Sammarusich Blog

If you are selling your home and your existing mortgage is already paid off, and you don’t require the proceeds of the sale all at once, then you may consider financing the sale yourself.

Unlike when investing in a fluctuating market, holding the loan on a mortgage assures you of a predetermined interest rate. Now that banks have started tightening their lending criteria, some prospective homeowners are finding it more difficult to obtaining mortgages and seller financing solves the problem. In addition to the investment benefit, homeowners find that offering to take back the mortgage gives them a sellers advantage in this tight buyers market.

Generally, the seller and the buyer come up with a mutually agreeable arrangement that outlines the payment, deposit and payment schedule, without the benefit of bank involvement. Instead of financing the entire mortgage amount, the seller may consider taking a loan on a portion of it. Often times, people want to buy, but the banks won’t give them the amount they require. These types of loans are often short term and at a fairly high rate of interest.

It’s common for banks to request at least 20 percent down, or the borrower will have to agree to pay for private mortgage insurance. This adds an extra charge of up to half a percentage point to the mortgage. Generally the individual seller requires only a minimum 10 percent down payment, but it is to the buyers advantage to put down as much as possible.

Interest rates in a seller financing arrangement are generally a few points above market rates because the lender is taking on the risk, especially if a buyer is pursuing this avenue of financing because of rejection from a bank or other lender. During the bargaining process, sellers who normally would have to settle for a lower than desired price for their home, can instead offer a slightly lower interest rate in return for the original asking price.

There are two common types of financing used with most vendor loans – a purchase money mortgage or an installment contract. With a purchase money mortgage, the seller pretty much plays the role of the bank. They receive a cash down payment from the buyer, then proceed to take back the mortgage on the remainder of the balance. The buyer gets a deed and title to the property, and commits to making monthly payments on interest and principal.

Installment contracts are generally held for shorter terms and the deed and title are not handed over until the amount is paid in full. The buyer lives in the home, paying off the interest in regular installments over the length of the contract with the balance due when the loan matures. In most cases owner held mortgages have shorter terms of five to seven years and finish with a balloon payment.

Since there are no banks involved, it is critical that the buyer does his research with regard to uncovering any tax liens, or claims that could affect property transfer. Also important are a current property appraisal, credit report and background check for both parties. If the buyer defaults, then the owner must go through the process of foreclosure or eviction before they eventually retain original title again.

When a buyer is applying for an owner held mortgage, they should provide the same financial documentation that they would if applying for a loan at a bank. The seller will need a good real estate attorney, realtor and possibly an accountant overseeing the transaction.

Visit LeslieEskildsen.com for all your Orange County real estate needs. Compare the market in surrounding areas including real estate in Rancho Santa Margarita.

Big home improvements may make a hole in your pocket. Even if you manage home improvements and the money involved in it, you should ensure that the corresponding value addition to your property is much more than your actual expenditure.

Many homeowners fail to save enough money for home upgradation. For such people, the lenders and other financial institutions may prove helpful. These lenders can provide you home improvement loans at competitive rates. The loan market is going through a very competitive phase where every lender is trying to outdo the other. In such a scenario, the customer is the king.

Anyway, after arranging the finance the next question that arises is how to use the funds in a best possible manner. After all, home improvement loans carry a price and you have to repay such loans with due interest. The best bet lies in ensuring that the property value of your condominium rises more than what you spend on it. In particular, this aspect assumes a greater significance if you want to sell your condo.

If your condo has laminated floors and they are in good condition then what is the point in ripping them out and install real wood or a higher quality laminate floor. Instead, you can explore and adopt some other means to make your condo look beautiful. Many real estate experts believe that the money spent on your kitchen brings in the highest return on investment. After all, a new buyer usually heads to the kitchen before seeing other things. You should keep these things in mind if you are doing home improvements with an intention of selling out the condo.

To make up for the monetary requirements, you can apply for home improvement loans. These loans are also available online. The rate of interest usually starts from 6.5 per cent and may go higher up as per your individual circumstances.

For more information about secured homeowner loans please visit http://www.longdogfinance.co.uk/

Having a mortgage can be expensive; with the interest that is charged over the life of your mortgage, a large portion of what you end up paying is nothing more than interest payments and not the loan itself. Obviously it’s important to be able to pay off your mortgage as quickly as possible in order to keep the interest at a minimum, just as it’s important to make sure that all of your payments are made on time so as to avoid late fees or other costs. One option that can help you to pay off your mortgage early while giving you the added benefit of having to pay less at any given time is a bi-weekly mortgage.

If you aren’t familiar with the term, a bi-weekly mortgage is a payment plan which allows you to make a partial payment on your mortgage every two weeks. It’s not an actual mortgage loan, but instead is a service which will help you to pay off your mortgage faster than you would be able to by simply making your standard payments each month. There are a number of pros and cons associated with bi-weekly mortgage services, and you should stop and consider some of these in order to make sure that a bi-weekly mortgage plan meets your financial needs.

How Bi-Weekly Mortgages Work

When you’re using your standard mortgage payment plan, you’re making one payment every month for a total of 12 payments per year. With a bi-weekly mortgage plan, however, you’re making a payment equal to one half of your current payment every two weeks… this equals out to 26 half-payments over the course of a year. A bi-weekly mortgage essentially allows you to make one extra full payment each year, taking a full month off of your repayment schedule every year that you’re using the bi-weekly mortgage plan. Even though you have to pay a service charge to the company offering the bi-weekly mortgage service, the savings that you receive in interest works out so that you still save money even with the added fees.

Advantages of a Bi-Weekly Mortgage

Obviously, the biggest advantage to a bi-weekly mortgage plan is the fact that you can pay off your mortgage early and save a significant amount of money on the interest that you have to pay. For most homeowners, this savings will be quite significant as they will be able to pay their mortgage off as much as two or three years early. Since the individual payments are lower than they would be if you were paying the full amount once per month, bi-weekly mortgage payments can also be much easier to fit into your budget. Many companies who offer bi-weekly payment services will let you tailor your payment due dates so that they best fit your income, letting you make payments when you get paid.

Disadvantages of a Bi-Weekly Mortgage

While bi-weekly mortgage payments may sound wonderful, there are some drawbacks associated with them as well. Probably the most important of these is the fact that even though you’re making your payments to the service provider, you are still the one who is responsible for your mortgage. The service provider isn’t a lender and doesn’t have any sort of influence or control over your mortgage itself. They only make your mortgage payments once per month, just like you would; in the unlikely event that there’s some problem in processing the payment, you may be required to pay it out-of-pocket while the problem is sorted out or risk receiving late fees or an interest rate increase for a late payment.

Another main drawback to bi-weekly mortgages is that the service which these companies offer isn’t anything that you couldn’t do by yourself with proper budgeting. When it comes down to it, if you have the self-control to structure your budget similar to making bi-weekly payments you could actually save significantly more by doing it yourself than you would through one of these services. You will save more because the service will charge you a transaction fee for each time they process one of your payments (in some cases you may have a fee for each time that they receive a payment from you via direct deposit, for each time that they make a payment, and an additional fee for account maintenance.) Depending on how you budget your finances, you may also be able to pay off your mortgage even faster than you would through a payment service by simply setting aside slightly more than one half of your monthly payment every two weeks. This only applies if you budget your money, of course.

Grant Eckert is a freelance writer who writes about topics pertaining to the mortgage industry such as Mortgage Company | Mortgage Lender

A couple of years back, housing prices skyrocketed and interest rates hit rock bottom. Homeowners everywhere refinanced or took out home equity loans for remodels, pools, and decks. Backyards became outdoor living areas. Home Depots spawned Expo Design Centers and soon granite countertops were de rigueur. As conspicuous consumers we contented ourselves that these improvements were worth it because they increased the value of our homes.

But what kind of return did we get on our investments? The truth is that most home improvements cost more than they add to the value of your home. And no improvement is valuable if you can’t sell your home. So before you run out willy-nilly remodeling this and that, ask yourself how soon you want to sell that house. Sometimes inexpensive home improvements are best for the short term.

What are homebuyers looking for? First and foremost buyers want a solid house in good repair. A newly renovated kitchen may be eye-catching, but if the roof leaks what good is it? At best the buyer will ask for the cost of the repairs to be deducted from the price of the home, so make sure all the basics are in tiptop shape. Your first investment should be in the roof, gutters, foundation, plumbing, electrical systems, and chimney. Plus, according to soundmoneytips.com, repairing plumbing and electrical problems has a 260% average return on investment.

Once you’ve taken care of the fundamentals, you can consider the eye candy. Again, sometimes the best investments cost the least. A freshly mowed and edged lawn costs nothing and will be inviting to buyers. Fresh paint looks neat and tidy on the exterior of your home and can brighten up dingy interiors. Always patch and repair any damage to the walls before painting. The average return on painting your home’s interior is 148%.

What is the number one return on investment? Cleaning and de-cluttering your house. Try renting a storage space if you can’t bear to part with your junk altogether. Buyers want to feel comfortable in your home—not creeped out by your dusty, cobweb covered light fixtures. The soundmoneytips rate for return on investment in cleaning and de-cluttering is 973%.

So what about the additional bath, the kitchen remodel, and the pool? These are home improvements you may want to consider if you are planning to stay in the home for a few years. While they still add value to your home, they cost more than the value they add. That’s not to say they cost more than they are worth. Lifestyle can be a big factor in a home sale. People rarely say, “It’s almost perfect, but I just can’t stand a house with a pool.” And while a pool only adds about 40% of its cost to the value of a home, you also have to consider if you and your family will be sticking around long enough to use it.

Kitchen remodels and bathroom additions fall into the same category. A major kitchen remodel with new cabinets, tile floors, and brand new appliances can run from $50,000-$100,000 for a modest single family home and it will only add about 75% of that cost to its value. An extra bathroom will run you about $60,000 and only recoup 70% of its cost.

But they look great to potential buyers, and besides, you get to enjoy them while you live there.

By: Christine Flanders

Edited By: Michael C. Podlesny

About the Author
Michael C. Podlesny and Christine Flanders are freelance writers for Indocquent.com. Indocquent.com is an online resource that allows home improvement companies and skilled profressionals to promote their products and services throughout 200 countries around the world.

Acquiring a mortgage is a big step in anyone’s life. Knowing the terminology that is associated with a mortgage is the first step in making the right decision when selecting a mortgage type and term. Common terms are explained in the following sections.

What is amortization?

Amortization is the payment of a loan or debt through systematic payments that continue on a scheduled basis until the loan is repaid in full. An amortization schedule lists each payment and its details for the life of the loan. It indicates the total payment amount and breaks that amount into the portion that is applied to the principal, as well as, the interest.

What is an adjustable rate mortgage?

An adjustable rate mortgage, also known as ARM, is one in which the interest rate fluctuates according to predetermined conditions set at the time the loan is arranged.

What is a balloon mortgage?

A balloon mortgage is one in which fixed payments are made for a predetermined number of years and then is paid off in full. This final, single payment is considerably large and referred to as the balloon payment. This type of loan is popular with individuals who are expecting to come into some money later in time, such as an inheritance or the sale of other property.

What are closing costs?

The closing, known as settlement, is the finalization of the purchase of real estate. The costs that are associated with this are known as closing costs. Closing costs will include recording fees and documents, the origination fee, charges for surveys that have been taken, points, the cost of the title insurance, attorney fees (if an attorney is used), the cost of the title insurance, payment of real estate taxes, and payment of insurance on the home. Closing costs may include other fees. Additionally, the seller occasionally pays some of the costs for the buyer, but this is prearranged prior to the actual closing itself.

What is collateral?

Collateral is property that has been offered to secure the loan. Usually, the real estate that is being purchased is used as the collateral, since it can be repossessed if the loan payments are not made or the loan is not repaid in full.

What is a conversion option?

A conversion option allows certain loans to be changed. Certain conditions must be met.

Balloon loans and adjustable rate mortgages can be changed into fixed rate mortgages under these conditions.

Why is my credit score important?

A credit score is a rating given to a person based upon the individual’s current and past credit history. It is calculated for the purpose of determining an individual’s credit worthiness. It will include information gleaned from credit card usage and payment history, past mortgage history, other bank loan history, and any other financial matters.

A credit score assists the lender in determining the risk factor, if any, in lending money to the individual.

What is default?

Default is the failure to make the mortgage payments or to pay the property taxes on the real estate in question.

What is a down payment?

A down payment is the money, cash, or check that an individual pays towards the purchase price of the house. This is not financed.

What is an escrow account?

In general, lenders set up an escrow account to hold money that has been collected each month along with the loan payment. It includes a percentage of the money that needs to be paid toward property taxes and insurance. The lender will then make the payments at the appropriate time.

What is a first mortgage?

A first mortgage is the one that has the primary lien against the property. The holder of the mortgage has first claim for repayment.

What is a fixed rate mortgage?

A fixed rate mortgage, also known as a traditional mortgage, is one in which the mortgage payment is set and never fluctuates. The interest percentage remains the same throughout the loan’s term. While the payment remains the same, the amount of money that goes toward the principal gradually increases as the amount that goes toward the interest gradually decreases.

What is floating?

If the purchaser decides not to lock-in the interest rate at the time they apply for the loan, this is known as floating.

What is a Good Faith Estimate?

A Good Faith Estimate is an estimate of what the settlement costs at closing will be for the borrower of the loan.

Do I need insurance?

Lenders require that insurance be held on the home, and that they are listed as beneficiary on this insurance. It is their way of guaranteeing that they will not lose any money should the home be destroyed, damaged, or any liability claims are placed against the homeowner. The insurance claims are subject to the predetermined conditions of the insurance.

What is Interest?

Interest is the amount of money that a lender, usually a bank, charges for loaning money.

What is an interest only mortgage?

An interest only mortgage is one in which the borrower pays only the interest due for the first term of the loan. This often allows first time purchasers the ability to buy a home in a higher price range. After a predetermined number of years, the loan becomes a fixed rate loan in which the borrower pays the interest and principal for the remaining duration of the mortgage.

What are points?

Points are equal to 1 % of the amount of the loan. For clarification purposes, consider that the amount of the loan is $100,000. One point is equal to $1,000 or 1% of the loan. If three points are charged, they are equal to $3,000. The lender who is making the mortgage loan charges points. Points are negotiated along with the interest rate and term of the loan. Occasionally, points are credited to the borrower.

What is a late fee?

A late fee is a small monetary charge that is assessed to a borrower who is late making a mortgage payment.

What is a lien?

A lien is created when a person borrows money using the home as collateral. It is a claim against a property that needs to be repaid whenever the home is sold.

What is a loan balance?

The loan balance is the amount of money that is remaining to be paid. It is the principal balance that has not been paid yet.

What is a loan term?

The loan term is the number of years that the loan is held or amortized. Generally, loan terms of fifteen, twenty, or thirty years are popular.

What is an origination fee?

An origination fee is a charge that a lender charges to process the loan application.

What is PMI?

PMI, otherwise referred to as private mortgage insurance, is insurance or protection against default by the homeowner. It protects the lender from a loss of his monetary investment. The borrower purchases this insurance from a private insurance company and the premiums are usually included with the mortgage payments.

What are property taxes?

Property taxes, assessed by local or state governments, are taxes assessed on the real estate. The homeowner must pay these annually.

What is a recording fee?

A recording fee is a charge to record documents. The documents are a matter of public record and therefore, must be included in public records. A recorder’s office handles the transaction.

What is a reverse mortgage?

A reverse mortgage allows homeowners to receive a sum of money from a lender that they do not need to repay. The equity of the home is used as collateral. The loan is repaid when the home is sold. Three different types of reverse mortgages exist and they are popular with senior citizens.

Being well-informed is equivalent to being well-prepared. A bit of careful research and comparison shopping is all that is necessary before selecting the right mortgage for you.

Steve is the chief editor for CreditServicer.com, a site that provides free ChexSystems and bad credit resources. He also edits for Apex Credit Cards and Dollar Guides.