Continue reading »]]> The party who borrows the money and gives the mortgage (the debtor) is the mortgagor; the party who pays the money and receives the mortgage (the lender) is the mortgagee. Under early English and U.S. law, the mortgage was treated as a complete transfer of title from the borrower to the lender. The lender was entitled not only to payments of interest on the debt but also to the rents and profits of the real estate. This meant that as far as the borrower was concerned, the real estate was of no value, that is, “dead,” until the debt was paid in full—hence the Norman-English name “mort” (dead), “gage” (pledge). Since then the laws have changed dramatically and now allow the borrower to have complete control over the real estate while the mortgage is being paid off – the key is to get this loan at the best mortgage rates possible.

Fixed Mortgages

A common type of mortgage loan is the fixed rate mortgage.  With this loan, your payments and interest do not change for the term of the loan – this type of mortgage often has higher rates but gives the borrower the stability that other types of mortgages that offer best mortgage rates do not possess.

Fixed rate mortgages come in different packages.  The most common is the 30-year fixed.  However, other terms are available.  By getting a 15 or 20-year fixed mortgage, the loan is paid off more quickly.  Although, these are not the best mortgage rates around, you get a lower interest rate with these terms and you can build equity in your home at a faster rate because you are paying more money toward the principal each month.  However, your monthly payment most likely would be higher than with a 30-year fixed.  A somewhat newer option is a 40 or 50-year fixed mortgage.  These offer lower monthly payments but have a higher interest rate.  More of your monthly payment goes toward paying interest instead of principal.

Adjustable Or Variable Rate Mortgages

The interest rate on an adjustable rate mortgage can vary, usually with the rate on the 1-year Treasury bill. The lender can let the rate adjust monthly, quarterly, annually, every 3 years or every 5 years, depending on the type of loan you get. These types of mortgages usually have best mortgage rates compared to the fixed rate loans.

The advantage of an adjustable rate mortgage, as we just mentioned, is that the rate and monthly payments are usually lower than a fixed rate mortgage. The disadvantage, however, is that that good rate can go up if the Treasury bill rate increases, thus suddenly increasing your monthly payment.  This risk could be well worth it if you consider the savings you might be getting by paying best mortgage rates available in the market.

A fixed rate mortgage can be a good option for buying a home.  If you plan to stay in the home for a very long time, a fixed mortgage may be right for you.  You have the security of knowing what your payment will be each month since the interest rate will not change.  If it looks like interest rates are going to rise, a fixed rate mortgage can be a better option than an adjustable rate mortgage (ARM), which has an interest rate that changes at set intervals.  You can secure your interest rate before they rise and keep that rate for the term of your loan.

Ultimately the decision of which loan type is better is up to the borrower; however a mortgage broker can be a valuable advisor when it comes to getting you the best mortgage rate possible, they can also demystify some of the complexities of these different types of mortgages.

Continue reading »]]> A reverse mortgage enables older homeowners (60+) to convert part of the equity in their homes into tax-free cash without having to sell the home, give up title, or take on a new monthly mortgage payment. The reverse mortgage is aptly named because the payment stream is “reversed.” Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to you. Below are some common questions asked by consumers about reverse mortgages.

A reverse mortgage provides income that people can tap into for their retirement. The advantage of a reverse mortgage is that the borrower’s credit is not relevant, and is often unchecked, because the borrower does not need to make any payments. Because the home serves as collateral, it must be sold in order to repay the mortgage when the borrower dies (in some cases, the heirs have the option of repaying the mortgage without selling the home).

These types of mortgages have large origination costs relative to other types of mortgages.  These costs become part of the initial loan balance and accrue interest. Senior citizen borrowers with good credit should carefully analyze the options of a more traditional mortgage, such as a home equity loan, against a reverse mortgage.

To be eligible for a reverse mortgage, the Federal Government requires that all homeowners be at least age 60. The home must be owned free and clear or all existing liens but be able to be satisfied with the reverse mortgage. If there is a mortgage balance, it can be paid off completely with the proceeds of the reverse mortgage loan at the closing.

Generally there are no income or credit score requirements for a reverse mortgage. You may qualify for a reverse mortgage even if you still owe money on an existing mortgage. However, the reverse mortgage must be in a first lien position, so any existing indebtedness must be paid off. You can pay off the existing mortgage with a reverse mortgage, money from your savings, or assistance from a family member or friend.

Disadvantages or pitfalls include the limits set by the governing body that prevent reverse mortgage lenders from giving you the full value of the house. There are also interest rates applicable and the closing costs are higher than that of regular mortgages but more lenders are starting to waive some of their fees. Additionally like all other programs, it eats up the equity of the home which leaves less inheritance. Further reverse mortgage information can be obtained from a counseling specialist.

Continue reading »]]> Mortgage specialists need to understand the complex details of the mortgage loans that are available at any given time. Commercial lenders change their mortgage loan interest rates on a regular basis to reflect changing rates in the economy and demand from borrowers. Lenders also offer different rates and terms to borrowers based on the borrowers’ credit. Mortgage specialists examine the credit report of a prospective borrower and find loans for which the borrower is likely to qualify. Mortgage specialists deal with pre-approved mortgages and work with borrowers to finalize a mortgage deal to buy a house.

Becoming a mortgage specialist often does not require obtaining a university diploma however it does require certification. A candidate will also have to attend special courses – which are usually offered by a company you work for.

Any mortgage specialist has to complete a mortgage specialist training before starting his practice. A lot of educational establishments offer mortgage specialist classes where it is possible to receive basic skills and knowledge which will help them to become professionals and get more clients.

A mortgage specialist:

• is an expert in analyzing, advising, structuring, underwriting, packaging, presenting and negotiating plan proposals.
• is knowledgeable in the many types of mortgage loans available.
• has a vast network of lenders
• is continuously updated as to rates available in the ever-changing mortgage market
• is a specialist in all phases of mortgage lending and has the resources available to handle all your financial needs.

Frequently, a mortgage specialist will provide basic credit counseling in an attempt to assist borrowers with correcting credit issues. He or she may also advise borrowers on ways to obtain better loan rates. Mortgage specialist will answer questions and assist borrowers in understanding both the application process and loan details as well. The mortgage specialist only offers assistance before the loan process is complete. Once the borrower has obtained a mortgage, the specialist is effectively out of the loop and all questions must be asked of the lender.

Continue reading »]]> A mortgage lender is a person or company that loans money and takes a security interest in real estate. The lender can provide more than just real estate loans, but it is referred to as the mortgage lender when someone is talking about a real estate loan.

Mortgage lenders will vary in size and type: mortgage bankers are a type of mortgage lenders who originate loans and choose whether to keep them in their own portfolio, or sell them to the secondary market – in US it could be Fannie Mae, Ginnie Mae, Freddie Mac or other large investors, in Canada it is mostly other banking institutions. Most mortgage bankers will have a retail and wholesale division. Wholesale mortgage lenders often do not have retail departments and rely on mortgage brokers and correspondent lenders for loan origination. Correspondent mortgage lenders are lenders who act on behalf of a larger lender and are allowed to underwrite the loan and fund it on their own. They usually sell originated mortgages to the wholesale lender shortly after closing the loan.

Once a mortgage lender makes you an offer, remember it isn’t cast in stone, so continue to negotiate. You never know, but on any given day, loan brokers and lenders may offer two different deals to people with the same qualifications. The reason is that they are probably allowed to keep some of the difference as compensation for generating the loan. These situations can occur in both fixed and adjustable-rate loans. In theory, once you sign with a mortgage lender, you’ll be sending that company a check every month for the life of your mortgage. In today’s market, however, mortgages are often sold between companies. There’s a good chance that the company you sign with at your real estate closing will not be the same one you are paying at the end of your loan. When lenders sell mortgages to one another, the terms of the mortgage should stay the same. The only difference you may see is the address where the check is sent.

There are literally thousands of mortgage lenders. Some lenders are very small, such as local banks that focus on lending money for real estate in a small geographic area. There are also larger lenders who provide mortgage loans through an entire province or region and there are lenders who make loans nationwide.