| A mortgage is a device used to create a lien on real | | | | This information might contain the following: credit card |
| estate by contract. The mortgage is an instrument that | | | | bills, consumer debt bills, information about alimonies (if |
| the borrower (called the mortgagor) uses to pledge | | | | applicable) and some other. Lenders usually interested |
| real property to the lender (called the mortgagee) as | | | | in the origin of the future down payments (will the |
| security for a debt, also called hypothecation. The | | | | borrower pay them from the salary or interest from |
| mortgage, as a rule, consists of the promissory note | | | | some equity etc). Additional personal information can |
| and the pledge. | | | | include divorce decree or explanation letters about any |
| A mortgage is a device used to create a lien on real | | | | credit problems. Of course, the list of the required |
| estate by contract. The mortgage is an instrument that | | | | documents may very different from one lender to |
| the borrower (called the mortgagor) uses to pledge | | | | another and it will be wisely to make them more |
| real property to the lender (called the mortgagee) as | | | | precise by the means of communications beforehand. |
| security for a debt, also called hypothecation. The | | | | But borrowers should take into consideration that fact |
| mortgage, as a rule, consists of the promissory note | | | | that different types of mortgage imply specific |
| and the pledge. For example, when somebody wants | | | | requirements (for example, reverse mortgage requires |
| to buy a house to live in it with his family, but does not | | | | the borrower to be at least sixty-two years old). I also |
| have enough money at the moment. Thus that person | | | | want to mention that there is a kind of mortgage when |
| needs to take a credit. But nobody will give this person | | | | no or very little documents are required to be |
| such a large sum of money, without having | | | | presented except for income and losses, but it can be |
| trustworthy and firm guarantees. But what kind of | | | | given only to self-employed borrowers. |
| guarantee can meet these criteria? Of course it is not | | | | When the lender processes and analyses the |
| a word of honour or just a promissory note. But the | | | | information about the borrower, he determines the size |
| house, which a person wants to buy, will probably be | | | | of the loan, which he can give to the borrower. This |
| the best guarantee for the creditors. | | | | size depends on the borrower's ability to repay the |
| Consequently, the person, who needs a credit, writes a | | | | debt. When the borrower knows the amount of the |
| promissory note, which serves as the evidence of the | | | | possible loan he or she can negotiate the terms of the |
| debt and the promise to repay money with a certain | | | | mortgage and its type (main types of the mortgage |
| interest rate, and formalizes a lien. This lien must be | | | | were described above). Then it comes time to open |
| registered in the public records. After the repayment | | | | escrow, provide title report, credit report and the |
| of the debt within a certain period of time, creditor | | | | appraisal of the property - in other words, to form |
| returns the promissory note to the debtor and the lien | | | | mortgage package and send it to the lender, which |
| becomes annulled. In the case when the debtor can | | | | would finally determine to give a loan to the borrower |
| not fulfill his engagements, the pledge (the house in our | | | | or not. |
| example) will be sold by the auction and the proceeds | | | | If the loan is approved by the lender, it is time to sign all |
| pass into the hands of the creditor. | | | | the documents (with the signing agent of course) and |
| Sometimes there occur such conditions, when a | | | | deliver them to the lender. The lender reviews the |
| creditor needs money with expedition and the credit's | | | | document once more and funds the loan, then all |
| maturity date is too late. In that case the creditor can | | | | necessary records are made and the loan closes. |
| resell the lien to other holder, which will receive the | | | | Mortgage loan implies different additional fees for the |
| interest rate and the credit. This kind of financing is | | | | borrower (or the lender, which is very seldom, but it |
| very popular in the United States of America and | | | | depends on the prior negotiations) among of which |
| there exists two governmental organizations - Home | | | | there may be the following: discount fee (this fee |
| Owners Loan Corporation and Federal Housing | | | | usually reduces interest on the pro rata basis), loan |
| Administration, which provide mortgage loans with very | | | | origination fee (it is the compensation for the lender |
| law interest rates and of course there are plenty of | | | | because of his operation costs for organizing the |
| private loan companies, mortgage companies, credit | | | | mortgage), application fee (it is usually paid when the |
| unions etc. There are many types of mortgage loans | | | | borrower competes the application form for the debt), |
| exist: adjustable rate mortgage, fixed rate mortgage, | | | | appraisal fee (this fee increases directly on the pro |
| capped rate mortgage, discounted rate mortgage, | | | | rata basis with the price of the house; it is paid for the |
| reverse mortgage and other. | | | | independent appraisal of the house, which lender |
| Adjustable rate mortgage is characterized by the | | | | wants to know in order to assess how much money |
| changing interest rate. Thus "the borrower benefits if | | | | he can lend you; "Factors to be considered in |
| the interest rate falls and loses out if interest rates | | | | determining market value of the property are: present |
| rise". | | | | cash value; use; location; replacement value of |
| Fixed rate mortgage is characterized by the constant | | | | improvements; condition; income from property; net |
| interest rate and, in turn, constant monthly payments. | | | | proceeds if the property is sold, etc"; moreover, |
| Capped rate mortgage is the mortgage when the | | | | lenders usually suggest a mortgage which not |
| borrower pays the accrued interest with a constant | | | | exceeds ninety five percent of the assessed |
| rate, but if the actual rate falls below the capped rate, | | | | property), credit report fee (this fee is paid for the |
| then the borrower pays on the lower rate. | | | | independent assessment of the borrower's solvency), |
| Discounted rate mortgage is a mortgage when the | | | | title search and insurance fee (these costs are related |
| borrower repays the loan with the discounted interest | | | | to the investigation of the property's history), flood |
| rate for a certain period of time. | | | | certification costs (related to the investigation if the |
| Reverse mortgage is a kind of loan, when old people | | | | property is not situated in the flood zone and if it is so |
| want to receive money while living in their homes. | | | | than it implies flood insurance costs), survey fee, |
| When the borrower dies his property is sold and the | | | | paperwork fee, costs of attorneys, real property taxes |
| credit is repaid from the proceeds. | | | | (regulated by the state law), escrow account costs |
| In order to obtain a mortgage a person should fill a loan | | | | (lenders often require borrower to create such |
| application and prepare all the required by the lender | | | | account as a guarantee that the borrower pays |
| documents (see below), and then deliver them to the | | | | insurance fees and taxes on the real estate in time, in |
| lender. Within three days the lender has to return the | | | | order not to lose his pledge; usually governmental loan |
| disclosures, required by the law - Good Faith Estimate | | | | companies require an escrow account, private |
| and Truth in Lending, to the borrower. | | | | companies may not require it) and some others |
| Commonly, lenders demand for the following | | | | depending on the situation. In this part there also must |
| documents to be presented by the borrowers: - | | | | be mentioned, that most lenders require an immediate |
| verification of income; - verification of assets; - | | | | down payment at the certain rate of the purchase |
| information about the purchase; - information about the | | | | price (different lenders require different down |
| debts; - some kinds of additional personal information. | | | | payments - from three up to thirty percent; low down |
| Verification of income includes the following: earning | | | | payment percentage are stipulated by the private |
| statements for the two past years; profit and losses | | | | mortgage insurance). |
| from the self-employment (if applicable) for the past | | | | During the process of obtaining the mortgage loan |
| three years; additional income (if applicable) such as | | | | there are also needed signing agent's services. This |
| interest or social security. Verification of assets | | | | need is stipulated by the following circumstances: both |
| includes the following: list of bank accounts numbers, list | | | | the lender and the borrower need to ascertain that |
| of saving bonds and some other. Information about the | | | | they have a deal with the right people, they want to |
| purchase - anything that may be considered important | | | | ascertain that the documents are accurate enough, |
| from the point of view of the lender - copies of the | | | | that all the necessary procedures are performed in the |
| purchase agreement and the sale agreement, | | | | appropriate way, that all the essential signatures and |
| because he is concerned a lot if the borrower is not a | | | | dates are made in the appropriate way and that all the |
| swindler. Information about the debts is important | | | | documents notarized correspondingly. But as it was |
| because in the case of borrower's bankruptcy there | | | | already stated above, the loan signing agent must not |
| can occur the line of his creditors each of which has a | | | | give any legal advice or comments. |
| legal priority to receive debts. | | | | |