Did You Know Your Mortgage is a Closed End Loan?

Originally posted 2008-11-30 07:59:21. Republished by Blog Post Promoter

  

Did you know that your mortgage is a closed end loan?  What is a closed end loan, you ask?  A closed end loan is a loan that has limitations because the money paid in cannot be withdrawn.  Meaning that once the money is received by the lender it is paid on the balance owed and equated into an equity position in your home.  Equity is the different between what you owe and how much the property is worth.  The lender will apply a full scheduled payment.  If you desire to pay toward your principal you must specify that the money needs to be applied to the principal.  Oh, by the way, you must be current on your mortgage to be able to pay on your principal balance.  Remember, the lender is in the business to make money so if you do not instruct the lender, where to apply the extra payment they will apply the additional money to, you guessed it, interest, because that is how lender makes money.  Interest, of course, is the rent that you are paying the lender to borrow their money to get your home.

The closed end loan is driven by an amortization schedule.  This amortization schedule does not move at the speed of light.  It moves the opposite slower than a snail.  Hence, taking 30 years to pay it down.  Before we go any further, I feel you need to understand what an amortization schedule is.  It is the blending of loan payments showing the principal and the amount of interest that you are paying each time you made your scheduled payment.  Why, you ask?  Let examine.  If your mortgage payment was $2,000.00 a month.  You will pay only $199.10 to principal and a whopping $1,800.90 to interest in your first month.  The second month, the amount to principal will increase by only one additional dollar, so for every month that follows there is only one more dollar applied to the previous months principal payment.  That’s right one dollar.  For instance, month two the principal payment is 200.10, month 3 $201.10, month 4 202.10, etc.

Another interesting thing about a closed end loan is the interest charges are from the principal balance at the end of the month.  In other words, the interest paid is for the next month not the month that the bill is due.  The interest is a pre-determine amount.  Meaning it is calculated daily but applied to the month end principal balance.  Now, this does not effect daily interest in the month the payment is receive, but effect the following month pre-determine amount.

It is should be easy to see that in order to reduce the choke hold that the lender has on us through our mortgage we must reduce our principal balance.

Interview with Attorney Siegel on “The New Rules for Mortgages”

Originally posted 2009-12-01 10:36:37. Republished by Blog Post Promoter

Dale Robyn Siegel is a licensed attorney in New York and owner of Circle Mortgage Group, a boutique mortgage broker in Westchester, New York. She is an adjunct professor at Baruch College as well as NYU Schack Institute of Real Estate. She is currently on a mission to re-educate the consumer about real estate finance. Dale has been speaking to the public and teaching real estate professionals about mortgage finance for the past ten years. You can learn more about The New Rules for Mortgages at thenewrulesformortgages.com, and you can purchase a copy at Amazon.com.

1. How much money will a first time home buyer need to purchase a home?

It is best to have a 20% down payment these days. The lenders will also require additional funds to cover closing costs and reserves for taxes and homeowner’s insurance. A reserve of at least two months of housing expenses is required, however I recommend having at least six months covered and in the bank. You just never know what can happen these days.

2. What changes exist to acquiring a mortgage should a buyer be most concerned about?

The borrower is qualified on their credit, assets and income under very strict guidelines these days. Not too long ago, lenders would use one strong factor to compensate for weak ones. Now, there are simply risk assessments and a good credit score might not make up a high expense to income ratio. Thus, it is easier to get rejected for a loan even if the client is almost perfect.

3. What changes have been made to the appraisal criteria, and how does it affect the buyer’s ability to get a mortgage?

Appraisals are now under the scope of HVCC (Home Valuation Code of Conduct) and are ordered by a management service company rather than the lender or loan officer. The service hands out jobs on a “round robin” system (think of up’s in a car dealer). The next appraiser on the list gets it and he/she might not be familiar with that property type or location. Therefore, the appraisal might not be performed from experience and will be unacceptable to the lender or come in low in value. The borrower bears the burden of the cost [appraisal], so they might have to pay for a new one.

4. What credit score is required to get a mortgage?

A buyer’s best asset these days is a good FICO score. If a minimum credit score of 620 is not met, there will be few lenders that one may go to (for a decent mortgage). Of course, there are plenty of lenders that will offer mortgages at different levels of FICO score, but the lower the score, the more of a down payment is required and the higher the interest rate.

5. How long does it take to close on a FHA/VA loan or conventional loan compare to the time to close those loans before the changes to mortgage rules?

I would give a loan more towards 60 days to close whereas before it could have been less than 30. The better prepared the parties are, the faster the process goes.

6. How often does the loan get denied after the completion of the appraisal? What can the buyer do to protect his or her self from the possible monetary losses?

As stated, appraisals are coming in lower than purchase prices more often than not. If this happens, the buyer has to either come up with more money or renegotiate a lower price. Some sellers are willing to reduce, other are not. If the deal goes south, the buyer does not get reimbursed for any money already spent on appraisals or engineer reports. It is simply the cost of doing business.

7. Are there other reasons that a buyer is turned down after receiving a pre-approval letter?

A preapproval is not a commitment to lend. Think of it as a review of the financial profile and a promise to work on getting a loan approval. A borrower can be rejected if the bank feels they do not qualify after they have received all of the documents. In addition, a borrower’s situation could change with loss of employment, income or a credit blemish. So, it is not ever until the fat lady sings- as they say.

8. If a buyer is turned down can the buyer get his or her money back?

Typically a contract will have a mortgage contingency clause. This will state that they have a set time (45 days) in order to make a reasonable application for a mortgage. If the borrower has done all they could and not get a loan, then they will get the down payment back. If they have done nothing to get a mortgage, it will be tough to get a refund.

9. Should a buyer get a copy of his her credit report before applying for a mortgage? If so, when should he or she get it? Who should the buyer contact to get a copy of his or her report? How does the buyer dispute incorrect information? How long does it take to correct the information?

Yes, regardless all people should get a copy of their credit report once a year just to review it for errors or changes. A free annual credit report is allowed by law from each of the three credit bureaus. This can be researched on line for easy access and information. After the report is received it should be examined and corrected with both the vendors/creditors and the bureaus. It takes about 60-90 days to show changes on a report and have a positive effect on the FICO score. So, it is a good idea to stay on top of one’s credit.

10. In your opinion, have the changes that have been made improved the mortgage industry or made lending more difficult and complicated for the consumer?

It was a necessary evil on so many levels. The bad apples had to be weeded out of the industry, the lender portfolios needed be flushed of bad loans and non-qualifying borrowers needed to be deterred from getting mortgages. On the downside it does eliminate many good qualified borrowers which is having a crushing effect on the real estate market. However, once this is over and we are back to reality, the ride will be smoother and smarter just ahead.

The Truth About Mortgages

Originally posted 2009-05-23 08:54:07. Republished by Blog Post Promoter

The truth about mortgages is that it has changed, but has it changed for the better.  If the change is for the better remains to be seen, but it is important to note that change has occurred.  The changes are:

• Your credit score must be 620 or higher
• You can not do any other business  like purchase a car, open a new credit card during the purchasing process or suffer consequences to your credit (not a change, but can not be stressed enough)
• You will pay a down payment of as much as ten percent
• The home you are purchasing will have a least two appraisal and may have three broker price opinion
• The purchase process may take as long as 60 to 90 days for conventional finances and 90 to 120 days for FHA/VA finances
• You may have to attend a require home buyer seminar given by HUD approved organization

 

The end of February beginning of March of 2009, the lenders increased the minimum credit score to 620.  Lenders increased the minimum credit score to this amount due to changes to the secondary lender market.   The lenders viewed this increase in credit score limits as a safeguard to the uncertainty of the secondary lender market.   The lenders feared that by the time a loan was ready to close and it was time to sell it to the secondary market that the borrowers could no longer qualify for the longer due to regulatory changes to credit score and lending guidelines. 

 

Incidentally, how lending works is that a front line lender like Chase finances your loan, then sells it to the secondary market, Fannie Mae or Freddie Mac for a portion of what the original loan is so that Chase can have cash available to make the next loan. 

 

Mortgage – Latest News

Originally posted 2010-01-14 05:00:14. Republished by Blog Post Promoter

Latest news in mortgages from around the blogosphere:
Families forced to pay mortgage with credit cards – BBC Business …

Mortgage News and Mortgage Rates on January 11, 2010. Latest news on mortgages and mortgage rates. 11th January 2010 SEARCH … Families forced to pay mortgage with credit cards – BBC Business. Posted by writer On 11 January 2010 …

SAFE Act Requires Credit Worthy Originator; RESPA Impact on VA …

Mortgage News and Mortgage Rates on January 11, 2010. Latest news on mortgages and mortgage rates. 11th January 2010 SEARCH. RSS · Home · About. SAFE Act Requires Credit Worthy Originator; RESPA Impact on VA Loans … …

Federal government simplifies mortgage shopping for consumers …

Posted by writer On 10 January 2010 10785Commentshttp://www.mortgagethoughts.com/2010/01/10/federal-government-simplifies-mortgage-shopping-for-consumers-savannah-morning-news/Federal+government+simplifies+mortgage+shopping+for+ …

Mortgage News Blog » Week of 01/11/10 MMG Week in Review

Mortgage News Blog. Subscribe by: Email / RSS. When I’m not out training for a 5K, 10K, or 1/2 marathon with the ladies, I’m reading about the ever-changing world of the mortgage industry, credit market, and the overall economic outlook …

Realtors, Are You Getting Paid for Your Mortgage Referrals?

Originally posted 2008-11-29 22:15:39. Republished by Blog Post Promoter

Realtors, what if there is a way for you to get paid for all your clients that you refer to someone else for there financing?  Would you be interested? 

I recently found a company that offers just that.  It not only helps you to help your clients with their financial needs but it also allows you the opportunity to help people with financing needs in all 50 states.  There is a webinar call for details at  219 803 4489 .  Do not worry you will receive all the training necessary so that you will be the professional that you are in other aspects of your business.

The Crimes We Commit Against Our Wallets

Originally posted 2009-12-12 05:00:33. Republished by Blog Post Promoter

Taylor-Brown Real Estate prides itself on deliver top-notch information that you can use about the topics of mortgages, real estate, and insurance.  Therefore, it is imperative that from time to time specific information is given that may not be found anywhere else on the web.

There are several often over look but very important facts that you will want to know so that you can protect your investment, as well as, your wallet.  Therefore, there are several valuable documents, blogs, and books that needed to be read before purchasing a home:

• Don’t Buy A Foreclosed Property WIthout An Inspection

“However, the potential financial rewards of buying a foreclosure don’t come without their share of hard work and headaches. Foreclosed homes are distressed and neglected homes. Repair issues in foreclosed homes may not be as obvious, nor simple as damaged drywall or dirty carpet……”

• The New Rules For Mortgages

“When getting a mortgage in today’s market, it’s not who you know, but what you know! Before getting a mortgage, you really need to know the rules.  Read this book!……”

• Do You Make These Mistakes When Getting a Mortgage

“Often times, the buyer’s excitement about being told that he or she has been approved for a mortgage that often stops him or her from asking the right questions when applying for a mortgage. When shopping for mortgages make sure you asking the following questions:…….”

• What is Closing Cost

“Closing cost only accrues when a seller conveys title of a property through a real estate contract. When the contract is executed through changing of deed of ownership, transfer of funds, and signatures of all parties, there is an action commonly called a “closing”……..”

• The Little Mistakes that Cost a Homeowner Over $6000 a Year

“There are a couple of little mistakes that cost homeowners a lot of money. One of those mistakes is not filing for tax exemptions. Another mistake is not understanding the mortgage. Still yet another mistake is not knowing your right if you are trouble with your mortgage…..”

• I am a First Time Homebuyer What Next

“As a first time home buyer, there are things that are important to your successful ownership of your first home. The most important things that will make you successful in home ownership understand your market, understanding your mortgage, and knowing what you can and cannot handle…..”

The above blogs and books will arm you with the information needed to conquer the hold on the money in your wallet.

Related Recommended Articles:

• Real Estate News: Loan Mods Disappoint, Lehman Sells Funds (blogs.wsj.com)
• FHA Improvements: New guidelines and Fewer Restrictions (zillow.com)
• Homebuyer Tax Credits Threaten the FHA (online.wsj.com)
• Real Estate News: Fannie As Landlord, Tax Credit Extended (blogs.wsj.com)

A Real Estate Broker Reviews “New Rules for Mortgages”

Originally posted 2009-12-01 10:42:08. Republished by Blog Post Promoter

Dale Robyn Siegel, the author of New Rules for Mortgages, utilized more than her professional experience to explain the new rules of acquiring a mortgage, but she utilizes technical aptitude and business savvy that keeps the reader wanting to know more about the not so easily explained topic of mortgages.

From the table of contents, the reader will be mesmerized by the organization and thought that went into answering the question of “what are the new rules of acquiring a mortgage”?

The reader will learn just by reading the table of content that the credit score is the driving vehicle of acquiring a mortgage followed by income.

Next, the reader will learn that the property or home matters. The author reveals tips on how to avoid over paying for home inspections and home appraisals while getting the home of your dreams.

More importantly, the reader learns that he has a choice in mortgages. More often than not, the buyer is not giving choices, but told “this is the only product that available for your situation.

The table of contents goes on through the process of purchasing a home up to the buyer receiving the keys that approach adds value and gives the buyer an educated view of the buying process as opposed to the “just sign here” approach.

You may be wondering why there were several paragraphs about the table of contents. Well, the table of contents conveyed to me if the writer understands the buying process. If the book started by talking about the mortgage products then that conveyed only a desire to give typical information; however, it starts at the level where the buyer starts at the credit score thereby conveying a desire to empower the buyer. As the old adage says “knowledge is power.” In the first few paragraphs and first few sentences of the book, Siegel continues on her quest to give the buyer power by revealing the origins of a mortgage.

Next the reader learns how the credit score is used to reveal to the lender the level of risk associated to lending to a buyer.

As a matter of a fact, the higher the credits score the lower the risk. This information believe it or not is one of the new rules of acquiring a mortgage because now a buyer can get a lower interest rate based on a higher credit score and the loan to value of the mortgage. The reader learns that latter approach is termed “tiered price ranging of a mortgage.” Before this change everyone that was approved got the same rate regardless of your score.

Unlike most books written on the subject of mortgages, this writer empowers the reader with golden nuggets of information on the dos and don’ts pertaining to correcting bad credit and/or for maintaining good credit.

The book continues to reveal obvious ways and some not so obvious ways to maintain good credit. For instance, most buyers may not know the weight that certain activities have on their credit. Siegel reveals the weight and what are good practices to utilize to take advantage of the weight.

Still yet, the buyer is warned and given the reason why acquiring new credit during the buying process is frowned upon by the lender. Siegel realizes that most buyers do not realize that lenders view new credit as “credit stoppers”; therefore, she takes the opportunity to explain in a no nonsense matter how and why the lender feels that way about obtaining new credit in the middle of purchasing a home.

The most important information in this book may be the tactics that are revealed to correct bad credit, and the information on how long those bad activities will affect the buyer’s ability to acquire a mortgage.

Another equally important fact that the book reveals is how debt to income is used to ascertain the buyer’s qualification for the mortgage.

This book is a must read for anyone looking to acquire a mortgage. Armed with the information and tips revealed in this book the buyer no longer have to feel that acquiring a mortgage is an “engagement” of war of the borrower against the “mysterious” mortgage rules.

Related Mortgage Articles

• Mortgage rates dip to summer levels (telegraph.co.uk)
• Friday’s Rates following the Jobs Report (raincityguide.com)
• Half of borrowers rely on high cost loans to survive, says OFT (telegraph.co.uk)
• FSA proposes ban on ‘toxic’ mortgages (telegraph.co.uk)

If You Are Considering Buying a Home, Read This First!

Originally posted 2009-05-08 05:06:55. Republished by Blog Post Promoter

In Indiana, the flood gates have been open and a first time homebuyer can get up to $25,000 from the state of Indiana to purchase a home.  You may also qualify to get an additional $8,000 from the federal government.

Never before has there been such an incentive for buyers to purchase a home.  The buyer can also take advantage of the lowest purchase prices in the last two years.  It is equally important to mention that the interest rate is as low as 4.25%, so if you been wondering if not is the time.  Wonder no more.  Call Taylor-Brown Real Estate now for more details at 219-803-4489.

Do You Make These Mistakes When Getting a Mortgage?

Originally posted 2009-05-24 05:01:15. Republished by Blog Post Promoter

Often times, the buyer’s excitement about being told that he or she has been approved for a mortgage that often stops him or her from asking the right questions when applying for a mortgage.  When shopping for mortgages make sure you asking the following questions:

• What is the interest rate?
• Is this a fixed rate or adjustable rate?
• If adjustable, what is the highest rate will it be adjusted too?
• What affects the adjustment of the rate?
• How many years is the loan for?
• What is my estimated closing cost?
• Is the closing cost negotiable?
• How much is the origination fee?
• How much of my closing cost and/or down payment can the seller pay on the buyer’s behalf?
• What is the down payment?
• How much money will be needed to purchase a home?
• When will the money need to be paid?
• How many points will need to be paid and why?
• What is an appraisal?
• Will the buyer have to be at the appraisal when it is completed?
• What does the title insurance coverage?
• Why is a judgment search completed on the buyer?
• What annual adjustable interest rate?
• What is a FHA loan?
• What is the credit score?
• Can the buyer get a copy of the appraisal?
• When can I refinance?
• Is there a cost or prepayment penalty when the buyer refinances?

The latter questions should be asked of your mortgage lender.  It is important to understand or know the responses that you should expect to hear.  It is equally important to note the answers for comparison with another mortgage broker/banker.  Remember, the Fair Credit Act has reduced the penalty to your credit report when you are shopping for a mortgage, so shop and compare. 

 The first question is what is your interest rate?  When the mortgage broker/banker answers this question it should also be accompanied with the type of mortgage that you have whether it is fixed or adjustable.

 A fixed rate mortgage will stay at the same rate for the life of the loan.  Conversely, the adjustable rate mortgage will adjust during some period during the life of the loan.

With the adjustable rate adjusting, it is important to know both the starting interest rate and how high the rate can adjust and what factors cause this adjustment?  More often than not, the gross interest rate or inflation rate may cause your rate to adjust.  Remember with most mortgages you are charged a late fee and day 16 if your mortgage is late, you will receive negative reporting on your credit report if you do not pay by the end of the month.  If you must be late notify the mortgage company and overnight the payment within 10 days of the end of month to avoid a negative report to the credit bureau.    The reason these little known rules were mention is that this is another reason your mortgage can adjust.

 The mortgage company should notify you before it adjusts your rate.

 With an adjustable rate, you often can have a prepayment penalty.  Find out how much that will be and how long the prepayment period is?  For instance, typically the prepayment period can be three years.  What this means is that if you pay your loan off before the end of the first three years of having the loan you will have to pay a certain percentage amount more to do so.   Most times a prepayment occurs with an early payoff of the entire loan amount through refinancing because you may qualify for a lower fixed interest rate. 

The origination fee is  charged by the lender.  It is a percentage of the total principal of a loan.   It is charged by a lender to a borrower when the borrower start the loan process.

The processing fee covers the processors making sure that all required documents are available for underwriter to make the final decision on the loan. 

The process ensures that:

• W-2
• Pay stub
• Tax returns
• Signed purchase agreement
• Appraisal
• FHA loan number is applied for

The underwriter reviews all the documents provide and gives final approval for the mortgage to be processed and funded by the lender. 

Knowing how much closing cost or down payment that you can negotiate as part of your purchase is important in ascertain how much you will need to close the deal.  The lender  is required to provide a good faith estimate showing you the estimated figures needed to close the deal. 

You will need to show proof of funds for the estimated amount that the mortgage broker/banker stated you will need to close.  Those funds can be a gift from a relative and funds from the negotiated deal with the seller; however, the lender also requires that the buyer have a certain amount of his or her own money invested in the deal.

The downpayment for acquirying a loan today is as much as ten percent, so it is important to know this upfront. 

The amount needed to purchase a home can vary, but a seasoned mortgage broker/banker should be able to provide a good estimate of that amount.  Remember, the lender is required to provide that estimate in writing.

The next question is knowing when you will need the money in the buying process. This amount can vary as well, but when it is needed is about the same.

You will need an application fee and appraisal fee at time of application with the lender unless you are still interviewing lenders. 

After you find a home and write your purchase agreement with your Realtor.  The Realtor will ask for earnest money.  The earnest money deposit is a deposit given by the buyer for the listing broker to hold.  This money is to be deposited into the listing broker’s escrow account within 48 hours of an accepted offer.  The earnest money is a deposite that the buyer gives as a token to the seller that the buyer will do what is necessary to move forward to close the deal if the seller removes the property from the market or put the property in pending status so that the buyer can do his or her due diligence to close the deal.

Once the deal has been accepted by all parties, the buyer could have decided to have a home inspection as part of his or her due diligence. 

The home inspection per agreement is usually performed within seven to ten days after acceptance of the purchase agreement.  The reason that it is done first is that it is considered a contiguency to the sale.  If the home does not pass the inspection or the parties can not reach an agreement on responsible for repairs ten there is no need for an appraisal of the property because the home inspeciton was a deal breaker.  When this happens, the buyer gets his or her earnest money back.  The latter reason and the fact that the buyer could not get financing are the only reasons to breach a purchase agreement. 

The home inspection report is prepared by a licensed home inspector and may take up to two to three hours to prepare.  It is important that the buyer or buyer’s Realtor be present at the time of the inspection, so that the buyer can learn important details about the home he or she is purchasing. 

The home inspector will be checking to ensure that the electrical panel is up to code, the roof is free of leaks, the plumbing is up to code, etc. 

Shortly after, the Realtor notifies the lender that all contingencies have been removed the appraiser is send to appraise the home.  The appraiser is a licensed professional who gives his or her professional opinion of value of the home based on recent sales of homes with similar square footage, features, neighborhood, etc.

 

Once the appraisal is complete the file goes t the processor to ensure that all lenders’ initial requirements are part of the package which once again included all the items previous mention along with the appraisal and title work. 

 

The processor sends the entire file to the underwriter.  The underwriter reviews the file and weighs it against the guidelines of the lender and governmental guidelines.   

If the guidelines are met, but the underwriter requires more information for final approval, the processor will be notified that he or she has a conditional approval.    At that point, the processor notifies all parties, the buyer and buyer’s Realtor of what is required.  It is then up to those parties to provide the required information for the final approval. 

 

Once the final approval is met by the underwriter, the lender gives clear to close.

 

The buyer and seller negotiated per the purchase agreement a closing date.  Hopefully, the closing date negotiate has been met by the lender if not the buyer’s Realtor may have to request an extension to give the lender time to meet all the requirements it has to approve the mortgage.

 

The closing is scheduled once the lender gives clear to close.  The buyer will need show proof of the required funds to close.  Once that is shown, the title company prepares the HUD-1.  The HUD-1 is send to the Realtors and mortgage broker/banker to ensure that all cost and fees are correct.  When the HUD-1 is send to the buyer’s Realtor, the buyer’s Realtor should notify the buyer so that he or she can compare the good faith estimate with the HUD-1 fees.  It is also time for the buyer’s Realtor to schedule the final walk through of the property.  The final walk through completed so that the buyer can ensure that the property is still in the same condition as it was 60 to 90 days ago that the buyer last seen it.  The final walk through is also done to ensure that the requested items from the home inspection and/or appraisal are complete before the buyer takes possession.    By the way, the cost and fees that the parties are verifying are:

• Pro-ration of property taxes
• Utilities bills and/or liens that need to be paid by the seller
• Settlement cost to include mortgage origination cost, processing fees, etc
• Brokerage commission

 

Once the HUD-1 is approved by the Realtors and mortgage broker then it is send to the lender for final approval. 

 

The buyer will need to bring the required funds to close in certified funds, identification, proof of homeowner’s insurance, and a copy of the good faith estimate.

 

The buyer will have to acquire homeowner’s insurance prior to closing.  It is recommended that the buyer do comparison shopping for homeowner’s insurance, as well. 

 

Make sure that the replacement cost for the property is enough to pay off the mortgage and gives you enough to start over if something happens to the property.  Also, ensure that the insurance covers your personal items, has liability insurance, and have water/sewer backup coverage.    

 

If the home is located in a flood zone, the buyer will need to acquire flood insurance, as well.  If it is not in a flood zone, then it is recommended to get water/sewer backup coverage if you have a basement to your new home.

 

At the closing, the buyer will need to read or review all documents that he or she is signing and ensure that the documents state the same thing that the buyer was told on the day he or she originated the loan.

 

The buyer also needs to ensure that he or she understands where to send the payment and when to send the first payment.

 

Another often overlook fact is that if the buyer is occupying the home as his or her primary residence the buyer is entitled up to three property tax exemptions.  The buyer needs to make sure that the buyer applies as soon as possible for those exemptions that the buyer qualifies for.    At the closing, the buyer should learn how and when he or she can apply for those exemptions.  Most states, the buyer applies at the assessor office.  The buyer will need the parcel number and proof of ownership.  The title work and HUD-1 should be enough evidence.  By the way, in the title work you should have a copy of the deed; this document is often times what the assessor needs to process your request for your property tax exemptions.   The exemptions most buyers are eligible for are the homestead and mortgage exemption.    The homestead exemption is an exemption that is given because the home is your primary residence.  The mortgage exemption is because there is a mortgage on the home.

 

Now, that you understand what questions are important and when money is due then I think this will make the buying process less complicated.

 

 

 

 

 

 

 

What is a HELOC?

Originally posted 2008-12-02 08:03:42. Republished by Blog Post Promoter

Before we discover why the home equity loan must be an adjusted rate loan and discover more about how the money merge account can make us financial free. I felt it was necessary to address several responses and comments about the money merge account.

There has been a lot of response to my recent blog on the money merge account.  It has been brought to my attention that the HELOC (home equity loan) is being blocked or they are hard to come by, so I thought that it was necessary to reveal what company is still offering the HELOC.  The company is US Bank. 

                The features of the HELOC that is being offered by US Bank is 15 year draw period with a a 10 year repayment period.  The money in the HELOC can be assessed using a Visa card and/or checks.  There is no minimum or maximum charge and no limits on number of checks.  The states that this HELOC is currently available in are:

• California
• Colorado
• Oregon
• Utah
• Idaho
• North Dakota
• Missouri
• New Mexico
• Wyoming

US Bank promises to add more states, soon.  Please visit www.ulstfinancial.net/financialfreedomin2008, and continue to check to see when your state is added to this unique and needed program.  Please contact me at taylorbrownrealestate@yahoo.com to find out the guidelines used to qualify for US Bank’s HELOC.

                Now that everyone knows where they can get their HELOC let’s discuss the requirement of the HELOC.  The HELOC must be open ended, must have an interest only payment option, and needs to have a variable interest rate.

                The fixed interest rate cause the HELOC to function as a closed end loan. 

                Before we go any further, I think it would be necessary to discuss once again the difference between an open end loan and a closed end loan.

The closed end loan is driven by an amortization schedule.  This amortization schedule does not move at the speed of light.  It moves the opposite slower than a snail.  Hence, taking 30 years to pay it down.  Before we go any further, I feel you need to understand what an amortization schedule is.  It is the blending of loan payments showing the principal and the amount of interest that you are paying each time you made your scheduled payment.  Why, you ask?  Let examine.  If your mortgage payment was $2,000.00 a month.  You will pay only $199.10 to principal and a whopping $1,800.90 to interest in your first month.  The second month, the amount to principal will increase by only one additional dollar, so for every month that follows there is only one more dollar applied to the previous months principal payment.  That’s right one dollar.  For instance, month two the principal payment is 200.10, month 3 $201.10, month 4 202.10, etc.

A closed end loan is a loan that has limitations because the money paid in cannot be withdrawn.  Meaning that once the money is received by the lender it is paid on the balance owed and equated into an equity position in your home.  Equity is the different between what you owe and how much the property is worth.  The lender will apply a full scheduled payment.  If you desire to pay toward your principal you must specify that the money needs to be applied to the principal.  Oh, by the way, you must be current on your mortgage to be able to pay on your principal balance.  Remember, the lender is in the business to make money so if you do not instruct the lender, where to apply the extra payment they will apply the additional money to, you guessed it, interest, because that is how lender makes money.  Interest, of course, is the rent that you are paying the lender to borrow their money to get your home.

Another interesting thing about a closed end loan is the interest charges are from the principal balance at the end of the month.  In other words, the interest paid is for the next month not the month that the bill is due.  The interest is a pre-determine amount.  Meaning it is calculated daily but applied to the month end principal balance.  Now, this does not effect daily interest in the month the payment is receive, but effect the following month pre-determine amount.

                The open end loan is a loan where the lender must apply your payment to the loan balance on the day received. Remember, with our mortgage, the closed end loan, the payment is applied, but it does not effect the mortgage in the month or day received, but it effects the following months principal balance and calculated interest.

If there is a payment several times a month on the open end loan the lender will have to recalculate interest several times in the month. Consequently, the interest can be reduced daily (if we send in a payment daily) or several times a month at the most depending on frequency of payments.  This in turn forces the lender to recalculate interest and subsequently canceling interest charged on the mortgage.  Incidentally, this loan uses daily interest cancellation on the new principal balance once the payment is applied.

                This type of account has another advantage you can take money out and put money in.  This feature is similar to your checking account.  With that being said we are going to examine using the advanced line of credit as a checking account.  We will examine applying our income to the advanced line of credit and paying our bills from the account.  When we apply our income to the advanced line of credit, we are making a payment on the advanced line of credit.  When we pay our bills from the advanced line of credit we are withdrawing from the account.

                Next time, we will get into the meat and potatoes of the money merge account, and how it will help make us financial free.

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