Posts Tagged mortgage
Mortgage Refinance- All your Financial Problems Solved
Mortgage is a term used to denote the pledging of a persons property (typically) as a security when a person borrows money from the lenders. In most countries and their jurisdictions, loans secured on real estate are called mortgages. But, there are a few exceptions and few restrictions as well. There might be some jurisdictions in which only a piece of land can be mortgaged. But on the whole, mortgage generally refers to putting up your real estate as security. Thus, it is a secured loan with minimal risks to the lender.
Suppose, you have an old loan and you want to repay it. Well, then you can take a new loan to repay the outstanding debt. This, in essence, is what mortgage refinance is all about. When a person goes for a refinance loan, he/she is actually going for a secured loan. Through this process people replace an existing loan that was secured by the same assets. The most common reason why consumers go for refinancing is home mortgage. Some of the other salient reasons why people tend to go for mortgage refinance are given below:
·Refinancing goes a long way in reducing the cost of interests. Refinancing is generally done at a lower rate as compared to the other loans.
·If a person wants to pay off other debts, the refinance is the mortgage to go for.
·At times, people take a long-term loan and reduce their obligations in terms of periodic payments.
·Mortgage refinance also aids in risk reduction. Sometimes people move from a variable-rate to a fixed rate loan when they choose the refinance option.
·Many a times, people want to liquidate their entire equity, which has assimilated in real property since the time they gained ownership of their house.
Believe it or not, in some types of refinanced mortgages, you have a penalty if you repay the loan early. This can be with respect to a part repayment or the repayment of the entire loan. You are also cautioned, as far the lower interest rates are concerned. Some refinanced mortgages expose the borrower to greater risk than done so by the existing loan.
While picking a mortgage refinance you must calculate the ongoing, up-front, and the potentially variable costs that are all a part of refinancing mortgage. All these points must be considered before making a decision to go for a refinanced mortgage. Refinancing quotes also vary from region to region and depend on your credit history and other aspects like employment, duration of employment, savings history, and number of years at the existing place of residence.
Like all mortgages, mortgage refinance gives a lot of importance to credit reports. But, don’t fret if you have a poor credit history. There are numerous options available in the market today that allow you to pledge your property in order to borrow cash.
4 Mistakes to Avoid When Managing Your Owner Financed Mortgage Note
With the crash of the real estate market and complete pendulum swing in requirements to qualify for a mortgage, many home sellers are resorting to owner financing in order to move their property. Once the sale is completed, the seller now has in their possession a valuable financial asset. But managing an owner financed note is hardly a skill most home sellers possess or is taught in school or anywhere else today. As a private note buyer I get calls daily from note sellers wanting to sell a note that haven’t managed their asset as well as they should. Some of the mistakes can make a note unsellable, or at least for a discount they can accept. Below are the 4 biggest mistakes I see on a daily basis.
1. Not monitoring whether the borrower is current on their property taxes – In a worse case scenario, this mistake could result in a total loss if the home were foreclosed on my the local municipality and sold off before the note holder even knew it.
2. Not insuring that the buyer is current on their homeowner’s insurance as well as has sufficient coverage – If the borrower let their insurance coverage lapse and had a fire, the note holder could again end up with a worthless note. Note holders should not only monitor the borrowers insurance coverage but should be sure they are on the policy as the mortgagee.
3. Not physically monitoring the property – Many property sellers no longer reside in the city the property they sold and owner financed or they live across town. As a result, they rarely if ever drive by the home which is the asset supporting the note they hold. What can and has happened on many occasions is that the borrower may have moved out and is renting the property out to a friend or family member who has a lot less incentive to maintain the property. This could also cause problems if a major insurance claim were made since the property is no longer owner occupied, requiring a different insurance policy.
4. Allowing the borrower to pay their mortgage in cash each month – If the note holder never needs to sell their note, this may not be a big deal. However, if the note holder ever needs to sell their note, they will not have proof of the servicing of the note. This makes a note worth much less and giving the borrower a receipt will not suffice.
There you have it, four mistakes to avoid in order to a) protect the value of a private mortgage note and b) make the note worth more money if you ever need to sell it.