What is a Mortgage?

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When a person purchases a property in Canada they will most often take out a mortgage. This means that a purchaser will borrow money, a mortgage loan, and use the property as collateral. The purchaser will contact a Mortgage Broker or Agent who is employed by a Mortgage Brokerage. A Mortgage Broker or Agent will find a lender willing to lend the mortgage loan to the purchaser.  

The lender of the mortgage loan is often an institution such as a bank, credit union, trust company, caisse populaire, finance company, insurance company or pension fund. Private individuals occasionally lend money to borrowers for mortgages. The lender of a mortgage will receive monthly interest payments and will keep a lien on the property as security that the loan will be repaid. The borrower will receive the mortgage loan and use the money to purchase the property and receive ownership rights to the property. When the mortgage is paid in full, the lien is removed. If the borrower fails to repay the mortgage the lender may take possession of the property.

Mortgage payments are blended to include the amount borrowed (the principal) and the charge for borrowing the money (the interest). How much interest a borrower pays depends on three things: how much is being borrowed; the interest rate on the mortgage; and the amortization period or the length of time the borrower takes to pay back the mortgage.

The length of an amortization period depends on how much the borrower can afford to pay each month. The borrower will pay less in interest if the amortization rate is shorter. A typical amortization period lasts 25 years and can be changed when the mortgage is renewed. Most borrowers choose to renew their mortgage every five years.

Mortgages are repaid on a regular schedule and are usually “level”, or identical, with each payment. Most borrowers choose to make monthly payments, however some choose to make weekly or bimonthly payments. Sometimes mortgage payments include property taxes which are forwarded to the municipality on the borrower’s behalf by the company collecting payments.  This can be arranged during initial mortgage negotiations.

In conventional mortgage situations, the down payment on a home is at least 20% of the purchase price, with the mortgage not exceeding 80% of the home’s appraised value.

A high-ratio mortgage is when the borrower’s down-payment on a home is less than 20%.

Canadian law requires lenders to purchase mortgage loan insurance from the Canada Mortgage and Housing Corporation (CMHC). This is to protect the lender if the borrower defaults on the mortgage. The cost of this insurance is usually passed on to the borrower and can be paid in a single lump sum when the home is purchased or added to the mortgage’s principal amount. Mortgage loan insurance is not the same as mortgage life insurance which pays off a mortgage in full if the borrower or the borrower’s spouse dies.

First-time home buyers will often seek a mortgage pre-approval from a potential lender for a pre-determined mortgage amount. Pre-approval assures the lender that the borrower can pay back the mortgage without defaulting. To receive pre-approval the lender will perform a credit-check on the borrower; request a list of the borrower’s assets and liabilities; and request personal information such as current employment, salary, marital status, and number of dependents. A pre-approval agreement may lock-in a specific interest rate throughout the mortgage pre-approval’s 60-to-90 day term.

There are some other ways for a borrower to obtain a mortgage. Sometimes a home-buyer chooses to take over the seller’s mortgage which is called “assuming an existing mortgage”. By assuming an existing mortgage a borrower benefits by saving money on lawyer and appraisal fees, will not have to arrange new financing and may obtain an interest rate much lower than the interest rates available in the current market. Another option is for the home-seller to lend money or provide some of the mortgage financing to the buyer to purchase the home. This is called a Vendor Take- Back mortgage. A Vendor Take-Back Mortgage is sometimes offered at less than bank rates.

After a borrower has obtained a mortgage they have the option of taking on a second mortgage if more money is needed. A second mortgage is usually from a different lender and is often perceived by the lender to be higher risk. Because of this, a second mortgage usually has a shorter amortization period and a much higher interest rate. 

Written by mortgageagent

A look at the events that could influence mortgage rates in the week ahead.
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Role Of Mortgage & Mortgage Broker

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Mortgage is the financial term used in terms of money. Mortgage is a method used to obtain loan on behalf of any collateral security. Mortgage plays the dominant role in the world financial market for the purpose of obtaining money from the mortgage lenders. Mortgage broker is the other important person who helps the people to obtain mortgages from the lenders by securing a collateral security. Mortgaging is the business which fetches more demand among the people and huge number of people are engaged in the activity of providing mortgages for the public.

Generally, mortgages will be provided based on securing any real or personal property for payment of debt obtained. Nowadays, mortgage and mortgage dealers play the important and essential role in the world market. Mortgages are provided by the financial institutions, banks and many other financial sources. Mortgage dealers are available in the market in more numbers and nowadays most of the people are interested in mortgage business. Real and personal properties can be secured as the collateral security to obtain payment debt.

There is standard method of obtaining mortgages loan and each institutions formality differs. Generally, mortgage loan are obtained for construction of residential and commercial properties and for purchase of different kinds of house property. Mortgages are the instrument used for the purpose of obtaining loan or financial sources which can be obtained for different interest rates. Mortgage loans will be issued for different interest rates and the interest rate varies as per the institution and banks issued. Most of the people obtain mortgages for their houses, business, marriage, education or for any other kind of issues.

Arranging mortgage from the financial institution is not the difficult task and for the purpose only mortgage brokers are exist in the market. To arrange credit loans and advances, mortgage brokers provides excellent, unique and uncreditable performance to the customers. Over the past years mortgage brokers were finds to be listed in few numbers. But now due to increase in population and requirement of the people more number of mortgages and mortgage institutions has been started. To perform excellent performance in mortgage business, proper experience and knowledge is required for the business.

Because of the extensive performance and demand of the mortgage brokers, more number of mortgages is provided. Nowadays, mortgage loans are provided for reasonable interest rate to enable customers to obtain mortgages from this kind of banks, financial institutions. The profession of mortgage business broker differs according to each state and his style. Mortgage broker of each state is required to obtain mortgage broker license from the state and federal government to engage in the business. Without mortgage broker license, the mortgage broker cannot able to perform the mortgage broker business.

Written by babu2012

The secret mortgage servicers don’t want you to know is they can make MORE money off of homeowners when they keep your loan in default. A former employee of loan servicer EMC tells the inside story why so many people can’t get their loan out of default.
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Mortgage Assumption

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What is a mortgage assumption?

A mortgage assumption is a transaction that takes place when a new home buyer formally takes over the loan obligation of a seller while that seller’s mortgage financing stays in place.  Through mortgage assumption, another person “assumes” your loan at its current interest rate and takes over the payments.  In some cases the seller will be released from the loan, though in most cases the lender will refuse to release the original borrower (the seller) from the original loan obligation even in cases where the buyer is well-qualified for the mortgage assumption.

Which loans are assumable?

Very few loans are assumable these days, however it cannot hurt to review your mortgage to see if it is assumable. There are two basic types of mortgage assumption transactions: a simple assumption and a novation agreement.  In a simple assumption the mortgage lender is not involved and the buyer and seller come to a private agreement. In a novation agreement the seller will notify the lender of their intent to allow a different buyer to assume the mortgage.  If the mortgage lender agrees to the assumption, typically a buyer must meet the lender’s credit and income requirements, the seller will then be released from the liability of the original loan.

Who can do a mortgage assumption?

As we mentioned above some mortgages are assumable and some are not.  You can look through your original mortgage documents or ask your mortgage company to learn more about your loan.  Mortgages that were originated before Dec. 1, 1986, use the simple assumption process. Most loans after that date include the “due-on-sale” clause which we will talk about below.

Mortgage assumption and the “due-on-sale” clause

The biggest factor limiting the use of mortgage assumptions is the “due-on-sale” clause that is included in most conventional home loans since 1986. This clause requires that ‘the loan be repaid in full if a property is sold.’  Even with the “due-on-sale clause,” mortgage lenders may allow an assumption (because foreclosure and non-performing assets are costly for banks), but the interest rate will typically be raised to current market rates.

Where you are the buyer or the seller doing the mortgage assignment, you will want to review the loan documents thoroughly. Consult a lawyer before proceeding in any real estate transaction so that you fully understand the ramifications of the deal and so that you can avoid any pitfalls.

What is a mortgage assumption?

A mortgage assumption is a transaction that takes place when a new home buyer formally takes over the loan obligation of a seller while that seller’s mortgage financing stays in place.  Through mortgage assumption, another person “assumes” your loan at its current interest rate and takes over the payments.  In some cases the seller will be released from the loan, though in most cases the lender will refuse to release the original borrower (the seller) from the original loan obligation even in cases where the buyer is well-qualified for the mortgage assumption.

Which loans are assumable?

Very few loans are assumable these days, however it cannot hurt to review your mortgage to see if it is assumable. There are two basic types of mortgage assumption transactions: a simple assumption and a novation agreement.  In a simple assumption the mortgage lender is not involved and the buyer and seller come to a private agreement. In a novation agreement the seller will notify the lender of their intent to allow a different buyer to assume the mortgage.  If the mortgage lender agrees to the assumption, typically a buyer must meet the lender’s credit and income requirements, the seller will then be released from the liability of the original loan.

Who can do a mortgage assumption?

As we mentioned above some mortgages are assumable and some are not.  You can look through your original mortgage documents or ask your mortgage company to learn more about your loan.  Mortgages that were originated before Dec. 1, 1986, use the simple assumption process. Most loans after that date include the “due-on-sale” clause which we will talk about below.

Mortgage assumption and the “due-on-sale” clause

The biggest factor limiting the use of mortgage assumptions is the “due-on-sale” clause that is included in most conventional home loans since 1986. This clause requires that ‘the loan be repaid in full if a property is sold.’  Even with the “due-on-sale clause,” mortgage lenders may allow an assumption (because foreclosure and non-performing assets are costly for banks), but the interest rate will typically be raised to current market rates.

Where you are the buyer or the seller doing the mortgage assignment, you will want to review the loan documents thoroughly. Consult a lawyer before proceeding in any real estate transaction so that you fully understand the ramifications of the deal and so that you can avoid any pitfalls.

Phill Grove has conducted approximately 0M in real estate transactions – using non-traditional investing methods such as mortgage assignment, short sales, equity partnering, auction-options, wraps, swaps, and other methods – many of which he invented and/or pioneered for the industry. Phill has invented a new strategy called the Mortgage Assignment Profits System. Phill Grove has personally trained and coached hundreds of Real Estate Investors on the “12 Ways to Buy and Sell Real Estate”, as well as marketing and lead processing strategies that actually work. Find out more about Phill at http://www.REIMaverick.com

Written by phillgrove
Entrepreneur. Real Estate Investor with over 1,200 deals under my belt. Real Estate & Business Coach to thousands of students finding financial freedo

default Mortgage Assumption

Understanding how mortgage interest rates are quoted
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Mortgage Loan And Mortgage Refinancing Deals

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Choose the Best Mortgage Rate

Refinance mortgagecomes in different shapes, sizes and packages. Each of which has its own advantages and disadvantages. Therefore, make sure you select the mortgage loan which is best for you, your future plans and your financial capacity…with the best mortgage rate. You may consider mortgage finance as a personal guarantee that you will be able to repay the money that you have borrowed to buy your home. In a refinance home mortgage, you are going to pledge your house to your bank. You can only attain full ownership of the house after you have paid your loan amortization to the bank. If you cannot pay the house within the specified period of time, the bank may opt to foreclose the property and then sell it to another prospective buyer. The said buyer will eventually complete the payment of the load amortization with the bank including the interests, penalties and surcharges.

Find Mortgage Brokers With Lowest Mortgage Rates

            Obtaining the lowest available rate on a mortgage quote should be your primary objective. Lower interest rates result to lower monthly payments.  Therefore, as much as possible, search for the most competitive mortgage quotes available.  No matter where you are in the USA or around the world, a Mortgage loan that is based in your location will be provided by a mortgage broker. This mortgage refinancing focuses on the arrangement of home financing alternative that best satisfy the demands of local homeowners and prospective buyers. The local Mortgage brokers and staff are committed to ensure that their clients receive the best service, the lowest possible home mortgage rates and the best product selection. Purchasing your first home via refinance mortgage is one of the most exciting experiences in your life. However, some complicated process concerning the arrangement of the mortgage finance can suspend your excitement. Transactions from bank to bank, negotiation of rates can be taxing and costly at your part. Therefore, let the qualified and experienced local Mortgage Brokers make your transactions easy and simple. They will make your application for refinance home mortgage hassle-free.

Get Mortgage Deals With Flexible Payment Plans

            You may feel that you are not able to get a mortgage loan due to your financial issues in the past or maybe you are new to the country and you do not have credit rating. Do not worry because the local Mortgage brokers may help you arrange the mortgage financing of your new home at a competitive rate. Most USA homeowners know that the longer the period they hold borrowed money, the more they pay in interest for mortgage finance. The same principle applies to every mortgage- the longer the time it takes for you to fully pay your mortgage means the more interest you end up paying. Thus, refinance home mortgage lending partners in the USA and elsewhere make it possible for homeowners to pay their mortgage loan in a period less than their amortized loan period. Usually they offer payment privileges and extra mortgage payment options. Using all the available payment options, you can pay off your mortgage loan in 5 years. The local Mortgage brokers assist you in every transaction that may involve you. Moreover, they assure you quality service and commitment in finding the best mortgage rate for you. Browse the internet to get mortgage quotes and compare them to get the best deal.

Written by dtrance
Entrepreneur,QS Technician,Application Developer,Marketing Coordinator, Editorial Administrator

Three years ago the US government took over Fannie Mae and Freddie Mac in hopes of protecting the mortgage market from collapsing. Now 27 percent of Americans owe more than their homes are worth and a solution has yet to be found. Andrew Schiff of Euro Pacific Capital explains to us who really benefited from the bailout and offers possible solutions for the economic state. Follow Lauren on Twitter: twitter.com
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Question by Christopher: What caused the home mortgage rates to sky rocket, causing people being unable to pay their monthly mortgages?
The recession was caused by people being unable to pay back their home mortgages because the mortgage rates were too high?

Banks were not getting their money back from home owners, causing a credit crunch, thus they were unable to lend money to big businesses.

Big businesses then had to cut back on expenses and began to lay people off the the thousands.

So what caused the mortgage rates to go up so high that started this financial mess in the first place?

Best answer:

Answer by carmenlafond
ARM’s -Adjustable Rate Mortgage.

Give your answer to this question below!

Your Money – Finance Column – Fixed Versus Variable Rate Mortgage

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There are various mortgages available in the loan market today.  The various forms of mortgages are fixed rate mortgage, graduated payment mortgage, variable rate mortgage, interest only mortgage, adjustable rate mortgage, negative amortization mortgage, and balloon payment mortgage.  Of these fixed and variable rate mortgages are very popular. 

A fixed rate mortgage (FRM) is a mortgage where the rate of interest remains the same throughout the term of the loan.  A variable rate mortgage is a form of mortgage wherein the rate of interest varies or is adjusted. Though the variable rate mortgage may have payment term that is fixed, the interest rate can change. The rate is determined by prevailing market conditions.

Fixed rate mortgages have rigid conditions though new products are available which are popular. A fixed rate mortgage can be good if one wants to carefully budget repayment.  Here you know exactly how much you need to repay which means payment can be planed accordingly which can give you a degree of security and certainty.

A fixed rate mortgage is

1. Predictable and secure.  The borrower is not exposed to increasing interest rates due to market condition or due to any other reason.

2. Higher cost in short term: The interest rate charged for a fixed rate mortgage is generally higher than the initial interest rate for a variable rate mortgage.

3. Ideal for long-term ownership: In the long term, the rate of interest on a variable rate mortgage can exceed that of a fixed rate mortgage.

Variable rate mortgages generally provide flexibility and options, but they can be highly risky in a rising interest rate market in case your have overcapitalized on your loan. The important aspect while availing a variable rate mortgage is to plan and budget for increase in interest rates and also make sure that it is possible for you to meet your repayment obligations in case rates rise.

A variable rate mortgage is

1. Good for short-term ownership: If you plan to sell your house before the adjustable rate comes into force then you can benefit from lower initial fixed rate.

2. Good when market rates fall:  If you are confident that the index can go down in the near future, then you can pay low interest rates in the future.

Most experts suggest fixed rate mortgage as better option in case there is likelihood of interest rate rise in the medium to long term. But benefits gained might not be enough to cover the fees to be paid to switch from a variable to a fixed rate mortgage.  The important point is to check your own financial situation and then consider a change.

It is pointed out by experts that the fixed rates never fall below the standard variable rate for a long period of time.  In case fixed rates do fall, then it is good idea to fix at least some part of the mortgage.

The type of mortgage which suits you wholly and solely depends on your ability to handle the rate of interest fluctuations.

Written by BigKnowledge

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Question by buad0118: What happens to a second mortgage when a home is purchased at a foreclosure auction?
I am going to bid on a house at foreclosure and it has a 1st mortgage of $ 280K and a second of $ 70K. The lender on the first two mortgages is Decision One Mortgage. The lender at foreclosure is Countrywide. Does this mean that if I buy this house at foreclosure that I will own additional money to the second mortgage or just the first mortgage and back taxes?

Best answer:

Answer by Karen R
If Countrywide is currently the 3rd mortgage and you buy it at their foreclosure sale you will be responsible for the 1st and 2nd mortages plus taxes.

Give your answer to this question below!