Mortgages first appeared in the English feudal system and have continually served as a means to obtain land ownership without paying for the total price of the land. The mortgage is essentially a contractual relationship creating an interest in land, but it is not a loan as many people often confuse it. Most mortgage agreements involve a promise to repay a debt, but is not a debt in itself, but rather, is evidence of a debt.
Essentially, the mortgage is a transfer of either a legal or equitable interest in the land on the condition that the interest will be returned when the terms of the contract are performed. If the borrower fulfills all of the obligations of the mortgage contract, the transfer then becomes void and title automatically passes back to the mortgagor.
The principle generally governing what priority a mortgage is usually first in time, first in right, though modifications to this principle can be made in the course of the process. First in time priority generally belongs to the first party to deliver that specific security instrument for recording, though most states will not enforce this general principle if the person attempting to record has actual knowledge of a previously unrecorded claim.
In a minority of states, statutes provide for a true first in time circumstance where the first to record takes priority regardless of knowledge of a previously unrecorded claim. When dealing with the priority of mortgages, it is necessary to check how your particular jurisdiction treats this type of situation.
The priority of a mortgage will often be the difference between payment and non-payment, therefore, a firm understanding of jurisdictional differences is critical in obtaining the strongest legal position.
Due to both the increased use of online mortgage applications and the increased solicitation by online mortgage companies, determining the true priority of all liens on a particular piece of property can be a challenging task. Like mortgages obtained from a mortgagor with a true physical office, online mortgages will generally be held to the first in time first in right principle.
However, like most mortgages, they may also be subject to any leases involving the land. In the event of a forced foreclosure, when lease was executed before a mortgage, the purchaser of the property in the foreclosure auction would still take subject to the lease. Conversely, if a lease is entered into after a mortgage is recorded, the purchaser of the property would take free of the lease.
Specifically, further problems can be encountered when first and second mortgages are applied for close in time to each other, and especially when one of those mortgages was obtained from an online mortgage company.
When faced with potential foreclosure due to financial difficulties, the first step in determining who takes priority when dealing with a combination of leases, first, second and all subsequent mortgages, is to examine where the debt instrument was obtained and, more specifically, when the instrument was effectively recorded.
Because online mortgage companies may lack a physical presence in your particular jurisdiction, it may take a significant amount of time to perfect the recording, if it ever. As long as subsequent mortgagees or lenders record the debt instrument without notice of the online mortgage, they will take priority over the unrecorded online mortgage, especially in ‘race-notice’ statute jurisdictions.
While not all jurisdictions are first in time, first in line (‘race-notice), most states are, and this specific distinction can determine the priority of any online mortgage application. Whether you represent such an online mortgage company or a consumer subjecting his or her property to various liens and mortgages, it is important to accurately understand the method of record perfection and its relation to establishing priority of a claim.
An attorney experienced in real estate and borrowing transactions can be an invaluable tool in determining your rights as a consumer or company attempting to establish the order of lien priorities.
This article was written by Nick Delaunt, who writes select pieces about real estate law for Goldstein and Clegg, LLC.
Article Source: http://EzineArticles.com/?expert=Nicholas_Deleault
Showing posts with label mortgages. Show all posts
Showing posts with label mortgages. Show all posts
Thursday, April 19, 2007
Saturday, April 14, 2007
Mortgage
If you are looking for a mortgage, it is important to know what you are looking for, and where to find the right mortgage for you. You should spend time to find the mortgage with the most affordable repayment terms for your financial situation. The rates offered for a mortgage will differ depending on the state you reside in. The rate for a mortgage will also differ when comparing them within the same state.When looking for a mortgage, it is best to decide between either a fixed rate mortgage, or an adjustable rate mortgage.
Either of these two types of mortgages can affect how much you pay back to the mortgage lender. With an adjustable rate mortgage, the amount you pay will depend on the interest rate, and how stable the economy might be. This amount can be either a higher or lower rate depending on what is happening in the financial sector. Keep in mind that if the economy is doing poorly or is well off, this will be reflected in the amount you pay back as well.
A fixed mortgage will remain at the same interest rate throughout the life of the mortgage loan. This might seem like a good idea if you are expecting sudden changes within the economy, affecting the interest rates. However, in the cases when the interest rates drop, and the rate you are paying remains high and the same, then a fixed rate mortgage might not be your best idea after all.Overall, the Internet is by far the best place to research the different mortgage rates available to anyone wanting to buy a home. The great thing about using the Internet is that you have a choice of any lender, and are not at the mercy of only your local bank. In this way, you are able to spend time researching the best mortgage for you.
By: Marsha Brown
Either of these two types of mortgages can affect how much you pay back to the mortgage lender. With an adjustable rate mortgage, the amount you pay will depend on the interest rate, and how stable the economy might be. This amount can be either a higher or lower rate depending on what is happening in the financial sector. Keep in mind that if the economy is doing poorly or is well off, this will be reflected in the amount you pay back as well.
A fixed mortgage will remain at the same interest rate throughout the life of the mortgage loan. This might seem like a good idea if you are expecting sudden changes within the economy, affecting the interest rates. However, in the cases when the interest rates drop, and the rate you are paying remains high and the same, then a fixed rate mortgage might not be your best idea after all.Overall, the Internet is by far the best place to research the different mortgage rates available to anyone wanting to buy a home. The great thing about using the Internet is that you have a choice of any lender, and are not at the mercy of only your local bank. In this way, you are able to spend time researching the best mortgage for you.
By: Marsha Brown
FHA Loans for first-time buyers
If you have little or no money for a down payment, bad or no credit and too many bills, an FHA loan could be what you need to buy a house.
The Federal Housing Administration, a part of the Department of Housing and Urban Development, was created 70 years ago to help first-time buyers, especially low-to-moderate income families and minorities, get the financing they need.
You can apply for an FHA-backed loan from most banks and mortgage companies. Just click here to find all of the FHA in your area.
Since repayment is guaranteed by the federal government, the lender knows it will not lose money on the deal. That allows the bank or mortgage company to offer competitive rates on a loan that's easier to qualify for than a conventional home loan.
FHA loans aren't as popular as the once were, primarily because the limits on how much you can borrow didn't keep up with soaring home prices.
As a result, the FHA guaranteed just 425,000 purchases last year, down from 1.3 million homes in 2003. The decline is even more dramatic in states with the highest home prices. Only 4,443 Californians took out FHA loans last year, down from 100,000 in 2003.
But with a wave of foreclosures making alternatives such as subprime loans and 100% financing more difficult to obtain, every first-time buyer should at least consider an FHA loan.
Here are the ways you could benefit from the government's help:
Benefit 1. You don't need a big down payment and your lender can help you get it
An FHA mortgage requires only a 3% down payment -- that's $30 for every $1,000 you borrow.
Don't have it. No problem. It can be a gift from a relative, friend or an organization that provides financial assistance.
The FHA works with down payment assistance programs, more popularly known as DAPs. They can help you get the down payment money you need at little or no cost. Your lender will be glad to explain how they work.
None of that is possible when you apply for a conventional loan. Lenders want the down payment to come out of your pocket so you've got some skin in the game and are less likely to default.
Benefit 2. Your credit doesn't have to be perfect
Your credit score doesn't matter because the FHA doesn't use them.
More than 36 factors go into calculating your credit score, including how much credit you have and how often you apply for credit. The FHA doesn't care about all of that.
What it does care about is a record of paying your bills, and paying them on time, for at least the past two years. It will overlook minor lapses on your credit history if there's a reasonable excuse such as losing a job or serious illness. But your bill-paying prowess is a critical factor for every application.
In the end, the FHA does not have a strict set of rules that determine who gets a mortgage and who doesn't. An underwriter at the bank, who knows all of the federal rules and regulations governing the FHA program, uses a computer program to analyze your finances and make the call.
There are things the FHA will not overlook. If you've:
Declared bankruptcy, you must wait two years from the date of discharge and have re-established good credit before you can apply.
Lost a home through foreclosure, you must wait three years and have a clean credit history during that time.
Benefit 3. You can have more debt
Your debt-to-income ratio can be considerably higher for an FHA loan than a conventional loan.
Add your total mortgage payment (principal, interest, taxes, hazard insurance, mortgage insurance and homeowner's dues, if they apply) to regular monthly obligations, such as credit card debt, auto loans, student loans or court-ordered payments like child support or alimony. (Utilities, food, clothing and so forth are not factored in). Then you divide this total by your monthly income, which is the before-tax income of those making the payments.
You can qualify for an FHA loan if your monthly debt payments are no more than 41% of your income. For most conventional loans it can't be more than 36%.
Benefit 4. There are many different types of mortgages to choose from
The FHA offers 15- or 30-year fixed-rate loans and 1-year, 3-year, 5-year, 7-year and 10-year adjustable-rate mortgages. (Dangerous loans such as interest-only mortgages and option ARMS are not available.)
The FHA also offers special programs that require very low payments during the first couple of years of the mortgage the Growing Equity Mortgage and the Graduated Mortgage Payment programs.
The growing equity mortgages, often referred to as GEMs, allow homeowners to make small payments during the first few years and then increase monthly payments over time.
The graduated mortgage payment program is available to people who have good reason to expect their incomes will grow over the first five to 10 years of the loan, allowing them to buy prior to being able to make full payments. Payments can increase during the first 10 years of the loan.
Benefit 5. Competitive rates.
The interest rate will depend on your credit history, with the best rates given to those with the best record of paying their bills and earning a steady income.
But in general, you can expect an FHA loan to cost no more than one-eighth of a percentage point more than any conventional loan you might qualify for.
An FHA loan is almost guaranteed to be cheaper than a subprime loan or option ARM. That's why it's critical to seek an FHA loan before accepting such a high-cost mortgage.
There are two disadvantages to FHA loans that you should be aware of before you apply:
Disadvantage 1. Limits on how much you can borrow
The maximum amount you're allowed to borrow depends on where you live. You can get a loan for as much as $362,790 in high-cost cities, such as New York, Los Angeles or Seattle, but the limit for what HUD considers "standard areas" tops out at $200,160.
Those buying in Hawaii get a 50% increase on the lending limit if the home is located on Maui or in Honolulu, and they can get a somewhat higher loan cap in other parts of the islands.
Disadvantage 2. Pricey mortgage insurance.
If you put less than 20% down on your house and most buyers with FHA mortgages do you will have to pay mortgage insurance.
You'd have to buy it if you took out a conventional mortgage, too. And the annual cost is about the same -- 0.5% of the loan, usually broken into 12 monthly payments added to your mortgage statement.
But the FHA also charges an upfront insurance premium totaling 1.5% of your mortgage amount, and it is due at closing. While that amount can be added to your loan amount, it's still an extra charge.
You must continue this coverage until you've paid off 22% of the principal. Conventional loans allow you to drop mortgage insurance as soon as you hold 20% of your home's equity the difference between what the home is worth and how much you owe on your loan. That can include any appreciation in you home's value, not just paying down the debt.
Despite those drawbacks, FHA loans have helped thousands of people buy their first home. Could it help you?
By Carolyn Siegel
The Federal Housing Administration, a part of the Department of Housing and Urban Development, was created 70 years ago to help first-time buyers, especially low-to-moderate income families and minorities, get the financing they need.
You can apply for an FHA-backed loan from most banks and mortgage companies. Just click here to find all of the FHA in your area.
Since repayment is guaranteed by the federal government, the lender knows it will not lose money on the deal. That allows the bank or mortgage company to offer competitive rates on a loan that's easier to qualify for than a conventional home loan.
FHA loans aren't as popular as the once were, primarily because the limits on how much you can borrow didn't keep up with soaring home prices.
As a result, the FHA guaranteed just 425,000 purchases last year, down from 1.3 million homes in 2003. The decline is even more dramatic in states with the highest home prices. Only 4,443 Californians took out FHA loans last year, down from 100,000 in 2003.
But with a wave of foreclosures making alternatives such as subprime loans and 100% financing more difficult to obtain, every first-time buyer should at least consider an FHA loan.
Here are the ways you could benefit from the government's help:
Benefit 1. You don't need a big down payment and your lender can help you get it
An FHA mortgage requires only a 3% down payment -- that's $30 for every $1,000 you borrow.
Don't have it. No problem. It can be a gift from a relative, friend or an organization that provides financial assistance.
The FHA works with down payment assistance programs, more popularly known as DAPs. They can help you get the down payment money you need at little or no cost. Your lender will be glad to explain how they work.
None of that is possible when you apply for a conventional loan. Lenders want the down payment to come out of your pocket so you've got some skin in the game and are less likely to default.
Benefit 2. Your credit doesn't have to be perfect
Your credit score doesn't matter because the FHA doesn't use them.
More than 36 factors go into calculating your credit score, including how much credit you have and how often you apply for credit. The FHA doesn't care about all of that.
What it does care about is a record of paying your bills, and paying them on time, for at least the past two years. It will overlook minor lapses on your credit history if there's a reasonable excuse such as losing a job or serious illness. But your bill-paying prowess is a critical factor for every application.
In the end, the FHA does not have a strict set of rules that determine who gets a mortgage and who doesn't. An underwriter at the bank, who knows all of the federal rules and regulations governing the FHA program, uses a computer program to analyze your finances and make the call.
There are things the FHA will not overlook. If you've:
Declared bankruptcy, you must wait two years from the date of discharge and have re-established good credit before you can apply.
Lost a home through foreclosure, you must wait three years and have a clean credit history during that time.
Benefit 3. You can have more debt
Your debt-to-income ratio can be considerably higher for an FHA loan than a conventional loan.
Add your total mortgage payment (principal, interest, taxes, hazard insurance, mortgage insurance and homeowner's dues, if they apply) to regular monthly obligations, such as credit card debt, auto loans, student loans or court-ordered payments like child support or alimony. (Utilities, food, clothing and so forth are not factored in). Then you divide this total by your monthly income, which is the before-tax income of those making the payments.
You can qualify for an FHA loan if your monthly debt payments are no more than 41% of your income. For most conventional loans it can't be more than 36%.
Benefit 4. There are many different types of mortgages to choose from
The FHA offers 15- or 30-year fixed-rate loans and 1-year, 3-year, 5-year, 7-year and 10-year adjustable-rate mortgages. (Dangerous loans such as interest-only mortgages and option ARMS are not available.)
The FHA also offers special programs that require very low payments during the first couple of years of the mortgage the Growing Equity Mortgage and the Graduated Mortgage Payment programs.
The growing equity mortgages, often referred to as GEMs, allow homeowners to make small payments during the first few years and then increase monthly payments over time.
The graduated mortgage payment program is available to people who have good reason to expect their incomes will grow over the first five to 10 years of the loan, allowing them to buy prior to being able to make full payments. Payments can increase during the first 10 years of the loan.
Benefit 5. Competitive rates.
The interest rate will depend on your credit history, with the best rates given to those with the best record of paying their bills and earning a steady income.
But in general, you can expect an FHA loan to cost no more than one-eighth of a percentage point more than any conventional loan you might qualify for.
An FHA loan is almost guaranteed to be cheaper than a subprime loan or option ARM. That's why it's critical to seek an FHA loan before accepting such a high-cost mortgage.
There are two disadvantages to FHA loans that you should be aware of before you apply:
Disadvantage 1. Limits on how much you can borrow
The maximum amount you're allowed to borrow depends on where you live. You can get a loan for as much as $362,790 in high-cost cities, such as New York, Los Angeles or Seattle, but the limit for what HUD considers "standard areas" tops out at $200,160.
Those buying in Hawaii get a 50% increase on the lending limit if the home is located on Maui or in Honolulu, and they can get a somewhat higher loan cap in other parts of the islands.
Disadvantage 2. Pricey mortgage insurance.
If you put less than 20% down on your house and most buyers with FHA mortgages do you will have to pay mortgage insurance.
You'd have to buy it if you took out a conventional mortgage, too. And the annual cost is about the same -- 0.5% of the loan, usually broken into 12 monthly payments added to your mortgage statement.
But the FHA also charges an upfront insurance premium totaling 1.5% of your mortgage amount, and it is due at closing. While that amount can be added to your loan amount, it's still an extra charge.
You must continue this coverage until you've paid off 22% of the principal. Conventional loans allow you to drop mortgage insurance as soon as you hold 20% of your home's equity the difference between what the home is worth and how much you owe on your loan. That can include any appreciation in you home's value, not just paying down the debt.
Despite those drawbacks, FHA loans have helped thousands of people buy their first home. Could it help you?
By Carolyn Siegel
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