MortgagesZ

By: Joseph Kenny

Ever dreamed of running away to live in the sun? Whereas people used to aspire to a second home in a seaside resort, thousands are now looking further afield to find their dream lifestyle.

It’s a seductive image – sunny weather, relatively cheap property, and with low-cost flights running several direct flights a day from the UK and easy to get to. You may want to retire to the Med, or you may want a holiday home with sunshine virtually guaranteed. Either way, the market in overseas property has gone ballistic in recent years and there are now dedicated companies to help you find your own Spanish casa.

Where To Go

The most popular destinations for Brits are in the south of Spain – the climate and easy access to the beach are great attractions, and many people have fallen in love with the Costas while on holiday. But there’s a lot more to Spain than the south – which some people might find too crowded or too hot in the summer months.

While the Atlantic coast is colder, you may want to consider the Balearic Islands or the Canaries. Some online estate agents specialise in a particular region. You should think about what you want when considering the location – town or country, how close to the coast you want, transport for getting to and from the property, whether there’s enough of an entertainment scene for you. If you are intending to retire to the property, will you want a city flat with nightclubs nearby, or a peaceful hideaway with no neighbours?

What To Look For

You have several choices – everything from buying a finca (a plot of land or a property with land in a rural location outside town, usually inland), to an ‘Urbanizacione’ – a housing estate, often with beach frontage. Buying a home to renovate is a popular dream, although it may actually be cheaper to have a new home built than to fix up an old one.

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By: Frank Mori

Deed of trusts are probably one of the safest investments you can make that offers you a high return, but what exactly is a trust deed?

A trust deed, or deed of trust is a document that is used to secure the debt on a home acting as a mortgage. A trust deed is recorded as a lien on real property. However, although a deed of trust acts like a mortgage, it is important that you understand there are differences between a mortgage and a deed of trust.

The fundamental difference between deed of trusts and mortgages is the utilized procedure that is followed if the borrower neglectes his or her obligation to pay off the loan and breaks the agreement.

Concerning mortgages, if a borrower “defaults”, such as by failing to make monthly payments or meet other conditions of the loan, such as carrying homeowner’s insurance and maintaining the house in good repair, the lender have to bring a court action in order to foreclose on the property. Nevertheless with a trust deed, if the homeowner does not pay the loan, the foreclosure process is usually much faster and less complicated than the formal court foreclosure process.

A trust deed is used as security for a loan on real property, and the specifics regarding the loan are written in a promissory note. A deed of trust is then documented at the county recorder’s office to legally notify the world that the property in question has now been pledged to secure a loan.

There are three parties involved in a trust deed:

1. Beneficiary - Investor/Lender/note holder
2. Trustor - Borrower
3. Trustee - Third party selected by the investor who has the legal power to act on the behalf and hold title until the note has been paid.

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By: Joseph Kenny

Here’s the first mortgage term you should learn – Standard Variable Rate, or SVR. This is the interest rate you will be paying on the total amount you are borrowing. It is usually expressed as a percentage, and is different from an APR (Annual Percentage Rate). An APR includes all costs associated with the loan, such as interest, fees, any compulsory insurances etc.

While interest rates can vary quite widely across the board, all lenders will have a Standard Variable Rate. It’s the default rate for their mortgages, and can provide a good indication of whether they are offering good deals. Comparing different lenders’ SVRs is one way to get an idea of who has lower rates generally – though there will be exceptions to this rule.

This rate fluctuates, going up or down according to the economy and the lender. The biggest factor that effects SVRs is the Base Rate set by the Bank of England. In recent years this has been kept relatively low, and mortgage interest rates have been particularly good for borrowers. However, this could change and you should bear in mind that rates could go up in the future.

Many mortgages start off with special introductory rates, and then revert to the SVR after a set period. These include capped and collared mortgages. There are also ‘fixed rate’ and ‘interest only’ mortgages available, which are covered in more detail further on in the guide. When considering mortgages with special introductory rates, you should also take into account what the SVR is likely to be once your initial period is over. Many mortgages come with the condition that you stick with the same one for several years, even after the special offer period is over. There will often be penalties if you want to change mortgage within this tied period.

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By: Michael Challiner

On June 1 st 2007, the law concerning the buying and selling of houses changes. From that date onwards everyone who wants to sell a house has firstly to prepare a Home Information Pack (HIP).

And if you don’t? You’re in the frame for a £200 fine! It’s also probable that estate agents will also insist on you having the Pack ready by the time they put your home on the market. Certainly, buyers’ solicitors won’t do a thing until you provide the Pack. All in all, you don’t have an option – you’ll have to go along with the law.

So what has to go in the Pack?

The Government has yet to confirm the final details but at the moment, it proposes that your Pack must include the following information:

Search results from H.M. Land Registry

Replies to anticipated initial enquiries – these are the currently raised by the buyer’s solicitor

Copies of any planning, listed building and building regulations consents and approvals. If you don’t have these, you’ll need copies from your Local Planning Authority

And for new properties, copies of building warranties, electrical test certificates, and any other warranties or guarantees attaching to the property.

A draft sale contract

It is also proposed that the Pack should contain two items currently obtained by the buyer:

A professional independent survey of the property called a Home Condition Report. This is expected to be mid-level survey like the current Homebuyer Survey and will offer far more information than a lender’s valuation report – but the Government has yet to announce the details. However, it seems likely that the Report will have to comment on the property’s state of repair, it’s energy conservation efficiency, the number and type of rooms and parking arrangements. Both buyers and sellers will have a legal right to rely on this Report and there’ll be no need for buyers to obtain their own reports or surveys. We expect lenders to make their own valuations as they do now, but they’ll want to maximise the use of the new Home Condition Report to improve their valuations and cut costs to consumers.

Replies to searches made of the Local Authority
In addition, if the property is leasehold:

A copy of the lease

The most recent service charge accounts and receipts

Details of the building’s insurance and receipts for the premiums paid.

And finally, any regulations made by the management company or landlord

And how much is all this going to cost? The Government believes that t he Pack is likely to cost sellers around £825 including VAT. But they claim these are not additional costs.

The Government make the following points:

The HIP transfers responsibility for obtaining local searches and a home condition report from the buyer to the seller. But since most sellers are also buyers, the costs will usually be balanced out by corresponding savings and benefits. We agree.

The Government also say that most sellers won’t have to pay up front for the pack. We very much doubt that. Someone is going to have to pay and we doubt whether solicitors or estate agents will pay upfront on behalf of the seller. The seller is going to have to fork out as soon as the property is put up for sale. Some commentators predict that this will act as a brake on properties coming to the market. We think that it will dissuade all but the committed sellers – those simply wanting to test the market will probably back off. In practice this will be a good thing, but we agree that it will reduce the amount of property on the market.

The Government believes that market forces will keep down the prices for preparing Home Condition Reports and Home Information Packs. We aren’t so confident about this. It very much depends on how estate agents and solicitors adapt the pricing within their fee structures. Expect some very creative pricing, especially from estate agents! It’s certainly going to pay you to shop around for a good deal.

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By: Joseph Kenny

Whatever stage of the mortgage game you’re at, unless you happen to be a qualified financial advisor, solicitor and broker all rolled into one, you’ll need professional help to find and arrange your loan. This guide presents some basic information on mortgages, but you’ll need to take specialist advice for your individual circumstances.

Having a general awareness of the processes involved and an idea of what’s available to you should help you to make the right decision when you choose your mortgage.

You should be aware, too, of the difference between ‘information’ and ‘advice’. Anyone can give information, and a survey of the web will offer literally thousands of pages about mortgages. Be aware of the legal aspects of mortgages and finances – any agreements should be in writing, and you should check all documents carefully before signing. Verbal agreements and information should always be backed up by written copies. Below are some useful starting points for you to explore. Good luck!

Information

The web offers any amount of information on mortgages – check that the pages are recent as rules and offers change constantly. Good sources of official information are:

The Financial Services Authority – includes a guide to money, mortgages and debt, plus details of regulatory bodies and ombudsmen www.fsa.gov.uk

Direct Gov – general information on finances and benefits www.direct.gov.uk

Inland Revenue – check the tax rules that apply to you www.hmrc.gov.uk

Advice

Anyone offering you advice should be a qualified professional. They should be registered with an appropriate independent regulatory body, and you can ask to see copies of their qualifications. There’s a lot of free advice out there, that should help you without obligation, and it’s worth taking advantage of.

Independent Financial Advisors

Find an advisor at www.impartial.co.uk and a mortgage specialist at www.unbiased.co.uk

Solicitors

Often family or friends will recommend a solicitor, otherwise look for one that specialises in conveyancing and house buying. Check www.lawsociety.org for professionals in England and Wales, and www.lawscot.org.uk for Scotland.

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By: Ken Black

To recap part 1, Reverse Mortgages are loans that allow you to borrow back the equity in your home. If you are 62 years of age or older, they are a way to borrow against the equity in your home to provide you with tax-free income. Probably a good idea if you’re a senior who needs cash for medical care, to maintain your standard of living, or for other reasons.

So, what are some of the disadvantages of Reverse Mortgages?

- They are even more complicated than conventional mortgages and the consequences of various options might not be always up front.

- They may be relatively expensive compared to other alternatives.

- Although the money you receive is tax-free, it may affect your eligibility for “need based” public assistance benefits such as Medicare, Supplemental Social Security Income (SSI) and Medicaid/MediCal.

- Reduces the equity you have in the property which could cause a potential negative impact for your heirs.

- This source of funds is often not well understood, even by real estate and legal professionals. (Check out their experience before accepting their advice.)

In general, what types are available?

- FHA-insured mortgages - Home Equity Conversion Mortgage (HECM).
- Lender-insured.
- Uninsured.

Each type differs in the amount you can borrow, how the proceeds will be paid, and allowed expenses such as interest, closing costs and other fees.

Here are some things to think about before getting this financing :

-How much money do you need?
-Is there another way to get the money you need ?
-Will a Reverse Mortgage make you or your partner ineligible for any government benefits - now or in the future?
-Do I qualify for this kind of Mortgage?
-How much can you borrow ?
-How much will it cost you in fees and interest to borrow this money, even if you don’t have any out-of-pocket expenses?
-Will you have to sell your house before you die to pay off the loan ?
-If you die, and your spouse is still living in the home, will he or she have to leave or pay it all off ?
-Will the loan become due and payable if you go to a long-term care or nursing home?
-What will your heirs or you have left after the loan is paid off?
-Are there any early-repayment penalties?
-What are your obligations, such as property maintenance, property taxes and insurance?

Seven important things to do before you make a decision :

1. Decide how long you expect to stay in your home. These loans are relatively expensive for the first 2-3 years, so consider other options first.

2. Consult with a HUD-approved Reverse Mortgage counselor before you apply. This information service is usually offered free of charge. A counselor can help you decide what kind of financial help you need and what type is best.

3. Decide if you really need it. Another type of loan may be a less costly solution to meet your financial needs.

4. You might want to Include your family, especially grown children, in the decision-making process. It’s good to get a general agreement among your heirs that going ahead with this type of mortgage arrangement is okay with them. Remember, you may be reducing their inheritance.

5. Shop around for the best deal. It may affect how much money you get immediately and in the long-term, how the money is paid out, how much you pay in interest and other charges, and so on.

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By: Michael Challiner

In the last 3 to 5 years we have seen rises of up to 450% in the exit fees charged by lenders when borrowers redeem their mortgage. But at last the Financial Services Authority (FSA) ha seen the light and is going to crackdown on these increases.

Lenders have been telling new borrowers about the exit fees currently charged, but the lender has retained the right to increase those charges at any time and without advising borrowers. This amounts to a free hand to increase these charges and many lenders have taken the opportunity gladly.

Take the Woolwich for example; they’ve increased their exit fee from what was £95 to £275. The Cheltenham & Gloucester has increased theirs from £50 to £225. The lenders have clearly been trying to penalise those of us who regularly switch their mortgage to get the best interest rates – the so called rate tarts – and at the same time line their coffers.

However, the FSA is now in talks with the mortgage lenders to bring them to heal. The FSA wants fees to be fully disclosed at the outset and for the disclosed exit fee to be fixed for the duration of the mortgage. The FSA hopes to have agreed a binding undertaking from the lenders by June this year.

On a wider front, borrowers should always remember to take into account all the charges and money saving offers when working out which mortgage is cheapest for them.

To illustrate this point, let’s say you wanted a 2-year fixed rate mortgage and were attracted by the offers from the Northern Rock and the Halifax.

Northern Rock currently charges an interest rate of 4.19% plus a 1.5% arrangement fee and an exit fee of £250. Halifax’s interest rate is 4.39% with an arrangement fee of £499 and exit fee of £175. Within Halifax’s package there’s also a free valuation and free conveyancing that typically could save around £750. So which mortgage deal is the cheapest?

Taking a 25 year repayment mortgage for £100,000 and costing it over the first two years with redemption at the end of the second year, The Northern Rock comes out at £14,671. The Halifax comes out at £807 cheaper at £13,864. And this saving doesn’t take into account the extra £750 valuation and legal savings offered by the Halifax. Therefore, assessed on this basis, the 4.39% headline rate offered by the Halifax is in fact the cheaper deal.

Another issue that will affect the true cost of your mortgage is whether the interest is charged on a daily, monthly or annual basis. On an otherwise like for like basis, annually calculated interest will always work out more expensive because for 11 months of the year, you are charged interest on money you have already repaid.

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By: Angela Quinn

The state of Pennsylvania is home to some of the most historic happenings in the entire country, so it’s not a surprise that so many families are relocating to or buying their first home is this celebrated state.

But no matter where you are, purchasing your first home can be a scary topic. Besides all of the legalities involved in transferring property, the mere thought of a mortgage (and its involved process) can be one of the most intimidating subject matters of one’s hectic life. The options you have can keep you from sleeping for weeks - never mind the terminology used by those within the lending industry! Lucky for you that you’ve stumbled upon all of the information you could possibly need about terminology used for securing a mortgage in Pennsylvania:

Amortization Schedule- For however many years you’re repaying your loan (let’s say 30), you will receive a schedule of your monthly payment for each year of the note, showing exactly how much money goes on the loan’s principal and how much to the interest.

ARM- Adjustable Rate Mortgage- You will hear this as “arm”, not the letters spelled out. This simply means that your mortgage interest rate will be the same for a pre-designated timeframe before “adjusting”. A “1 year ARM” would mean that your mortgage interest rate is the same for one year, then it will “adjust” or rise (as laymen refer to it). A 2 Year ARM would fall into the same category, adjusting after two years. And so on. Mortgage professionals also like to say things like “A 2-28 ARM”. When you add 2 + 28, you get 30. 30 is the number of years of your mortgage: two years are a fixed rate, and the remaining 28 are not.

Escrow Account- You may elect this convenience for money paid each month, in addition to your principal and interest payment, to cover your property taxes and hazard insurance. (It’s much easier to put $250 aside each month than come up with $3,000 come tax time.)

Fixed Rate- The interest rate is the same for the entire loan.

Loan Life- How long the loan is (usually 15 to 30 years).

PMI- Private Mortgage Insurance- This is extra money that you may be required to pay each month. It’s not hazard insurance, its mortgage insurance- put in place by the lender to insure your mortgage against possible default on your part.

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By: Kingston Amadan

Reverse mortgages are available through lenders insured by the federal government and can be of great benefit to those who are eligible to apply. There are three types of reverse mortgages currently available in the United States, including Home Equity Conversion Mortgages (HECM), Fannie Mae (FNMA) Home Keeper and Financial Freedom Cash Accounts. The basic premise of a reverse mortgage is that it allows homeowners over the age of sixty-two to convert part of the equity in their homes into tax-free income without having to sell the home, give up the title to the home, or take on a new monthly mortgage payment. The reverse mortgage is titled as such because lenders pay the borrower fixed payments or a lump sum over time as opposed to a traditional mortgage arrangement. Eligible property includes single-family dwellings, manufactured homes built after June 1976, condominiums and town houses.

The process for applying for a reverse mortgage is more involved than with a traditional mortgage. Aside from meeting the age and property type restrictions, applicants must discuss the loan with a counselor employed by the U.S. Department of Housing and Urban Development prior to signing. There are five different types of payment methods for each United States government insured loan available, allowing for flexibility to meet the needs of the applicants. These include monthly, quarterly, semi-annual and annual payments to the borrower for a fixed number of periods or a lump sum that can be invested.

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