Loan Secrets

By Guest Author Darren Yates

Adverse Credit
The term used if the borrower has a poor credit history. This could include previous mortgage or loan arrears, bankruptcy or CCJ’s. Other terms used to describe an adverse credit mortgage include:

* Bad credit mortgage

* Poor credit mortgage

* Non status mortgage

* Credit impaired mortgage

* No credit mortgage

* Low credit score mortgage

APR (Annual Percentage Rate)
The interest rate reflecting the cost of a mortgage as a yearly rate. The APR provides home buyers with the ability to compare different types of mortgages based on the annual cost of each.

Arrangement Fee
The fee you pay your Lender in return for them providing you with a mortgage. Usually paid on completion or with your application, these fees usually apply when you take out a fixed rate, discount or cashback mortgage.

AST (Assured Shorthold Tenancy)
A form of tenancy that gives the landlord the right to repossess their property after a set amount of time laid out in the tenancy agreement. New tenancies are automatically ASTs unless otherwise stated.

Assured tenancy
The landlord can charge a market rent (the current rate for similar property in that area) and take back the property under certain conditions, as set out in the Housing Acts of 1988 and 1996.

Bridging Loan/Finance
Short term loan to enable the purchase of one property before the sale of another essentially releasing funds that are required for the purchase. You should always consult a professional before considering any bridging finance as it could be a solution that is worse than the problem.

Brokers Fee
A fee charged by an intermediary or advisor for locating the most appropriate mortgage for the borrower.

Buildings insurance
Insurance you can take out when you buy a property that will cover the cost of any damage to the house and or contents..

Buy to Let
A mortgage meant for those who wish to purchase a property to rent out to others. The decision on whether you are able to repay this type of mortgage is often based up on the future rental income from the property rather than the personal income of you the borrower.

CCJ (County Court Judgment)
A judgement reached in the County Court generally realted to non payment of a loan, mortgage etc debt in general. If you pay off the debt, the CCJ will be satisfied and a note is put on your records that states this.

Chain
A housing ‘chain’ made up of a number of buyers and sellers, essentially the line of buyers and sellers involved in each house move.

Charge
Any right or interest, especially with a mortgage, to which a freehold or leasehold property may be held. Basically a charge is the claim the lender has on the property until the mortgage or loan is satisfied.

Completion
The term used when the seller and buyer exchange the finances required to buy a property through their respective solicitors. At exchange of contracts a deposit, usually 10%, will have been paid. At this point the buyer becomes legal owner of the property.

Conveyance
The legal process in which ownership of the property is transferred from the seller to the buyer. Generally undertaken by a solicitor, or licensed conveyancer.

Early redemption fee
If you decide that you want to sell your property or remortgage then you will be redeeming you mortgage early. Most lenders charge a penalty fee, especially during any period of a fixed, capped or discounted rate. Be sure you are clear about any potential penalties when you are about to take on a mortgage.

Equity and negative equity
The amount of value in a property that isn’t covered by a mortgage - simply take the amount of the mortgage from the valuation to work out the equity. This is where the money you owe on the mortgage is greater than the value of your property.

Exchange of contracts
The contract is a written agreement that lays out the terms between the buyer and the seller. When both parties exchange contracts, usually weeks before completion, the deal becomes legally binding. Often a deposit of around 10%, is paid at this stage.

Fixed Rate
A set interest rate on a mortgage fixed for a period of time. This varies from lender to lender.

Freehold
If you are the property owner outright then your property is freehold. Most houses are freehold wheres many flats are leasehold, since you are not the owner of the whole building containing the flats.

Gazumping
If you are in the process of purchasing a property and your offer has been accepted but the seller gets a better offer, before you complete, and takes it then, you’ve just been ‘Gazumped’.

Interest Only Mortgage
A mortgage whereby the borrower is only required to pay inerest on the amount borrowed during the mortgage term. It is the borrowers responsibility to ensure that enough funds will exist (either through an investment policyor other means) to repay the full mortgage at the end of the term.

Intermediary
A mortgage broker or advisor who finds the most suitable mortgage for a borrower and arranges the mortgage on their behalf.

Leasehold
If you buy a leasehold property you don’t own the property rather the right to live there for a specified period of time, however much time remains on the lease. The owner of the property is called the freeholder or landlord.

Liability
This relates more to commercial mortgages. With a commercial mortgage liability for the repayment of the loan depends on the legal structure of the business:

A sole trader will be personally liable for the mortgage debt. Personal assets could be seized if the business defaults.

Partners are jointly liable for the debts of the partnership and their personal assets are at risk

With a limited-liability partnership and a limited company, the liability falls firstly on the business rather than on the individual partners and directors. The lender may take a floating charge on business assets in general, rather than simply on the current property being purchased.

The lender may also insist on personal guarantees as a condition of granting the loan, in which case the partners and directors may be held personally liable anyway.

Life insurance
If you have a joint mortgage, life insurance can be acquired that will see the mortgage paid of should one of you pass on.

LTV (Loan to Value)
The size of the mortgage as a percentage of the value of the property i.e. A £90k mortgage on a house valued at £100k would mean an LTV of 90%.

MIG (Mortgage Indemnity Guarantee)
A one off payment made when you set up a mortgage a kind of insurance policy for the lender. This offers them protection against the value of the home falling to less than the mortgage. It is generally only charged to borrowers with a less than 10% deposit, but this can vary.

Mortgage
A loan to buy a property where the property is used as security against you paying back the loan.

Mortgagee
The company or organisation that lends you the money.

Mortgagor
The person taking out the mortgage.

Non-Status
Where a lender may not require income details from you or may accept some previous poor credit history i.e. CCJ’s or previous mortgage arrears.

Payment Holiday
A period during which the borrower makes no mortgage payments.

Regulated tenancy
A legal right to live in your accommodation for a period of time. Your tenancy might be for a set period such as a year (this is known as a fixed term tenancy) or it might roll on a week-to-week or month-to-month basis (this is known as a periodic tenancy).You are a regulated tenant if you moved in before 15 January 1989, you pay rent to a private landlord and your landlord does not live in the same building as you.

Remortgage
The taking on of a second mortgage to pay off the first. The most common reasons for doing this are that another mortgage is available at a better rate or that the value of the property has gone up allowing for the opportunity to borrow more money against the property.

Right to Buy
For example, a tenant in a council owned property may purchase the property at a discount depending on length of their tenancy.

Self Certified
Generally when a borrower applies for a mortgage he or she will be asked to provide pay slips or company accounts to prove their income. If it is difficult or inconvenient for you to provide this evidence, you can choose to self-certify your income. This involves signing a declaration which states your income sources and amounts. Lenders will charge you higher rates than average and offer you a more limited range of mortgages if you choose to self-certifyyour income, in general it’s not a good idea to self-certify just to avoid some paperwork.

Stamp Duty
Tax paid by the buyer of a property set at 1% for properties over £60k, 3% for properties over £250k and 4% for properties over £500k.

Structural survey
The most wide ranging check of the structure of a property. This is carried out by professional surveyor and should uncover any defects or faults with the building.

Tenancy
A legal written agreement between a landlord and tenant that sets out the terms of the rental.

Term
The period of years over which you take the mortgage and repay it.

Term Assurance
An insurance policy designed to repay the mortgage on the death of the insured person. Level Term Assurance covers a principal sum throughout the policy term and pays out the full amount on death. Reducing Term Assurance is designed to repay the balance outstanding on a repayment type mortgage upon death. Term Assurance may also pay out early on the diagnosis of a terminal illness.

Underwriting
The process of evaluating a loan application to determine the risk involved for the lender. This involves an analysis of the borrower’s creditworthinessand the quality of the property itself.

Unencumbered
Where the property is owned outright and no mortgages or loans are secured against it.

Valuation
A simple check of the property in order to find out how much it is worth and whether it is suitable to secure a mortgage against.

Valuation Fee
The fee paid by a borrower to cover the cost of the lender checking that the property is suitable security for the mortgage.

Variable Rate
A type of interest rate the lender can charge. It goes up and down and your repayments change accordingly.

Vendor
The person selling the property.

About the Author
Specialists in Bridging Finance and Commercial Mortgage lending Commercial Lifeline. Independent UK based Commercial Finance brokers.

Article Source: http://EzineArticles.com/?expert=Darren_Yates
Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota

Home Buying Mistakes

Article by Guest Author Charles Kirkendall

HUD reverse mortgages can be a great tool for Seniors that are looking for additional funds for retirement. Through a HUD reverse mortgage, seniors can tap into the equity from their homes without having to make repayments.

HUD Reverse Mortgage Eligibility

Homeowners must meet the following criteria in order to be ligible for a HUD reverse mortgage:

- Homeowner must be age 62 or older.

- The home must be owned free and clear or have a mortgage balance that can be paid from equity.

- The home must be a principal residence.

- The property must be a single-family home, a one-to-four unit dwelling with one unit occupied by the applicant, a manufactured home (mobile home), or a unit in condominiums or Planned Unit Developments.

- The property must meet minimum property standards.

Homeowners that qualify can receive payments in a lump sum, on a monthly basis, or on an occasional basis as a line of credit. At a later date the payment options can be restructured if circumstances change. These funds can be used for any purpose: home repair, vacations, healthcare costs, or daily living expenses.

Guidelines on HUD Reverse Mortgage Amounts

The amount that can be borrowed on a HUD reverse mortgages is determined by the following criteria:

- The borrower’s age - The older the borrower the more that can be borrowed against the value of the home.

- The loan interest rate - Obviously the lower the interest rate the more that can be borrowed.

- The home’s value - There is no hard limit for home value to qualify for a HUD reverse mortgage, but the amount that may be borrowed is capped by the maximum FHA mortgage limits for an area. This means that owners of a high priced home can’t borrow any more than the owners of homes valued at the FHA limit.

There are no asset or income limitations on borrowers receiving a HUD reverse mortgage.

Unlike ordinary home loans, a HUD reverse mortgage does not require repayment as long as the home remains the borrowers primary residence. When the home is sold the Mortgage company recovers their principal, plus interest, and the remaining value of the home goes to the homeowner or to his or her survivors. Should the sales proceeds not cover the amount owed, HUD will pay the mortgage company for any shortfall.

The Federal Housing Administration, which is part of HUD, collects an insurance premium from all borrowers to provide this coverage. Typically the mortgage company pays for this insurance and charges it to the borrower’s principal balance. This FHA reverse mortgage insurance can make HUD’s reverse mortgage program less expensive to borrowers than private programs without FHA insurance.

About the Author

Charles Kirkendall writes about reverse mortgages and other Senior financial issues. Visit HUD reverse mortgage for more information and resources on reverse mortgage issues.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota

Who Qualifies for Reverse Mortgages

Guest Article by Douglas Hanna

If you have a home that’s paid off – or almost paid off – a reverse mortgage can help you live better by providing a steady stream of dependable income.

This type of mortgage is called a reverse mortgage because instead of you paying the lender a certain amount per month for a certain number of years, the lender pays you. These payments are cash advances against the value of your home.

There are different kinds of reverse mortgages, but all of them are similar in certain ways. You continue to own your home just as you do with a normal mortgage. You pay the property taxes and are responsible for maintenance, homeowners insurance and property repairs.

At the end of the mortgage, you or your heirs must pay all of your cash advances plus interest. If you or your heirs cannot do this, the lender can foreclose on your house.

There are financing fees associated with a reverse mortgage just like with a forward mortgage. The money you get form the reverse mortgage can be used to pay these fees. These costs are added to your loan balance and must be paid back with interest when the loan is over.

How much money can you get with a reverse mortgage?

The monthly amount you get will depend on your age and the value of your home. Here’s an example. One reverse mortgage currently available is the Federally-insured Home Equity Conversion Mortgage or HECM. Assuming you have a home worth $200,000 and owe nothing on it, an HECM could get you $641 a month for the rest of your life. Alternately, you could get a credit line account in the amount of $107,466 that you then could draw from whenever you wished. Or you could choose to get a single lump sum payment for the same $107,466.

Keep in mind that, as a rule, reverse mortgages are first mortgages. In this case, if you still owe any money on your home, you must pay off the old mortgage first. If you don’t have the money to do this, you can usually use money from the reverse mortgage to pay off the old debt.

How much will you or your heirs end up owing?

The debt will equal all the cash advances you have received, plus all interest that is added to your loan balance. If that amount is less than your home is worth, you or your heirs get to keep the difference. The other good news is that you can never end up owing more than your house is worth at the time the loan is repaid.

If you are “house rich” but “cash poor,” a reverse mortgage could help make your golden years more golden, However, make sure you read the loan papers carefully to be certain you understand all the loan’s conditions.

Douglas Hanna is a retired marketing executive and the author of more than 100 articles on HD radio, the Internet and family finances.

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Article Source: http://EzineArticles.com/?expert=Douglas_Hanna

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota

Reverse Mortgage Tips