Archive for the ‘mortgage’ Category

Mortgage or a Note to a Deed of Trust?

June 16, 2014

Often people commonly use the word Mortgage when they take a home loan.  A true Mortgage however is much different from a ‘Note to a Deed of Trust’ which make up the majority of all home sales.

Mortgages typically deal with homes with 40+ more acres and were designed for Farm, Ranches and large Estates.  That will be another article….. today we will touch on a ‘Note to a Deed of Trust’ .  What is it?  How typical is it?  Why do banks use them’?

For real estate purchases, state law requires either a mortgage or a deed of trust to provide security for a home loan. In many ways, a deed of trust functions like a mortgage. However, one major difference between the two lies in who holds the legal title for the home while the loan is being paid. In a deed of trust, the legal title is held by the trustee, often an escrow company, while the equitable title is held by the borrower. Also, in a deed of trust, a foreclosure can be conducted outside of the courts, which is almost always faster and less costly than a judicial foreclosure.

A deed of trust secures repayment of the loan by placing a lien on the property. There are three parties to a deed of trust: the borrower, the lender, and a trustee. Some states permit both a deed of trust and mortgage, while others use just one or the other. A deed of trust is always used together with a promissory note, which is a contract that sets and controls the terms of the loan and repayment. The trust deed is simply a security instrument—without it, the note still creates indebtedness, but it is an unsecured debt. The money would still be owed, but a lender would not be able to force a sale in satisfaction of the note without going to court as an unsecured creditor.

When a note is secured by a deed of trust, it allows the loan holder to take back the property if the conditions for repayment aren’t met. Remember that with a deed of trust, this can be done without court proceedings.   The deed of trust, not the note, is recorded with the county recorder in the county where the property is located and indexed in the public records.

 

For more information on deeds and to purchase real estate deeds for your county and state, visit

deeds.com.

Closing a Real Estate Transaction – What to Expect

July 31, 2013

When you are purchasing a home, the closing is the last piece of the puzzle before you receive your keys to move into your new home. Your closing day may seem to move like a whirlwind, as there are many steps in the process that make sure everything is done professionally and accurately. What can you expect at closing? There are many things you need to know but here are a few of the basics.

First; the closing will generally be held at a Title Company, at an agreed location. However, depending on the circumstances, situation, and/or state you live in, it may also be conducted at your lender’s office, a real estate attorney’s office, or anywhere else that is legal and has been agreed upon.

There could be a number of different people who will attend the closing, such as your attorney, the seller and their attorney, both real estate professionals, your lender, the builder’s representative, the title company, a notary public and a closing escrow agent. It all depends on many different factors, such as; if it is a new construction home or existing, if there are attorneys involved, and the type of property that is being purchased. In many places the seller and buyer may sign at separate times. In some areas it may be customary for everyone to be at the same table at the same time.

Once the day and time has been scheduled for everyone at the agreed location, the closing process begins. Your closing escrow agent will review a settlement statement with you also known as the HUD (Housing and Urban Development) form, summarizing all the charges, credits and misc expenses that pertain to your particular purchase such as; title fees, loan fees, and other associated charges and credits that may apply based on the contracted details of your purchase.

When everything has been explained thoroughly and clearly so that everyone understands and is in agreement, then signing commences. The items you will have to sign may vary depending on the type of transaction. As an example; a cash deal will require a lot less forms to complete versus a standard ‘Conventional’ loan, but an ‘FHA’ (Federal Housing Authority) or ‘VA’ (Veterans Administration) loan will require a great deal more paperwork to review. Other documents you will also need to sign are the ‘Deed of Trust’ or mortgage, the promissory note, and the Clarity Commitment document. There might be other items to sign depending on your own specific situation and location.

Generally if you are financing your home then you will probably be required to provide evidence of homeowners insurance known as a ‘Binder; and in some cases the inspections that were performed on the home. Most all lenders require the buyer to have a homeowners insurance policy in place before they can sign over the home. This ensures that the lenders interests in the home are protected in case of a catastrophic event such as fire, water damage, etc.. This may also vary depending on your States requirements.

You will provide your down payment, closing costs, prepaid interest, taxes and insurance by using a certified or cashier’s check in most cases. Ask your closing agent what is the best form of payment that is acceptable. After all the parties involved have completed and signed all documents pertaining to the transaction, the lender (if applicable) will be notified to release funds to the closing escrow officer who will then distribute said monies as instructed by the agreement to the appropriate parties. The final step: Your new transaction will be recorded with the state, designating you as the rightful owner of your new home. In some states full funding may occur at the closing table, other states only after recording. Check with your agent for what is typical to expect in your State or area.

In order to cover everything, sign and delegate funds, the closing procedure may seem like a lengthy process. But once everything completed and all payments are distributed, the closing will be complete and you get the keys to move in to your new home.

About the Guest Author
Winter Park Colorado Real Estate Company, Coldwell Banker Mountain Properties is pleased to bring you this article on what to expect during a closing. Coldwell Mountain deals with Grand County Real Estate in Colorado. If you are interested in seeing their listings, check out their website today.

Idaho Statesman reports about the recent real estate frenzy we are feeling in the Boise Treasure Valley area.

June 15, 2012

The Boise market has really been heating up.  An article written by the Statesman “Shortage of homes for sale creates fierce competition”  describes the current conditions we also are experiencing here.  Their article  refers to the L.A. area but mirrors the same frustrations many buyers are having here in Idaho.

Recommended reading.  There are a number of factors that are contributing to this in the treasure valley;
  • We are experiencing an all time low of viable home listings, so the law of supply and demand takes affect.
  •  Boise is an influx city with predictions of continued growth through 2020.
  • Many people are still migrating here,  a high number of which are either newly retired, about to retire in the next year or two and/or semi retired and buying now.  The upside to this is the strong capital they bring to the market as they generally either buy out right or borrow very little on a mortgage.  This in turn helps create a solid foundation in the market.
  • Boise also offers a lot of amenities for families.  I have dealt with many that have relocated here specifically because the environment fosters a great atmosphere to raise their children.
  • Cost of living is reasonable and very moderate compared to most other cities with a major airport.
  • Boise offers a mix of values and services that appeals to everyone but still maintains that small town politeness.

Boise is the only place I ever lived where I look forward to coming home from vacation.  Please let me know how you feel about Boise life and what are your predictions.  I look forward to viewing your opinion.

National Real Estate trends that may be indicators of things coming.

May 24, 2012

It’s always interesting to watch regional trends as they can be indications of what will happen here in Idaho.  A colleague of mine in South Florida, Jeff Lichtenstein reports good news from the sunshine state.  Florida was the epicenter of speculation.  There still is a 3 year backlog of foreclosures and plenty of short sells still to go but the worst is past.  Jeff also can tell you a lot of the red tape of short sales since he experiences them first hand in Florida. Check out his blog to read all about it!

To learn more about what the area Jeff covers has to offer in amenities check out the Palm Beach Post

Jeff  specializes in luxury real estate in Abacoa  and  Jupiter real estate in South Florida.  His website is at www.JeffRealty.com

Good News for Idaho home buyers- Rules for FHA Lending have loosened.

February 13, 2011

Wanted to share an important article about FHA lending.  Many first time home buyers in the Boise Idaho area have had some difficulties acquiring mortgage loans as FICOs and FHA requirements were not compatable.  Previously credit scores were needing to be 620 or higher.  Seems some rules have changed without much fanfare or notice to the general public.

The article : FICOs and FHA: 2 big lenders loosen up explains how the new changes will affect you if you are a home buyer in Idaho needing and FHA loan and/or if you previously could not qualify you may want to check with your lender to see if your situation now qualifies you to purchase a home.

Call or write if you ever have questions about real estate in the Boise Idaho Treasure Valley area.

Jingle Mail? What is it and is it your best bet?

December 10, 2010

Over these last few years of our housing collapse, while working as an Idaho real estate agent in this current economy, I have been approached by a number of people whom desire my opinion.  They have a mortgage, good employment but fret over how upside down they are on their homes value.  Are you upside down or underwater on your home or property?

There has been a new wave of people simply dropping the keys in the mail and walking away from their homes and defaulting, although capable of fulfilling their obligations.   Hence the coin ‘jingle mail’.  I am not addressing those that are in a distressed situation where payment is impossible and whom may try to short sale but those that would not qualify for a short sale because of sound income, savings and employment.

Now there are the moral obligations to consider, but along with it seems to come a million excuses to get around them.  But lets look forward time-wise and calculate the costs.  These are some of the things I have seen and heard occur to people.

  • When you default you will destroy your credit, and I am not talking about a 1 year set back on your credit score, but perhaps seven to ten years before you can get another mortgage.
  • You may find that some of your existing creditors such as your credit card provider may send you a nice ‘Dear John’ letter cutting your credit or cancelling it all together.  Now I am not a big proponent of credit, but it would be pretty inconvenient today to try to rent a car, reserve a hotel room and a myriad of other things without one.
  • So you moved on, your renting a new place for cheap, or maybe you bought that second home first prior to defaulting.  Maybe it was a great bargain, got it on auction or it was a foreclosure sale, like the one someone will get when they buy yours.  Life sounds peachy now, maybe it goes something like this; ‘were putting extra money away, even taking an extra vacation.  I can expect my values to increase and get a realistic return profit someday,  Wow I am making money as I sleep’.  Sounds good in theory but while your sleeping soundly with your head on that pillow, dreaming about how you beat the system, there is someone somewhere going over files determining whom and in what order they intend to pursue for judgement.  Maybe it will be the bank, worse yet probably one of them cut throat folks that buy defaulted loans and hence the rights to sue you for a judgement.  I think the owner of every one of them has someone named Vinny on the payroll.   When you receive that letter the party is over.   I have seen judgement’s come against people, seen huge payroll garnishments, excessive legal fees, etc….  So now what?  Probably decide that bankruptcy is a good choice.  While it does exist to assist people to start over it also comes with its own draw backs and expenditures.

All said and done, keep in mind that the financial gain you seem to make at the start is short sighted, it can and will probably costs you more over the next ten years of your life both financially and emotionally.  Does it seem fair?  I would have to say yes and no.  We all make decisions everyday, hopefully for the better but it doesn’t always turn out how we hoped.  But that doesn’t excuse us of the responsibility of those decisions.  Lord knows I made a few over the years that were maybe good ideas but bad timing, or just a bad idea all together.  Life happens, we move forward.  If your loosing sleep on how much value you lost in your home then you need to refocus.  Keep your savings plan, retirement plan,  if possible make an extra payment per year or two.  If you pay a little extra per month that in the end of the year equals to or greater than your monthly payment, you would be shocked at how many years that will knock off your mortgage.  For example, a thousand dollars off your principle now, over 30 years can save you over three thousand dollars.  When you closed on your home, remember that spreadsheet they showed you for amortization? Its what I call, ‘the truth and scary’ report.  The one that shows you what you will end up paying at the end of the term for your home after interest.  You can beat that system by paying principle early.  If you do this over the next five years not only will you have reduced your mortgage considerably, but eventually we hope the market will catch back up and you can meet it in the middle.  Either way, I think over ten years (the time it will take to re-establish your name and credit) you will come out far stronger and better situated then taking the quick gain. I wish all of you success in your worthy endeavors.