Archive for July, 2007
The reverse mortgage is the loan available for senior citizens of over 62 years of age in the United States and is used for releasing the home equity in the property as the lump sum or multiple repayments. The responsibility of repaying the loan by the home owner is deferred until the owner dies, the house is sold out or if the owner willingly leaves for going to the aged care. This type of mortgage loan is known as the Lifetime Mortgage in the United Kingdoms.
The borrower must be at least of 62 years or over of age as this is the basic requirement to be eligible for this type of loan. Also the borrower must repay any other existing loans or mortgages with proceeds from the reverse mortgage, and if need
be, additional personal funds. There are no minimum income criteria or any credit requirements, besides for most of the reverse mortgages, the money could well be used for any purpose.
Any pending bankruptcy which is not settled may anyway inhibit the mortgage process. Even several kinds of homes like low-value mobile homes disqualify for this mortgage. The borrower is required to seek HUD approved counseling before borrowing, which is the free safeguard for the borrower and his family, ensuring that the borrower has thoroughly understood the reverse mortgage and what is the necessary process for getting the same. Reverse mortgages are usually offered by state and local governments. The most of reverse mortgage loans are FHA insured.
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July 30th, 2007
The fixed rate mortgage – FRM is the general type of mortgage loan wherein the rate of interest on the loan amount remains fixed through out the loan tenure. The other mortgage type is floating rate mortgage wherein the rate of interest fluctuates as and when the economy demands. Besides, these there are some other types of mortgage loans also, such as interest only mortgage, graduate payment mortgage, adjustable rate mortgage, negative amortization mortgage and balloon payment mortgage.
Fixed rate mortgages are distinguished by their interest rate which includes the compounding frequency, amount of loan and term or period of the mortgage. Based on these three values, the monthly repayment of the mortgage loan is generally calculated. All the fixed rate mortgages have theinterest rates attached to the index. Several usual indexes in the United States include: 11th District Cost of Funds Index–COFI; 12-month Treasury Average Index–MTA; Constant MaturityTreasury–CMT and National Average Contact Mortgage Rate.
However, in some countries, the banks publish the Prime Lending Rate-PLR which is used as the index, and the index is thereafter generated as the rate plus little margin. For applying the index on a rate plus margin basis could mean that the rate of interest would equal the basic index plus the margin. The margin is mentioned in the agreement note. Fixed Rate Mortgage is the common most type of mortgage laons prevailing in the United States.
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July 20th, 2007
Mortgage is the term used for the residential property purchased through financial loan form some financial institution or banks. In this system the property buyer is the official owner of the unit but the first rights of the same property remains mortgaged with the financing company or the bank who has lent related finance to the borrower. The original set of all the legal documents also remain in the custody of the financer and the no objection consent is formally been obtained by the financer from the borrower for establishing their legal rights on the property concerned.
In the event of any default in repaying the borrowed amount by the property owner, the financing bank or the company takes over the physical possession of the involved property for reimbursing their dues and interest etc. Technically, a mortgage that has priority as a Lien over all the other mortgages and in the event of the foreclosure, the first mortgage has to be fulfilled before any other mortgages. It is the first to be paid when the property is sold. This system is also known as 
Senior Mortgage.
For instance, the property with costing $100,000 is financed through First Mortgage option of $75,000, the second mortgage of $15,000 and $10,000 in cash. Now if the borrower somehow defaults and the said property is sold upon foreclosure for $80,000, the First Mortgage holder is authorized to get amount of the unpaid principal plus legal expenses. And thus the second mortgage is entitled to get any excess after the first mortgage has been fulfilled.
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July 18th, 2007
The term Mortgage Loan is the generic phrase normally used for the loan secured by the mortgage on the real property. The word mortgage refers to the legal security, but the terms are mostly used interchangeably for referring to the mortgage loan. The mortgage loans again widely refer to the loan secured by the residential property, mostly taken for purchasing the residence. Usually the mortgage loans are lower priced as compared to the other forms of borrowing because the value of property minimizes the risk of lender.
For financing the private ownership of the residential property, mortgage lending is the preliminary mechanism used in many countries, however, the terms and specific forms
may vary from country to country, yet the vital factors tend to be similar, anyway. Such terms and conditions usually include certain universal features. There are two basic types of mortgage loans prevailing all over the world: they are fixed rate mortgage and floating rate mortgage loans.
Mortgage loans are usually planned as long-term loans, the periodic payments for which are alike to an annuity and calculated according to the time value of money formulae. The basic most features would need the fixed monthly repayment over a period of ten to thirty years, depending on the local conditions. During such period the principal or basic loan amount would be gradually paid down through amortization. Many variations are possibly and usually implied worldwide and within each country.
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July 15th, 2007