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

By Guest Author Adam Smith

Managing an investment property can be rewarding in a variety of ways. Most investment property owners derive great satisfaction from making improvements to their investment property and offering suitable living conditions at an affordable price. It is also rewarding to make a profit on a business venture by renting out a single family dwelling and earning equity in the investment property as someone else foots the mortgage payment.

However, there is one particular drawback to renting out an investment property that you should be aware of. From time to time you may run in to a problem tenant that falls behind on the payments or just doesn’t pay the rent at all, forcing you to perform an eviction. There are a couple of things you can do to avoid an eviction.

To begin with, before you rent out the property to a potential tenant make sure you do your due diligence on the tenant. You should ask the tenant to fill out an application that includes references of past landlords. This will allow you to do a little bit of investigative work which will go a long way in avoiding an eviction. Call up the past landlords and find out what kind of tenant your applicant was. Did they pay their rent on time? If they were late with their payment, why? Did they cause any problems? Are they the kind of tenant they would welcome back?

Past history often foreshadows future behavior. Thus if the tenant was an admirable renter before then chances are they won’t cause you any problems. But if they have a history of late payments, excessive complaints, or problematic behavior then it is best you look for another tenant. Taking on a tenant that has caused problems for other landlords in the past will only lead you down the road to eviction. And remember you are doing this due diligence in order to avoid the headache of eviction so make sure you are thorough and don’t skip any corners.

If you have done your due diligence then chances are you won’t run into any problems with your new tenant. However, once you do have a tenant there are a couple of things you can do to ensure there isn’t an eviction in the foreseeable future. First set clear guidelines that are clearly outlined in the lease agreement . Make sure the tenant knows when the rent is due, how long the grace period is, and what the penalty is for paying late. Don’t let the tenant get into the habit of paying late. If you don’t enforce your contract now it will be that much harder to enforce it later. The lease agreement is a binding contract and should be treated as such.

You should also treat your tenant with respect and respond to their repair requests in a timely manner. If you maintain a professional relationship with your tenant then many small problems that could potentially lead to larger problems can be squashed immediately. If you do your best to manage the investment property professionally and abide by the terms of the lease agreement then avoiding the unpleasant eviction process should be a piece of cake.

Adam Smith is an internet marketer specializing in affiliate program management for 10Xmarketing.com.

About the Author

Adam Smith,
adam10xmarketing@gmail.com
More Details about eviction here. Adam Smith is an client account specialist with http://www.10xMarketing.com - More Visitors. More Buyers. More Revenue.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Home Buying Secrets

The fixed rate mortgage offers the certainty of a constant monthly payment, but an adjustable may seduce you with its lower payment. Security or affordability? Which do you choose? Just what is a home buyer to do?

Which loan you eventually choose may depend more upon your personality than a careful analysis of each loan’s advantages and disadvantages. People who generally seek security in other areas of their lives, such as occupations and relationships, will often opt for the security of a fixed rate mortgage. Those who are more adventurous will sometimes respond to the lure of an adjustable.

The attractions of a fixed rate mortgage are a principal and interest payment and an interest rate that remain the same for the entire length of the loan. That stable predictability is what entices so many people to choose it, and its safety and reliability will afford the homeowner peace of mind. You get your fixed rate mortgage and you forget about it. What could be easier?

An adjustable rate mortgage or ARM, on the other hand, is generally the opposite. An ARM usually has an interest rate and a monthly payment that are fixed only for a specific period of time, after which both rate and payment will adjust periodically.

The ARM’s initial low rate and monthly payment are its appeal, and it can offer that because its rate is based on the short term bond market while a fixed rate mortgage is pegged to long term bonds. The short term bond market generally features lower rates than the long term market. If you believe that interest rates will decrease by the time your mortgage rate begins adjusting, then the lure of an even lower rate and payment down the road may tempt you even further.

The foreboding most people have with the ARM involves its uncertainty. An element of fear is introduced because your rate and payment might increase once the rate starts to adjust. If interest rates in the bond market are higher once adjustment does begin, then your rate and payment will increase. None of us wants payments higher than they need to be, but some of us shrink from the risk more than others do.
 
But much of that risk aversion is needless hand wringing. Here’s why.

By deciding which ARM you prefer, you are also choosing the initial time period you want the rate and monthly payment to remain fixed. ARMs generally offer the following initial fixed time periods: one month, three months, six months, one year, two years, three years, five years, seven years and ten years. The shortest time periods will offer the lowest initial rates. A one month ARM may provide for a rate and payment guarantee of just one month before adjustment begins. A one year ARM is fixed for one year and then the adjustments start. A three year ARM is fixed for three years, and so on.

By picking a time period that best fits you and your situation in life, you can take advantage of the lower rate and monthly payment that an ARM provides at a substantially diminished risk. If you are a first time home buyer, for example, then a three year ARM might make the most sense because first time home buyers often stay in their home for only three or four years. Why get a 30 year mortgage if you won’t be in the home that long?

If you are middle age and your children are at the point in life where they go off to college or trade school, statistics suggest that they will soon move out and you will become an empty nester. Empty nesters frequently downsize to a smaller home once their kids depart, which means a different home and yet another mortgage.

The point is that our lives change frequently and predictably. We get married, have babies, relocate, get divorced, remarry, get sick, grow old, retire and die. All of these chapters in our lives will often occur in a span of only 30 to 40 years. When these joyous and not so joyous events arise, sometimes without warning, our housing and mortgage needs will oftentimes shift just as suddenly. Yet most homeowners rarely take such life events into account when choosing their mortgage.

The average mortgage lasts only about five years, sometimes because a major life event sprouts up inducing the homeowner either to move or refinance. Other times economic change may cause mortgage rates to drop, which, in turn, may influence people to enact changes themselves. They either refinance or perhaps decide that it’s an affordable time to invest in other housing. Despite all of this, people predictably embrace the 30 year fixed rate mortgage rather than an ARM because of the warm and fuzzy sense of safety that a fixed exudes.

The choice is yours to make. An informed decision will include considering all of the alternatives with the knowledge that your personality traits may be influencing your decision making process. While statistical analysis will often favor choosing the ARM, there is nothing wrong with selecting a fixed rate loan.

Copyright 2006. Bob Roscoe. All rights reserved.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota

Mortgage Secrets 

By Guest Author Jeanette Joy Fisher

If you’re looking to get started investing in real estate by fixing and flipping houses, you’ll want to know what to type of property to buy. Many real estate investors make millions turning ugly houses into dollhouses. On the other hand, some inexperienced investors lose money buying houses that just don’t turn a profit.

Three Tips to Help You Find the Perfect Fixer

1. Learn Your Market

Your first task, exploring your market, helps you know a bargain house when you see one. Look at houses for sale in your area. Keep track of sales and how long the houses take to sell. Ask about the terms of these sales because this helps you understand how sellers market their property. For instance, if a seller paid closing costs for the buyer, did the price rise from the listed price accordingly? Or, did the seller come down on the price and pay the buyer’s costs, too. Examine the sales that sell quickly. What home features and financing options prompted the fast sale?

Also, look at model homes. Buyer often chose resale homes because they can’t wait for a new home to be finished. But, these buyers like the amenities found in newer homes. When you transform your fixer, you’ll know what buyers desire and you’ll make informed makeover choices.

2. Know When “Bad” Can Be Good

When you first start out in your real estate “fixer” enterprise, you’ll want to look for houses needing only cosmetic work. Look for houses that just need cleaning up, painting, and new flooring. Don’t be afraid of stinky houses that show horribly; look for fixers with peeling paint, holes in the wall, stained carpeting, and trash in the yard. Remember, these houses won’t look good to most buyers, but that other investors see them as gold mines. You need to use your imagination when viewing these homes. Try to visualize the finished product.

3. Know When “Ugly” Means “Pass”

If the house has cat urine staining the carpet, the subflooring or concrete foundation may need replacing. Dog urine cleans up easier. If the walls have too many cracks and bumps, you may need to hang new sheet rock or hire a professional plaster refinisher. Look for signs of plumbing problems such as water stains under sinks and loose flooring.

When you’re new to real estate investing, always remember your limitations. Use caution when considering houses needing structural repairs. Some rehabbers replace walls, plumbing, structural beams, sub-flooring, and electrical systems, but they acquired those skills after years of experience or pay a professional.

If you find a house with structural problems, get estimates from reliable contractors to do the work. Experience teaches you how to do more over time. Until then, rely on experienced contractors to do the repairs. Take professional estimates into account before deciding whether or not to purchase an investment property.

Why would anyone want to do this? How much does the average investor make? In Philadelphia, real estate investors only make offers on houses they expect to make $30,000 on. In Southern California, many investors make $50,000 to $100,000 on each house.

Summary: You can make a fortune fixing ugly houses. Learn your market. Know when “ugly” means bad that can be good, and when stinky means pass.

Copyright© 2005 Jeanette J. Fisher. All rights reserved.

For more information about finding, financing, fixing and flipping houses, visit Jeanette Fisher’s Doghouse to Dollhouse for Dollars. Learn about decorating to attract buyers. Professor Fisher teaches Design Psychology college courses and professional real estate seminars. She is the author of Home Staging, credit for buying real estate, and other books. http://www.doghousetodollhousefordollars.com/.

Fixing questions? Visit Dollhouse to Dollars blog: http://doghousetodollars.blogspot.com/.

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

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
401(k) for Down Payment

By Guest Author Scott Ames

Let’s call him John. A bright and hard worker just trading time for dollars at his regular job. His first house flipping experience could have been a lot better.

John was watching “Property Ladder” on the A&E network one day and got the bright idea to flip a house himself. After all, those people were making money. A complimentary show “Flip This House” confirmed that money could be made, lots of money.

If you haven’t seen Property Ladder, it’s a television show that features first time home flippers. Usually in that show the inexperienced flipper, egged on by Kirsten Kemp, make almost a year’s salary or more by fixing up an old house and selling it. Kirsten Kemp is a veteran of flipping houses and is a bit too pretty to be mistaken for Bob Vila.

John figures that the people featured in these shows are not all that bright and certainly he could do as well. With a bit of nervousness John put a 10% down payment on a home that needed repairs and begin the repair process. Or did he?

The first thing John did was to ponder what really needed to be fixed and if he needed a contractor to do it. Two weeks went by.

After getting several bids, John chose a contractor to come in and totally renovate the property for $11,000. That included paint, carpet, appliances, and a new wall to turn an open area into another bedroom. Once it was agreed, the contactor was to start working. As luck would have it, the contractor had some unfinished jobs and couldn’t start for another two weeks. John was patient, after all it was going to be a great flip and he was going to make money. It was just another $800 for an extra month, no big deal.

Once the contractor started, he started with a bang. Just like on the show “Flip this House” a big yellow dumpster was deposited on the lawn and a crew started ripping out wall paper and junk from the house. That demolition lasted about two days.

The next thing this “go getter” contractor did was to disappear for another two weeks. The excuse: Men had quit and another job was pushing them behind.

To make a long story short, the contract took 8 months to get nearly complete, and then John pulled the plug and fired the contractor.

John paid others to come in and finish what was started. He now had 9 months of house payments into the project, 10% down, and construction costs.

After the house was ready, John listed it with an agent, and it sat another month. John lowered the price a bit with the prompting of the agent, but got cold feet after two weeks and wanted to raise it again. Too late! The house had a full price offer. Good news, sort of.

All said and done John made a little money and got a whole lot of experience. It was a flop, but at least he didn’t lose money.

Let’s review what John, now wiser, could have done differently on his first flip.

Firstly, putting 10% down is ok, but not ideal. John should have used private money or have financed the property at 100%. That money could have been used for fix up rather than being tied up in the property.

Secondly. John waited too long to decide what he was going to do. He should have known before he bought the property what his plan was. This would have saved two weeks at least.

Thirdly. While John got a referral for the contractor, he should have gotten more bids. A deadline for the completion of the job, with penalties, should have been written in the contract.

Fourth. John waited too long to fire the contractor once he knew there was a problem. He was afraid that he would still owe the full amount if he terminated the contractor before the work was done. A proper contract would have prevented that fear.

Fifth. John listed with a realtor too early. The property should have been for sale by owner from day one and John should have tried to market the property himself.

Sixth. The price was set, and then changed too quickly. Better marketing would have netted John with a nicer profit. John should have known the selling price even before buying the property.

A lot of mistakes were made, but John still made a slim profit. All is well that ends well, but you don’t need to make these same mistakes. Learn from John.

Scott Ames is publisher of BirdDogCity.com a website dedicated to those interested in flipping houses for profit, either retail or wholesale. You may visit the site at http://www.birddogcity.com

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

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Will Flippers Fade Away?