Primary Residence — A Simple Definition:
When getting a mortgage, one of the factors that will influence the rate and terms of your loan is whether or not you will occupy the property as a primary residence. Generally speaking, the best deals on mortgage terms are available to people who are going to occupy the property as their primary residence. Also, generally speaking you can only have one FHA insured loan at one time.
Primary Residence — An Expanded Definition:
When getting an FHA loan, it is generally not possible to have more than one FHA loan per borrower. Anyone who owns a home (either alone or with someone else) that is insured by FHA generally can’t get another FHA insured loan except under the following circumstances:
Relocation – if you are relocating to another area that is not within a reasonable commuting distance from your current home, you can get another FHA loan without being required to sell your existing home that currently has FHA financing.
Increase in Family Size – You can get another home with an FHA loan if you have an increase in the number of legal dependents where your present house no longer meets the family’s needs. If this is the case, you must pay your current FHA loan down to 75% LTV and a current appraisal must be used when determining the 75%.
Vacating a Jointly-Owned Property – If you are getting divorced and are moving out of your house that is currently financed with an FHA loan, you can get another FHA loan if you can qualify for it financially.
Non-occupying co-borrower — A non-occupying co-borrower on a property that is being purchased with an FHA-insured mortgage as a primary residence by other family members. This is often the case with what is known as “FHA kiddie condo loans”.
Primary residence.
It matters whether the property you are buying is going to be your primary residence or not. When getting a conventional loan, it matters for the rates and terms of the loan and when getting an FHA loan, it often matters whether or not you can get a loan at all.
Contact The Mortgage Mark with any questions!
http://www.themortgagemark.com mwilkins@capitalfmc.com
Wednesday, October 20, 2010
Monday, October 18, 2010
What is an escrow account?
Understanding Escrow
What is an escrow account?
An escrow account is used to collect and hold funds to pay your property taxes, homeowners insurance premiums or other charges when they become due.
The account is often established for you by your mortgage company when you take out your mortgage. However, if an escrow account was not set up when you took out your mortgage, you may be able to do so now.
Real estate taxes and insurance premiums must be paid regularly — typically, payments are due once or twice a year — and failure to pay these bills on time may cost you money in tax penalties or result in cancellation of your insurance coverage.
What are the benefits of an escrow account?
An escrow account helps you:
Manage your budget: You do not have to make lump sum payments when your taxes and insurance are due. You have made monthly payments throughout the year to cover those obligations.
Gain peace of mind: You don’t need to keep track of when your tax and insurance bills are due. The payments will be made, on time, on your behalf.
Ensure that your home is protected: With paid-up insurance coverage and taxes, you protect your investment in your home and meet your lender’s requirements.
Most mortgage companies require an escrow account for mortgages with less than a 20 percent down payment.
How does an escrow account work?
Your monthly mortgage payment includes an amount for property taxes and insurance in addition to the amount you owe for principal and interest.
The amount of your monthly mortgage payment that is for taxes and insurance is placed by your mortgage company into an escrow account. The funds can be used only to pay taxes and insurance on your behalf.
Your mortgage company pays the taxes and insurance bills for you when they are due. Your mortgage company examines any changes in your tax and insurance costs (for example, your local government may change the amount of your real estate taxes). Your mortgage company sends you a statement each year showing the prior year's activity — amounts collected from you and placed in escrow as well as the payments made on your behalf — and showing any adjustments that may be needed based on changes in your tax and insurance costs.
Here is a simplified example* of how escrow payments are calculated:
Annual real estate taxes: $1,800 ÷ 12 months = $150 per month
Annual property insurance: $720 ÷ 12 months = $60 per month
Total monthly taxes and insurance: $210
So in this example, $210 would be added to your total monthly mortgage payment and applied to your escrow account. You might hear your total monthly mortgage payment referred to as your “PITI” — for principal, interest, taxes and insurance.
Do you have an escrow account?
If you are not sure if you have an escrow account, check your monthly mortgage account statement or contact your mortgage company. Your account statement will typically indicate your “Escrow Balance” and the amount of your total monthly mortgage payment that is applied to escrow.
Should you establish an escrow account?
If you do not have an escrow account, you may want to establish one. Ask your mortgage company for more information.
Contact The Mortgage Mark with any questions!
www.themortgagemark.com mwilkins@capitalfmc.com
What is an escrow account?
An escrow account is used to collect and hold funds to pay your property taxes, homeowners insurance premiums or other charges when they become due.
The account is often established for you by your mortgage company when you take out your mortgage. However, if an escrow account was not set up when you took out your mortgage, you may be able to do so now.
Real estate taxes and insurance premiums must be paid regularly — typically, payments are due once or twice a year — and failure to pay these bills on time may cost you money in tax penalties or result in cancellation of your insurance coverage.
What are the benefits of an escrow account?
An escrow account helps you:
Manage your budget: You do not have to make lump sum payments when your taxes and insurance are due. You have made monthly payments throughout the year to cover those obligations.
Gain peace of mind: You don’t need to keep track of when your tax and insurance bills are due. The payments will be made, on time, on your behalf.
Ensure that your home is protected: With paid-up insurance coverage and taxes, you protect your investment in your home and meet your lender’s requirements.
Most mortgage companies require an escrow account for mortgages with less than a 20 percent down payment.
How does an escrow account work?
Your monthly mortgage payment includes an amount for property taxes and insurance in addition to the amount you owe for principal and interest.
The amount of your monthly mortgage payment that is for taxes and insurance is placed by your mortgage company into an escrow account. The funds can be used only to pay taxes and insurance on your behalf.
Your mortgage company pays the taxes and insurance bills for you when they are due. Your mortgage company examines any changes in your tax and insurance costs (for example, your local government may change the amount of your real estate taxes). Your mortgage company sends you a statement each year showing the prior year's activity — amounts collected from you and placed in escrow as well as the payments made on your behalf — and showing any adjustments that may be needed based on changes in your tax and insurance costs.
Here is a simplified example* of how escrow payments are calculated:
Annual real estate taxes: $1,800 ÷ 12 months = $150 per month
Annual property insurance: $720 ÷ 12 months = $60 per month
Total monthly taxes and insurance: $210
So in this example, $210 would be added to your total monthly mortgage payment and applied to your escrow account. You might hear your total monthly mortgage payment referred to as your “PITI” — for principal, interest, taxes and insurance.
Do you have an escrow account?
If you are not sure if you have an escrow account, check your monthly mortgage account statement or contact your mortgage company. Your account statement will typically indicate your “Escrow Balance” and the amount of your total monthly mortgage payment that is applied to escrow.
Should you establish an escrow account?
If you do not have an escrow account, you may want to establish one. Ask your mortgage company for more information.
Contact The Mortgage Mark with any questions!
www.themortgagemark.com mwilkins@capitalfmc.com
Wednesday, October 13, 2010
Today’s Mortgage Definition is: Subordination
Today’s Mortgage Definition is: Subordination
Subordination — A Simple Definition:
In the mortgage arena, most of the time when someone refers to a subordination, they are referring to a process involving second mortgage on a property. If you are interested in refinancing your home and you have a second mortgage, you will need to get a subordination agreed to by the lender who holds the second mortgage. In plain English: getting a subordination completed by the lender who holds the second mortgage means that the lender agrees to have their loan remain in second position while the loan in first position is refinanced.
Subordination — An Expanded Definition:
In most cases, your loan officer or a member of the loan officer’s team will do virtually everything required to get a subordination completed. The general steps to getting a subordination completed include:
Contact the lender who holds the second mortgage and get a copy of the subordination requirements.
Complete a subordination application with the information required – typically it is information about the current first mortgage, the new first mortgage and appraised value.
Follow up with the lender who holds the second mortgage until the subordination is approved.
Now that rates are low, many people are going through the refinance process and subordination(s) are a common occurrence. While it can be tricky to get a subordination approved, if you have a second mortgage it is important you remember that you will want to discuss the subordination requirements with your loan officer before either of you spend a great deal of time and effort into refinancing your first mortgage.
Why?
Because if your second mortgage lender won’t subordinate your loan, there is virtually no chance that you can refinance your first mortgage.
Be sure to ask your loan officer about subordination of your second mortgage if want to refinance.
Contact The Mortgage Mark if you have any questions!
http://www.themortgagemark.com mwilkins@capitalfmc.com
Subordination — A Simple Definition:
In the mortgage arena, most of the time when someone refers to a subordination, they are referring to a process involving second mortgage on a property. If you are interested in refinancing your home and you have a second mortgage, you will need to get a subordination agreed to by the lender who holds the second mortgage. In plain English: getting a subordination completed by the lender who holds the second mortgage means that the lender agrees to have their loan remain in second position while the loan in first position is refinanced.
Subordination — An Expanded Definition:
In most cases, your loan officer or a member of the loan officer’s team will do virtually everything required to get a subordination completed. The general steps to getting a subordination completed include:
Contact the lender who holds the second mortgage and get a copy of the subordination requirements.
Complete a subordination application with the information required – typically it is information about the current first mortgage, the new first mortgage and appraised value.
Follow up with the lender who holds the second mortgage until the subordination is approved.
Now that rates are low, many people are going through the refinance process and subordination(s) are a common occurrence. While it can be tricky to get a subordination approved, if you have a second mortgage it is important you remember that you will want to discuss the subordination requirements with your loan officer before either of you spend a great deal of time and effort into refinancing your first mortgage.
Why?
Because if your second mortgage lender won’t subordinate your loan, there is virtually no chance that you can refinance your first mortgage.
Be sure to ask your loan officer about subordination of your second mortgage if want to refinance.
Contact The Mortgage Mark if you have any questions!
http://www.themortgagemark.com mwilkins@capitalfmc.com
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