Saturday, June 03, 2006

Will missed mortgage payments lead to foreclosure on the property?

In general terms if a home owner fails to make the agreed payments on the mortgage, the lender may foreclose on the property.

The mortgage lender may do a statutory foreclosure or a judicial foreclosure depending on the terms and conditions agreed to in the original signed mortgage contract document.

Sometimes a lender may prefer to avoid the cost of foreclosure and be prepared to work out an agreement with the home owner. It really depends on the circumstances and whether the lender wants to consider that as an option.

In such cases a lender may, for a specified period of time, accept "interest only" payments or partial payments to help the home owner out of a tight situation.

However, it is important to note that there are specific regulations regarding foreclosure procedures.

Always, always, always, seek professional legal advice from an attorney if your home is in anyway endangered by a foreclosure proceeding.

House Fails To Sell Despite Location

Every wondered why some properties fail to sell despite being in a good location and in reasonable condition?

If your house has not sold because of (or regardless of) its location – alter your price and it will sell. If your house has not sold because of its condition, either fix what’s wrong, or alter your price until it does sell. As any good real estate agent will tell you, “when priced correctly, a property will sell regardless of condition or location.”

Friday, June 02, 2006

Why Get Prequalified For A Mortgage Loan?

When buying a property it is often recommended that you get prequalified for a mortgage loan. The purpose of this is to determine how much you can afford and what the amount you can borrow.

The advantage of being prequalified, is that you can move quickly if you find a suitable property. This can be a big advantage in a buoyant property market where there are other interested buyers looking at the same property.

Having a prequalified mortgage loan also indicates to the seller that you are serious and really can afford to buy the property.

Common Real Estate Terms & Mortgage Terms Explained - Part 5

Continuing on in our series of definitions for commonly used real estate terms and mortgage terms (or terminology relating to the real estate/mortgage industry):

Earnest Money
Money that is submitted with an offer to purchase which indicates a buyer's seriousness and good faith. In virtually all cases, earnest money will need to be submitted at the time of the offer and remains in escrow until the time of closing, at which time it becomes part of the downpayment.

Equity
The difference between the value of a property and the total of any outstanding loans or mortgages against it.

Escrow
Funds held in reserve both prior to closing (for example the earnest money and deposit) by a third party and after closing by the mortgage company to pay future taxes and homeowners insurance. In some areas, "escrow" also refers to the closing process.

Escrow Agent
A neutral third party who ensures that all conditions of a real estate transaction are met.

Common Real Estate Terms & Mortgage Terms Explained - Part 4

Continuing on in our series of definitions for commonly used real estate terms and mortgage terms (or terminology relating to the real estate/mortgage industry):

Contingencies
These are conditions written into Real Estate offers and contracts to prevent a buyer from being forced to buy a property that is unsatisfactory - either structurally or financially. Here are some examples of contingencies:

"This offer is subject to the buyer's obtaining adequate financing."
This could specify the maximum interest rate that you will pay or, that if the appraised value is less than agreed upon purchase price, the contract can be voided and full deposit refunded or the contract renegotiated.

"This offer is subject to a satisfactory home inspection and buyer's approval of that report."
The inspection should be completed within a designated number of days.

"This offer is subject to the buyer's approval of a title insurance policy to be obtained at the seller's expense."

"This offer is contingent upon the seller's providing the required survey certificate to the buyer at the seller's expense."

Please note - these are only examples and you should alway obtain proper legal advice from a real estate attorney before adding, removing or altering clauses or signing any real estate contract.

Condominium

This is housing (usually in a complex), where the owner owns only the unit in which they live (from the interior walls inward). A condo often includes a portion of the common area.

Debt to Income Ratio
The ratio of a borrower's total debt as a percentage of their total gross income.

Deed

The document that, when recorded with your local government, determines ownership of a property. A Deed is transferred from seller to buyer at closing.


Delinquent Mortgage

A mortgage where a borrower who is behind on payments. If the borrower fails to bring the payments up to date within a specified period, the lender (mortgagee) may begin foreclosure proceedings.

Duplex
A structure that consists of two separate family units.

Tuesday, May 30, 2006

Common Real Estate Terms & Mortgage Terms Explained - Part 3

Here is the third part in our series of definitions for commonly used real estate terms and mortgage terms (or terminology relating to the real estate/mortgage industry):

Comparable Market Analysis (CMA)
A comparable market analysis is a comparison of the prices of similar houses in the same general geographic area. A buyer or seller can use a CMA to help determine the true value of a property. A CMA is far more reliable than simply looking to see what other home sellers are asking for their properties. What people ask for and what they eventually get can be poles apart.

Closing
This is the process that effects the final transfer of the deed from the seller to the buyer. Closing also finalize all aspects of the mortgage of the property.

Closing Costs
These are the funds required at the time of closing (not to be confused with the down payment which is additional). Closing costs can include: loan origination fees, discount points, recording fees, pre-paids and Attorney fees. These closing costs can often equate to around 3% to 5% of the price of the property.

Why You Should Shop Around For Mortgage Rates and Mortgage Terms.

A difference of even half a percentage point in the mortgage rate can mean a huge savings over the life of a mortgage loan.

As an example, the difference in the monthly payment on a $100,000 mortgage at 8 percent when compared to a rate of 7.5 percent is about $35 per month. Over a 30 year term of the mortgage that amounts to $12,600.

So, it does pay to shop around for mortgage rates and mortgage terms.

Why Use A Real Estate Attorney To Represent You?

When selling a home it’s a good idea use the services of an attorney with expertise in real estate transactions.

A sales contract is a binding legal agreement, so a real estate attorney can help you protect your interests with the sales contract at the closing.

A real estate sales contract will usually include details of:

The Sale price
What is included in the purchase (item, chattels etc).
The amount of the down payment deposit The date for final settlement and the date of possession.

The sales contract may also include:

Contingencies to the sale such as structual inspections, lead-based paint inspections, radon inspections. An inspection is also likely to consider required improvements, a legal review of the sales contract by the buyer's or seller's attorney.

Other factors likely to be included are:
The amount and length of the mortgage loan, interest rate and time limit allocated to secure the loan.

The sales contract will also specify which closing costs are to be paid by the buyer and which closing costs are the responsibility of the seller.

Using the services of a Real estate Attorney can be money well spent, because the potential downside for getting things wrong in a real estate transaction, can be costly.

Monday, May 29, 2006

The difference between a real estate agent and a real estate broker explained

The first thing to note is that the terminology used to identify real estate professionals varies a little in the USA from state to state. The requirement in the USA is that real estate sales professionals are licensed by the state. In most countries real estate agents are licensed in some way. The has the advantage of putting some control on the education and experience requirements and provides for a central authority to resolve consumer complaints and disputes.

In the USA - Brokers are generally required to have more education and experience than real estate agent (or salesperson).

When buying or selling a property most people deal with is a real estate agent. The real estate agent (salesperson) is licensed by the state, but must work for a broker. All real estate listings are placed in the broker's name, not the salesperson's.

A broker can deal directly with homebuyers and vendors (sellers), or can have a staff of agents working for them.

Sunday, May 28, 2006

Common Real Estate Terms & Mortgage Terms Explained - Part 2

Here is the second part in our series of definitions for commonly used real estate terms and mortgage terms (or terminology relating to the real estate/mortgage industry) :

Appraisal
An appraisal is an estimated value of a real estate property by a professional third party such as a Certified Real Estate Appraiser. A written property appraisal my help the buyer borrow the required funds to buy the property. Lenders always want “hard” evidence before they are willing to risk their money in property deals. Almost all non-owner financed mortgages will require an appraisal and is generally paid for by the buyer. Having a full written property appraisal can put everyone’s minds at ease.

Adjustable Rate Mortgage (ARM)
A variable or adjustable rate mortgage is an ARM. It is a mortgage in which the Interest rate is adjustable, meaning that the rate can go up or down according to prevailing financial market conditions. An ARM loan will have typically a 3 or 5 year period during which the rate is lower than the going rate. This is used to entice would-be borrowers or help borrowers have lower payments for the initial period.

Assessment
The value of a property as calculated by the local tax jurisdiction. This assessment is then used to determine the amount of property taxes the property owner is due to pay (in some countries an assessment is refered to as "Rates".

Buyer's Agent
A Buyer's Agent is precisely what the term implies. He or she is a Real Estate Agent who has made an agreement to represent the buyer exclusively, rather than representing the seller.