Mortgage Terms Adjustable-Rate Mortgage (ARM): A mortgage with interest rates and monthly payments adjusted at regular intervals based on changes in either a national or regional index. Also called "variable-rate mortgage." Amortization: A loan payment schedule characterized by equal periodic payments that are calculated to meet current interest payments and retire the principal at the end of a fixed period (at maturity if the loan is fully amortized). Annual Percentage Rate (APR): The total yearly cost of a mortgage stated as a percentage of the loan amount; includes such items as the base interest rate, private mortgage insurance, and loan origination fee (points). Appraisal: A written analysis of the estimated value of a property prepared by a qualified appraiser. ARM Margin: The spread (or difference) between the index rate and the mortgage interest rate for an adjustable-rate mortgage. Balloon Mortgage: A mortgage in which the debt service (the regular payments of principal and interest) will not result in the complete payment of the loan by the end of the mortgage term. Cap: A provision of an ARM limiting how much the interest rate or mortgage payments may increase or decrease. Cash Reserve: A requirement of some lenders that buyers have sufficient cash remaining after closing to make the first two monthly mortgage payments. Closing: The completion of a real estate transaction that transfers rights of ownership to the buyer. Also called "settlement." Condominium: A type of property ownership within a multiunit complex in which the homeowner owns a unit and a proportionate interest in certain common areas, such as the grounds of the complex. Contingency: A condition that must be met before a contract is legally binding. Conventional Mortgage: A loan that is not insured or guaranteed by the federal government. Credit Report: A report from an independent agency that verifies a loan applicant's information on previous debts and liabilities. Deed: The legal document conveying title to a property. Down Payment: The part of the purchase price which the buyer pays in cash and does not finance with a mortgage. Earnest Money: A deposit made by the potential home buyer to show that he or she is serious about buying the house. Easement: A right of way giving persons other than the owner access to or over a property. Equity: A homeowner's financial interest in a property. Equity is the difference between the fair market value of a property and the amount still owed on the mortgage.
Richard Romano is one of the three principals at Cruickshank, Gath, & Romano. With eight years of experience and recognized by industry insiders as one of Canada's leading real estate experts, Richard wants to complete the appraisal according to his best estimate of the pro...
Hidden Balloon Payments: The borrower is approved for a low rate loan, but at closing may be informed that the low rate is short term, and the repayment amounts balloon afterwards.
Assessment of the Statement that Property is a Power Relationship Between People Property is the right to possess, enjoy or use a determinant thing, and includes the right of excluding others from doing the same. The concept of ownership or property has no single or widely accepted definition. Like any other concept it has great weight in public discourse and the popular usage varies broadly. Property is frequently conceived as a 'bundle of rights and obligations.' Property is stressed as not a relationship between people and things, but a relationship between people with regard to things.
With this type of loans, the borrower has a higher risk of defaults, because of the adjustable interest rates, which increases over time. That can lead to the foreclosures on their homes, which affects the neighborhood houses losing property value and taxes from this foreclosure. The risk to the lenders of these subprime mortgage loans, including having higher default and foreclosure rates on their properties than standard prime mortgages that require the homeowner to put some amount of money down on the mortgage. Subprime mortgage loans have a higher default rate sometimes as much as 20 times greater than prime mortgage loans (0609). Also, the lender has a higher than average loss rate from their subprime portfolio (0609). The combination of the higher default rates and the greater than average loss rates that may become unmanageable and cause the lender to go out of
Amortization basically means that your loan was set up in a way that will take a specific amount of time to repay it. As time passes, some of the payments will go to the interest, and some will go to the principal. Usually with the mortgage amortization, people pay more for the interest other than principal in the beginning of the year. Therefore, the faster people can start to pay off the principal, the faster the debt owner can pay off the balance.
2. A clause in a deed or contract which provides for an early termination of an exciting interest in land, in certain specific circumstances, thereby advancing the future interest.
Owning a home means gaining equity. If the owner keeps the house long enough for it to rise above the initial cost of its purchase, then that is profit. This is one of the most essential and superb matters associated with home ownership.
The second type of loan has an adjustable rate. These rates are often unpredictable, and even though the initial monthly rates might appear to be lower than with fixed rate mortgages, rest assured, you won’t be paying less in the long-run.
Mortgage brokers are yet another type of mortgage originator. They will often represent a large variety of lenders, including mortgage banks and traditional banks and are so influenced, directly and indirectly, by the lenders that they now feel that they can strengthen their own
It is normal practice for financial companies to charge consumers with credit history issues higher interest rates. It is justifiable because consumers with credit history issues that have had problems paying other creditors back in the past are more of a credit risk. Mortgage subprime loans are no different. Subprime loans become an ethical issue when financial companies use unethical practices to make subprime loans just in order to make more money.
In the past year home values, along with home sales, have declined. At the same time many homeowners who had adjustable rate mortgages saw their monthly mortgage payments dramatically increase. This has created financial hardships for homeowners who are both unable to pay their increased mortgage payments
Valuation of real estates or properties basically, refers to appraising a property or a real estate to form an opinion about the value of the property. This value is normally the properties’ market value. Properties are heterogeneous in nature; meaning they are not all identical or alike and thus, they have different values. However, it is possible to get a range for the values. There are some obvious factors like physical location of a property that automatically makes the market value of different properties differ. The materials used on a property and other features also contribute to making property differ in their value. Other factors such as the physical size of a property still determine a property’s market value (Histon Fine Homes, 2008
Buying a home is more complex then most think. A purchaser of a home doesn't pay in cash when buying a house. If that were so, then nobody would be able to afford one. A potential buyer must get a loan. The bank doesn't lend their money to just anybody, so there are prerequisites before a buyer should consider buying a home. The potential buyer must have enough money for a down payment which is 3% to 20% of purchase price, a steady job with for at least two years or more, must have a decent credit score with at least a 640 or better. That is standard for the market. (1) The credit score is based on the FICO score. FICO stands for, Fair Isaac Corporation, a company that has been in business since the early 1950's and monitors consumers' credit ratings and put a scoring system on it. (2) Conventional loans are usually financed up to eighty to ninety percent with a down payment required of ten to twenty percent. The potential buyer must also have a debt ratio not exceeding 28/39 of their income. The first number 28 refers to your new mortgage payment that cannot exceed 28% for your gross combined income and 39 refers to your mortgage payment plus revolving and installment debt as well as taxes and insurance cannot exceed 39% of you total combined gross income (3).
A mortgage is a form of debt, secured by the warranty of a specific real estate property. The borrower is required to pay back the debt in predetermined payments. The most common reason for acquiring a mortgage is to purchase real estate when it cannot be paid for up front. The homebuyer, in a residential mortgage, pledges their home to the bank. Over a period of years, the borrower pays back the loan with interest. Once the mortgage is paid in entirety, the owner retains the property free of any charges. However, in case of foreclosure, the bank has an entitlement on the house, as a form of insurance should the buyer default on repaying the mortgage. The bank can then sell the house, and use the capital to pay back the remaining mortgage.
Floating-rate mortgages begin with lower interest rate for first few yrs and then change according to the market conditions after the initial period is over. Caps are placed on how much interest rate can change at any one time, as well as on how much the rate can increase over the life of the loan. This means the principal and interest amount of monthly payments change repeatedly throughout the loan.