Property Mortgages

___________________________________________________________________


____________________________________________________________________

Being Smart About Property Mortgages

Before you commit to a loan for you home, there are some major considerations that you need to take. The paperwork is overwhelming, and the information is in legalize making it that much more difficult to understand. Just know that when you are looking over various property mortgages to finance your home, the deck is not stacked in your favor.

The following are some items that you need to be particularly aware of:

Pre-payment Penalty
This is placed in the mortgage for the lender to receive a percentage of the outstanding loan if you pay off your mortgage ahead of a predetermined time period, such as two years. It could be as much as 20%

Acceleration Clause
The lender has the right to demand the entire loan balance in the event that the borrower does not conform to all the terms of the agreement

Agreement Of Sale
If you are buying your home and the seller is financing it, make sure there are no hidden clauses that could create problems later when you go for a permanent mortgage

Assumption
Most lenders will not allow someone else to assume your loan without there approval. If your mortgage has this clause, read it carefully so you know what to do when the time comes to sell.

Good Faith Estimate
As much as the real estate industry tries to promote this as an accurate estimate of the closing costs, don’t buy it. The Good Faith Estimate is almost always under the amount you will have to come up with the day of the closing

Conforming Mortgage
This is a mortgage that conforms to the guidelines for Fannie Mae or Freddie Mac. The lender is guaranteed by these quasi government/public organizations in case of default

Late Fees
When looking over property mortgages, make sure you take into account not only the late fees but the time period in which they become effective. Most banks give a 15 day grace period before late fees apply

Mortgage Insurance
This is a cost incurred if you do not meet the LTV (loan to value) requirements of the lender. If your down payment is too low, then you must add mortgage insurance to make up the difference.

Payment Increase Cap
If you are considering an adjustable rate mortgage, make sure you can afford the increase in payments when they occur as the interest rate adjusts as well as the most in can increase in any one period.

Property mortgages are not as easy to get as they were just last year, and most lenders are stricter with their guidelines. Trying to find the right mortgage will take some effort and research on your part.