Friday was a great day for folks looking to lock in mortgage interest rates, We had a big drop and was able to help plenty of Indiana homeowners get a great interest rate with their Indiana Mortgage.
Tony Grego here at Sagamore Home Mortgage! While mortgage interest rates have risen over the last 10 days Friday did help. Now looking at the Japanese stock market and the further loss of the US Dollar we are in for a "rocky" day with the stock market. I am recommending all of my Indiana clients to lock your mortgage rate today. Looking at this weeks calendar of financial reports does not indicate that anything will help lower your mortgage interest rate.
I expect to see a dip in mortgage interest rates when first released this morning then the Feds making the "big surprise announcement" of lower short-term rates 1/2 point. This will help the market and cause the bond market to dip and raise your mortgage interest rate.
source: Tony Grego's blog entry
the adjustable mortgage
The Adjustable Rate Mortgage, or ARM, lost much of its edge over the 30-year fixed in the last few years. Things actually got so tangled up for a couple of weeks in 2007 that the 5-year ARM, or 5/1 ARM, the most sought-after of them, demanded a higher interest rate than the standard 30-year mortgage. ARMs have traditionally offered lower rates due to their shorter maturity period and that they will adjust either up or down annually after their initial set time frame.
Even as recently as early January the 5/1 ARM and 30-year fixed displayed the same rate in Bankrate.com's weekly survey of big national lenders. Since then, however, the whole scenario has changed in a major way. Interest rates for these popular programs have been drifting in opposite directions, ARMs lower and 30-year fixed higher, to a point that the 5/1 ARM is now nearly ¾ of a percentage below its recent rival.
5/1 ARM, for instance, can be the right mortgage for a borrower who plans on living in his home for 5 years or less, anticipates income improvement and has some money saved. Its advantage is in lower payments thanks to a lower home loan rate. For that there is a minor risk factor involved, namely that the interest rate could rise if the loan is active beyond the fifth anniversary.
When the subprime mess descended on the mortgage industry over the last few years, ARMs gradually lost the attractive rate edge that eventually reached parity with 30-year fixed. But change is currently under way. Now that they are slowly widening the gap again, possibly pushing it all the way to where it historically stood before the lender problems started, does it mean that the home loan industry as a whole is returning to its previous, "normal" operating mode? It could be. Regardless, this certainly appears to be a step in the right direction.
source: Esko Kiuru
Even as recently as early January the 5/1 ARM and 30-year fixed displayed the same rate in Bankrate.com's weekly survey of big national lenders. Since then, however, the whole scenario has changed in a major way. Interest rates for these popular programs have been drifting in opposite directions, ARMs lower and 30-year fixed higher, to a point that the 5/1 ARM is now nearly ¾ of a percentage below its recent rival.
5/1 ARM, for instance, can be the right mortgage for a borrower who plans on living in his home for 5 years or less, anticipates income improvement and has some money saved. Its advantage is in lower payments thanks to a lower home loan rate. For that there is a minor risk factor involved, namely that the interest rate could rise if the loan is active beyond the fifth anniversary.
When the subprime mess descended on the mortgage industry over the last few years, ARMs gradually lost the attractive rate edge that eventually reached parity with 30-year fixed. But change is currently under way. Now that they are slowly widening the gap again, possibly pushing it all the way to where it historically stood before the lender problems started, does it mean that the home loan industry as a whole is returning to its previous, "normal" operating mode? It could be. Regardless, this certainly appears to be a step in the right direction.
source: Esko Kiuru
Mortgage Broker Tools
A mortgage broker is a middleman between the home buyer and the various lenders so therefore they need to use all of their mortgage tools to their advantage. A mortgage broker is also someone who is affiliated with multiple lenders. This helps the homebuyer because then their credit wouldn't have to be pulled more then once. The mortgage broker would pull the credit then shop it around to the lenders that are more then likely to say yes. By not pulling credit that often then the buyer's credit score doesn't get affected that much.
A mortgage broker's tools may also include a mortgage calculator. A mortgage calculator would allow a home buyer the opportunity to know how much their monthly payments would be based upon certain criteria they entered. This will help them determine if they can afford the home they are looking to buy.
A mortgage broker's tools may also include the ability to negotiate a better interest rate for the buyer. Most lenders have interest rates that are rarely negotiated but the mortgage broker can negotiate the rate because they are using more then one lender. This helps the buyer to find the lowest rate possible and thereby helps them to reduce their monthly payments and interest. A mortgage broker can be very helpful for those who are purchasing a home for the first time and don't know that much about the home buying process. This can ease the process and make it a bit easier for the buyer
source: http://www.loansiteplus.com/mortgage-broker-tools.html
Mortgages in the United States
Types of Mortgage Instruments
Two types of mortgage instruments are commonly used in the United States: the mortgage (sometimes called a mortgage deed) and the deed of trust.
Two types of mortgage instruments are commonly used in the United States: the mortgage (sometimes called a mortgage deed) and the deed of trust.
The mortgage
In all but a few states, a mortgage creates a lien on the title to the mortgaged property. Foreclosure of that lien almost always requires a judicial proceeding declaring the debt to be due and in default and ordering a sale of the property to pay the debt.
The deed of trust
The deed of trust is a deed by the borrower to a trustee for the purposes of securing a debt. In most states, it also merely creates a lien on the title and not a title transfer, regardless of its terms. It differs from a mortgage in that, in many states, it can be foreclosed by a non-judicial sale held by the trustee.[5] It is also possible to foreclose them through a judicial proceeding.
Most "mortgages" in California are actually deeds of trust. The effective difference is that the foreclosure process can be much faster for a deed of trust than for a mortgage, on the order of 3 months rather than a year. Because the foreclosure does not require actions by the court the transaction costs can be quite a bit less.
Deeds of trust to secure repayments of debts should not be confused with trust instruments that are sometimes called deeds of trust but that are used to create trusts for other purposes, such as estate planning. Though there are superficial similarities in the form, many states hold deeds of trust to secure repayment of debts do not create true trust arrangements.
Mortgage lien priority
Except in those few states in the United States that adhere to the title theory of mortgages,[6] either a mortgage or a deed of trust will create a mortgage lien upon the title to the real property being mortgaged. The lien is said to "attach" to the title when the mortgage is signed by the mortgagor and delivered to the mortgagee and the mortgagor receives the funds whose repayment the mortgage secures. Subject to the requirements of the recording laws of the state in which the land is located, this attachment establishes the priority of the mortgage lien with respect to most other liens[7] on the property's title.[8] Liens that have attached to the title before the mortgage lien are said to be senior to, or prior to, the mortgage lien. Those attaching afterward are said to be junior or subordinate.[9] The purpose of this priority is to establish the order in which lien holders are entitled to foreclose their liens in an attempt to recover their debts. If there are multiple
mortgage liens on the title to a property and the loan secured by a first mortgage is paid off, the second mortgage lien will move up in priority and become the new first mortgage lien on the title. Documenting this new priority arrangement will require the release of the mortgage securing the paid off loan.
source:www.wikipedia.com
Legal Types of Mortgage
Mortgage by demise
In a mortgage by demise, the creditor becomes the owner of the mortgaged property until the loan is repaid in full (known as "redemption"). This kind of mortgage takes the form of a conveyance of the property to the creditor, with a condition that the property will be returned on redemption.
This is an older form of legal mortgage and is less common than a mortgage by legal charge. In the UK, this type of mortgage is no longer available, by virtue of the Land Registration Act 2002.
Mortgage by legal charge
In a mortgage by legal charge or technically "a charge by deed expressed to be by way of legal mortgage",[3] the debtor remains the legal owner of the property, but the creditor gains sufficient rights over it to enable them to enforce their security, such as a right to take possession of the property or sell it.
To protect the lender, a mortgage by legal charge is usually recorded in a public register. Since mortgage debt is often the largest debt owed by the debtor, banks and other mortgage lenders run title searches of the real property to make certain that there are no mortgages already registered on the debtor's property which might have higher priority. Tax liens, in some cases, will come ahead of mortgages. For this reason, if a borrower has delinquent property taxes, the bank will often pay them to prevent the lienholder from foreclosing and wiping out the mortgage.
source: www.wikipedia.com
participants in a mortgage agreement
in general, a mortgage of property involves the following parties.
Creditor
The creditor has legal rights to the debt or other obligation secured by the mortgage. That debt is often the obligation to repay the loan by the creditor (or its predecessor lender) who provided the purchase money to acquire the property mortgaged. Typically, creditors are banks, insurers or other financial institutions who make loans available for the purpose of real estate purchase.
A creditor is sometimes referred to as the beneficiary, mortgagee or lender.
Debtor
The debtor is the person or entity who owes the obligation secured by the mortgage, and may be multiple parties. Generally, the debtor must meet the conditions of the underlying loan or other obligation and the conditions of the mortgage. Otherwise, the debtor usually runs the risk of foreclosure of the mortgage by the creditor to recover the debt. Typically the debtors will be the individual home-owners, landlords or businesses who are purchasing their property by way of a loan.
A debtor is sometimes referred to as the mortgagor, borrower, or obligor.
Other participants
Because of the complicated legal exchange, or conveyance, of the property, one or both of the main participants are likely to require legal representation. The terminology varies with legal jurisdiction; see lawyer, solicitor and conveyancer.
Because of the complex nature of many markets the debtor may approach a mortgage broker or financial adviser to help them source an appropriate creditor, typically by finding the most competitive loan.
The debt is, in civil law jurisdictions, referred to as hypothecation, which may make use of the services of a hypothecary to assist in the hypothecation.
what is a mortgage anyway?
wikipedia explains a mortgage as a method of using property (real or personal) as security for the performance of an obligation, usually the payment of a debt.
The term mortgage (from old French, lit. dead pledge[1][2]) refers to the legal device used for this purpose, but it is also commonly used to refer to the debt secured by the mortgage, the mortgage loan.
In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than other property (such as ships) and in some cases only land may be mortgaged. Arranging a mortgage is seen as the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full value immediately. See mortgage loan for residential mortgage lending, and commercial mortgage for lending against commercial property.
In many countries it is normal for home purchases to be funded by a mortgage. In countries where the demand for home ownership is highest, strong domestic markets have developed, notably in Spain, the United Kingdom, and the United States.
www.realtor.com has this to say:
The mortgage is a legal document that secures the note and gives the lender a legal claim against your house if you default on the note's terms. In effect, you have possession of the property, but the lender has an ownership interest (called an "encumbrance") until the loan has been fully repaid. The lender agrees to hold the title or deed to your property (or in some states, to hold a lien on your title or deed) until you have paid back your loan plus interest.
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