Owner Financing Mortgage – Safety Tips
July 19, 2009 by admin
Filed under Home Loans
Why offer owner financing when you sell?
A higher price, to start with. Add to that a good return on your money, a faster sale, and an easier sale of a “problem property.”
Good reasons, but how do you do it safely?
1. Ask for a large down payment. This is the most obvious way to be safe, but not always possible. The point of owner financing is to help the buyer get the property, and down payment is one of the areas most buyers need help.
2. Ask for other security. If a buyer wants it with little down, and you like the return you’ll get, make it safe by putting a mortgage on other property that the buyer owns. Agree to release the mortgage when they’ve paid down the balance to a certain level.
3. Credit checks. Ask them to pay for and bring you a credit report. Bad credit might be okay, but type of bad credit is important. An unpaid hospital bill they’re disputing is obviously not as relevant as their unpaid loans.
4. Use your instincts. Are you usually right about people? If so, give some weight to your judgement of your buyer’s character. Personally, I’d trust a man who felt morally obliged to pay his debts over a playboy that happens to have decent income at the moment.
5. Look at the whole picture. Let’s suppose that a bank will loan your buyer 90%, and is okay with you taking back a second mortgage for up to 5%, allowing the buyer to get in with only 5% down. If you’re getting 6% more than you expected by accommodating the buyer’s needs, where’s the potential loss? You’re okay if he never pays, right?
6. Talk to a lawyer. In some areas it may take two years to foreclose on a mortgage through the courts, and only six months to foreclose on a “contract for sale.” Knowing these things can help you structure the deal in the safest way.
Owner financing makes it easier to sell, and to get a higher price. You just have to be safe about it. Let a real estate lawyer review your paperwork, and use the tips here.
Mail this post
Mortgage Backed Securities
MORTGAGE BACKED SECURITY:- A mortgage backed security is commonly used term in order to raise money against the property. Mortgage backed security has many advantages when compared to any other loans as the interest rate for a secured loan is always less when compared to any other type of loans in the market.Mortgage backed security is mainly used for three purposes such as to pay off the existing debts, for Home improvements and for any personal use or to invest in business.
Paying off Existing Debts: A mortgage backed Security is always used mainly to pay off existing debts, a customer might have debts with credit card commitment, personal loan or for any other borrowing. Customer should pay comparatively greater interest percentage for any other commitment like credit card or any unsecured personal loan. For all these type of loans the bank would have no security before they lend money to the customer for whom the interest rate what they charge is high.
A customer can put all his debts together and apply for a loan against his/her property and pay off all the debts and the customer will be paying just one interest for all his loans and he can also save some money. The customer will be paying different interest rates for this entire loan and will be paying to different lenders where one can get no concessions or reduction. Home Improvements: A customer can also take a loan against his property to extend or renovate his house. Suppose if a customer wants to construct a bedroom extra in house it may not be helpful if he opts for a home loan or a personal loan as interest in all these type of loans are comparatively high.
Loan against any property is cheaper when compared to any unsecured loan as the lender has also got interest over the property for which lending takes place. It is always better to consult a mortgage adviser before taking a secured loan over the property as the lender will definitely have a percentage of interest over the property.
Any personal use or to invest in Business: Money can be raised over the property to invest in business, in that way property is not only used for living purpose but also for investment purpose. It can also be used in order to raise money to fulfill their son/daughter’s dream of studying abroad. “Mortgage backed loans” does help people in many ways.
Mail this post
Interest Only Home Mortgage Loans – Good Or Bad Idea?
July 19, 2009 by admin
Filed under Home Loans
Is an interest only home mortgage loan a good or bad idea for financing a home? These loans have become very popular and are one of the many different kinds of financing available for property. Opinions vary as to whether an interest only home mortgage loan is a good idea for the average home owner, with valid points being made on both sides. If you are in the market for a home you need to consider all the finance options available to you, together with your ability to repay them. Here are some interest only mortgage loan pro and cons to look at both sides of this kind of financing. If you are employed full time, single and making a good salary then an interest only home mortgage loan may not be the best financing for you. That’s because you could pay off your loan at a lower rate of interest and in less time with a different kind of loan program. On the other hand, you could save a lot of money by only paying the interest. It is possible that if you invested this in a safe investment you would not only have enough to pay off the principle on the mortgage, but would also gain a little capital for yourself at the same time. This of course is a gamble, because how many people will actually invest the savings? However, if you have no other financial responsibilities, it’s one you might find attractive. If you work in seasonal employment, like in the tourist industry, you may find that paying an interest only monthly mortgage payment allows you the freedom to pay a minimum amount when you are in “off season”. But during the time you are working, you can make accelerated payments off the principle in addition to the interest. The risk of paying an interest only mortgage loan repayment is that the principle is not being repaid. Unless the price of homes in your area rises, you don’t build up any equity in your home. Paying the monthly mortgage payment on an interest only mortgage can become like paying rent. You don’t have the safety net of being able to sell your home to raise cash if you are faced with some emergency in your life. As a young professional just starting out on your own, this might not be an issue you need to consider. But if you are married and have a family, you should seriously consider the implications of not having the kind of mortgage that allows you to build a financial safety net. Home equity gives you a form of financial security that can come in handy if you really need to use it. This should be a consideration when deciding which home loan to choose. A lower monthly mortgage payment will always look attractive on paper, but consider all the implications carefully before taking the option of an interest only mortgage loan as a way of financing your home.
Mail this post
Mortgage – Basics Explained
mortgage information
1. Borrower’s Potential or Affordability
2. Proof of Income
3. Term of the Mortgage
4. Loan to Value Percent
a)Borrower’s Potential or Affordability: Any Lender would always calculate the customer’s income potential first to check if the customer can repay the loan amount. The lender would calculate the living expense and current commitments of the customer and based on that maximum loan amount is decided. Affordability is also based on the income stretch which means the calculation that involves all the expenses of the customer to his monthly income. In case of Joint mortgage affordability is calculated based on the income of both the applicants.
b)Proof of Income: Proof of income should be provided in order to sanction a mortgage, bank statements and Pay slips are usually requested to prove Proof of income. Pay slip provided should always match the bank statements so that, it will be an easy task for the lender to approve a loan. Lender would always require minimum of 3 to 4 months pay slip and also the bank statement. If the customer is self employed then the Lender would request for tax returns or self assessment statement. In some cases the Lender would request the documents to be certified by a professional.
c) Term of the Mortgage: Mortgage term determines the monthly payment of the customer towards his mortgage. Mortgage term is usually calculated based on the age and the service limit of the applicant. If the applicant is of young age, then the term of the mortgage can be increased accordingly in the same way if the applicant is nearing the retirement age the term that can be sanctioned will considerably be reduced. Higher the term, lower the monthly payments. Though the term is increased the interest paid by the customer on the whole will be more when compared to shorter term mortgage.
d) Loan to value percent: Loan to value percent is nothing but the Ratio of loan approved to the total purchase price of the property. Loan to value
Mail this post