available even if you can’t show your income as long as you can show that you have 2 months worth of reserves in the bank. If you don’t have any reserves you are so done. You can’t do anything at this point.

The loan to values that the banks will accept have also been lowered due to housing prices declining.

My advice to anyone with a Jumbo Mortgage is don’t spend up your reserves. If things get tight be sure and do something before it’s too late. You don’t want to be another casualty in the mortgage meltdown.

By: Sandra Sheely

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Flexible tracker mortgages combine flexible repayment options with an interest rate that tracks the Bank of England Base Rate.

Flexible tracker mortgages offer several benefits to the borrower: you have financial freedom and control because you can make overpayments, underpayments, and payment holidays, according to your financial situation. This is a particularly attractive option for self-employed workers and commission-only workers who have an unpredictable income.

With a flexible type of mortgage, you can save yourself a lot of money if you are able to overpay on your monthly repayments, either on a regular basis or from one-off lump sum payments. The consequence of making overpayments is your mortgage is paid off early and thousands of pounds can be saved in interest payments- a feature that is attractive to everybody! Underpayments and payment holidays (normally allowed when a set number of overpayments have been made) are a useful feature, but can prolong the life of the mortgage.

Flexible tracker mortgages also track the Bank of England Base Rate. When the Base Rate is lowered, your mortgage interest rate will follow suit, and the changes are effective as soon as the Base Rate changes are announced. However, if the Base Rate increases, your mortgage interest rate increases. With a tracker, your monthly repayments tend to keep changing more than any other type of mortgage. The downside with a tracker, it has no upper limit; there isn’t a cap for how high the interest rate can go.

Many tracker mortgages only run the tracking element for a limited time, (anything from 1 to 10 years) before the mortgage is reverted to the lender’s standard variable rate of interest (SVR). If you are considering a flexible tracker mortgage for a short period, you need to find out what the SVR is likely to be once you’ve stopped using the tracker feature. A standard variable rate mortgage means the interest rate is set by the individual lending company and it is their decision as to whether they pass on the Bank of England’s rate change to their customer.

A tracker mortgage can offer very competitive rates, but if you’re on a tight budget and can’t withstand any increase in your monthly mortgage repayments, then you’d probably be safer with fixed rate mortgage instead. A tracker mortgage is probably best suited to people who enjoy a little more risk in their lives.

When it comes to choosing a flexible tracker mortgage, choose one that doesn’t have an Early Repayment Charge (ERC). ERCs are normally charged as a percentage of the outstanding amount owed on your mortgage (approximately 3%). This charge can easily run into thousands, especially if you have a large mortgage.

It is important to look at flexible tracker mortgages as a whole – deals with the lowest rates may initially look attractive, but they often have the highest fees. And, the lowest rate deals may come with a lower Loan-to-Value (LTV). The LTV is the ratio of the amount of money you can borrow compared to the value of the property. To be eligible for the lowest rates, you may need a larger deposit or a larger amount of equity in your home.

To determine if flexible tracker mortgages are the right option for you, it is worth consulting an independent mortgage broker. They are trained professionals with a wealth of knowledge and experience to find the mortgage that best suits you needs.

In conclusion, flexible tracker mortgages are ideal for borrowers who want flexibility with their mortgage repayments, and have their mortgage interest keep pace with the Bank of England Base Rate.

By: Eugene Tyler

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As Baby Boomers retire, and pay off their home loans, we are sitting on trillions of dollars in home equity! How to access these funds without going back into debt? There is a new program called a “Reverse Mortgage” that allows one to access the equity they have built up in their home without taking out a new loan.

Basically, the bank/lender looks at your equity and says, ‘We will give you most of that money as a lump sum, or in monthly installments.” In turn, they acquire a lien interest on your property.

There are several ways to be paid, so let’s just take some examples:

Example 1

John & Mildred Jones have a home worth $700,000. Paid off. They are 62 years or older. Retired. They dreamed of going on a vacation in a rented motorhome to see all the National Parks such as Yellowstone, Grand Canyon, Yosemite, etc. They also want to pay off some high interest credit card debt.

They do a Reverse Mortgage and get a lump sum of $200,000 and then have monthly equity distribution payments of $5,000. For life, or until they reach the max equity in their home.

Fast-forward to today. John & Mildred have passed away. They took out mortgage life insurance that paid off their accumulated debt against their home when they got the reverse mortgage. The home passes, free and clear, to their heirs.


Example 2

Dolores and Hiram have a home that is almost paid off, worth 500,000 and they owe about $50,000. They get a reverse mortgage that pays them $3,500 a month. They pay off their car loan and can go out to dinner, take vacations and enjoy their “golden years.”

Example 3

Arthur owns a home worth 7 million dollars, it is paid off. He retired from being CEO of a Fortune 500 corporation. He is 72 years old. He does a reverse mortgage and receives a lump sum of 3 million dollars. He takes that 3 MM and buys a life insurance policy for $10 million dollars, and this costs him, annually, a premium, at his age, of about $700,000. After 2 years he can SELL this life insurance policy to a viatical policy buyer for about 40% of face value, or $4 million dollars. Once they buy the policy, they pay the annual premiums for him thereafter.

He paid $1.4 million in premiums and has received $4 million on sale of the policy. He just made $2.6 million dollars profit. He dies and passes that money, and his home, paid off by mortgage insurance, on to his heirs.

The Reverse Mortgage is an incredibly powerful strategy to allow you to access the financial power of the equity in your home without going back into debt!

The loan has to be done just right and you will definitely want to talk to your Certified Mortgage Planner, CPA and/or attorney to have this come out right for you.

By: James Hussher

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For years, when someone wanted to purchase or refinance a home, the choices were simple. The buyer chose either a 15-year fixed-rate mortgage or a 30 year fixed-rate mortgage. That was it. Of course, those were also the days of twenty percent down payments, which seriously hindered the ability of many Americans to obtain the loan necessary to buy their own home. In recent years, more flexible loan types have become available and down payment requirements have been relaxed. There are now far more choices of loan types available for the borrower than ever before. That can be a mixed blessing, however, as prospective borrowers now have to do a tremendous amount of homework in order to determine which type of loan might be the best choice. The selection of loan types that are currently available can be quite bewildering, and the wrong choice could cost the prospective borrower thousands of dollars over the term of the loan.

The standard 15-year and 30-year mortgages are still quite popular. Each provides the stability of a fixed interest rate and a payment that will remain the same throughout the duration of the life of the mortgage. When interest rates are near historic lows, as they are today, these traditional choices work well for most buyers. Buyers who find a 15-year or 30-year mortgage to be within their means would probably benefit from obtaining such a mortgage now.

In recent years, as home prices have increased faster than wages, the lending industry has created more flexible types of mortgages designed to help buyers who may have trouble with traditional loans obtain financing. These types of loans tend to have adjustable interest rates:

The Adjustable Rate Mortgage, or ARM, has a rate that adjusts over time as spelled out in the mortgage agreement. Typically, the rate at the time of singing the loan is lower than that of a traditional mortgage, perhaps by one percent or so. The difference is that the rate can adjust over time as the market changes. The loan agreement will spell out how often the rate may change and how much the rate may change at one time. The agreement may also indicate a maximum interest rate that may be charged over the life of the loan. These types of loans are ideal for buyers who do not intend to stay in their home for more than a few years, or buyers who are purchasing in times of high interest rates, when there is an expectation that rates will drop over time.

Convertible mortgages are ARMs that offer the buyer an opportunity to “convert” the adjustable rate loan to a fixed rate loan after a certain period of time that is spelled out in the loan agreement. There is a fee charged for converting the mortgage, but the fee is typically less than the fees associated with refinancing the mortgage altogether.

Two Step mortgages offer an initial rate that is lower than the rate for fixed-rate mortgages for the first few years of the loan. After a set period of time, the rate increases to a fixed rate. This allows buyers to pay less during the early years of their loan, when they may earn less or need extra cash for home furnishings. The disadvantage of this type of loan is that the increase in the interest rate can be substantial, and may make the payments unaffordable for some buyers..

These are just a few of the types of loans that are currently available in the market. There are probably dozens of variations on ARM loans, and prospective buyers should study their options carefully before agreeing to a loan. Making the right choice could save buyers thousands of dollars over the life of the loan. Making the wrong choice could leave buyers with a loan that they cannot afford to pay. A little time spent on research is time well spent.

By: Charles Essmeier

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Obtaining investment property mortgages is essential if you want to grow your property management business and become a successful landlord. Fortunately working with a mortgage lender doesn’t have do be an impossible challenge as long as you prepare well and know what to expect ahead of time.

Here are some time tested things that you can do to ensure that you get the best possible deal when it comes to investment property mortgages.

Find Out What is Your Credit Score and Improve it

Your credit score is an important factor when a lender is considering your application. This is why you should apply for a mortgage loan only when you have a clear knowledge of where you stand. Start by ordering copies of your credit reports from the three major credit reporting bureaus.

Comb through the reports carefully and look for any errors that may cause your score to be lower than it otherwise would. If you spot any errors, contact the credit bureaus to correct them.

Avoid taking steps that might lower your credit score before applying for your investment property mortgages. For example, don’t close old credit accounts that are in good standing, don’t take out additional credit and don’t obtain loans from another bank.

Choose the Right Down Payment and Loan Duration

Lenders often require a larger down payment for investment property mortgages than they do for residential loans. This is because rental property investors tend to default on their mortgages more often than home owners.

In general, you can expect to make a down payment of 20 to 25 percent of the purchase price of the property, with a loan duration that ranges anywhere from 10 to 30 years.

If you pay less than 20 percent down, you can expect that a lender will charge you a higher interest rate. This may not seem like a big deal at first, but in the long run it will easily run up to thousands of dollars. Likewise, a shorter loan term means that your monthly mortgages will be higher but you will actually spend less over the life of the loan.

Prepare All Your Important and Relevant Paperwork

If you can afford it, the best strategy is to make a sizable down payment and choose the shortest loan term that you are able to afford.

If you cannot afford a large down payment, don’t worry you still have any options to choose from. For example if you own other properties or a home of your own, you can apply for a home equity line of credit and draw money from it to make a down payment on your investment property.

In some cases, you may be able to take advantage of zero down financing. However, fewer and fewer lenders are offering the option. Plus, this loan option will result in the highest interest rate and you have to fork out a lot more money in total.

Once you decided on your options, make sure you have all the necessary paperwork and documentation for the lender to show that you are a trustworthy borrower. You should prepare written records of your income, bank statements and any self-employment documents, such as a business license and income statement.

By scoping out your options ahead of time and being prepared with the right document, you will have an excellent chance at obtaining your investment property mortgages at the best rates and terms.

By: Teo Zhenjie

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When you want to buy a house, you will more than likely need a mortgage or loan. You can acquire loans from either a bank or another lending agency. Mortgage loans are a common practice for people who lack the cash to buy their homes.

Of course when you do buy a new home, you’ll have to go through a furniture removal process. As with choosing a mortgage, there are many options that one can take when organizing your local furniture removal, interstate furniture removal or interstate backloading. If moving interstate, backloading is fairly popular these days, so you should keep that in mind after you successfully purchase your new home, as you may save a considerable amount of money.

In any event, here are some basics about mortgages you need to understand:

Length of the Mortgage

The bigger the loan, the longer it’ll be. Mortgages can take anywhere from ten to thirty years. If you adhere to the guidelines, you’ll have paid off the loan by the end of those ten to thirty years. Most often, the lower the monthly payment, the longer the loan payments will continue.

Interest on a Mortgage

The interest rates associated with property purchases vary from day to day. There are even times when it changes more than once a day. It all depends on the market conditions. Take the time to investigate several lenders so you can get an interest rate which suits you. Bear in mind that even one percent over the course of thirty years can mean an unnecessary expenditure of tens of thousands of dollars.

Two Types of Mortgages

Mortgages come in two varieties; either a fixed rate mortgage or an adjustable rate mortgage. The fixed rate means the payments and the interest rate are “fixed” for the entirety of the loan; neither amount will change no matter the economic conditions. The adjustable rate is much different in that your payment amounts depend almost entirely on how well the marketplace is doing.

The better the economy, the lower your payments and vice versa, if it’s bad and it continues to get worse, the higher your bills will be. Bear in mind that you might be stuck with this mortgage for as long as thirty years and nobody is a fortune teller who can predict what the economy is like throughout the entirety of that duration.

If things are good in the marketplace, this is a wonderful option. If things are bad, you might need to take out a second mortgage to make ends meet.

Paying it Off

Mortgages are awesome when you have the option of either increasing your payments or making more payments in order to reduce your overall loan in the shortest time possible. This means you will be saddled with that mortgage for a shorter period of time and end up saving a lot of money.

Most mortgage contracts have clauses limiting the amount of extra payments you can make per year. Some don’t permit this option altogether. Try to negotiate with your lender so that this option is available.

When acquiring a mortgage, it is best to educate yourself about the process and all the entailments. With that knowledge, you will be empowered to make the best possible decisions concerning your mortgage and have a loan that won’t cause you too much pain.

By: Jim Baker

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Self certification, non status or self employed mortgages are all different terms to cover the same type of loan.

These types of mortgage loans are ones that are approved without the traditional documentation such as proof of income. Often self employed people have a hard time being approved for a standard mortgage because they do not have the traditional documents needed and are therefore considered high risk.

A mortgage can still be obtained as long as the proper documents and proof of who you are provided to the lender.

Although it is important to provide as much documentation that you can, some of the more recommended documents include: bank statements covering the last six months, all invoices, pensions, rental incomes and any other proof of income you have maybe tax returns for the past two years, Proof of assets such as saving account balances, stocks and bonds and anything else that supports your income claims maybe required. Additionally you will want to provide your business license and be prepared to work with your broker to supply any other documentation needed.

Like most business transactions, there are benefits and drawbacks. A few of the benefits of self employed mortgages include the ability to get your foot on the property ladder, ease in remortgaging and moving homes. The drawbacks are often with higher interest rates and the requirement of larger deposits.

Explore the market to find the best deals, lowest interest rates and brokers who understand your unique needs and remember to be prepared with your own documentation.

There are hundreds of mortgages lenders in the market place today so you shouldn’t have a problem finding the best one for you.

By: Richard Coppin

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