Mortgage Answer Book

by John Talamo

Overview

What kinds of mortgages are available to me? How do I get a mortgage? How large a down payment do I have to put down to get a mortgage?

For most people, buying a house is the largest purchase they will make during their lives. However, it is the loan to buy the house that can add hundreds of thousands of dollars to your overall cost. The Mortgage Answer Book answers the most important questions someone buying a home needs answered before obtaining a mortgage. With insider tips, strategies, and insights that are critical for anyone applying for a mortgage. The Mortgage Answer Book is an authoritative reference, providing sound advice and immediate answers to your most pressing concerns.

Written by an attorney, The Mortgage Answer Book answers your most important questions including:

• How do interest rates affect me being able to purchase a home?
• How can I fix a problem on my credit history?
• What are prepayment penalties?
• How can I figure out how much money I will be able to borrow?
• How do I refinance my mortgage?
• What is the difference between a fixed mortgage and an adjustable rate mortgage?
• How do I avoid foreclosure and losing my home?

Written in an easy-to-read, question and answer format, The Mortgage Answer Book helps you understand how to successfully finance a home.

Product Details

ISBN-13:	9781402234828
Publisher:	Sourcebooks
Publication date:	08/01/2008
Series:	Answer Book
Sold by:	Barnes & Noble
Format:	eBook
Pages:	288
File size:	9 MB

About the Author

John J. Talamo received his law degree from the Detroit College of Law at Michigan State University. In addition to advising clients on all matters relating to buying, selling, owning, and renting property, Mr. Talamo has written or coauthored several books on topics relating to real estate and business. Collectively, his books have sold over two million copies and are used nationally by government agencies, title companies, escrow companies, and real estate agents. He resides outside of Las Vegas, Nevada.

Read an Excerpt

Excerpt from Chapter 1: Introduction to Mortgages

What is a mortgage?
In simple terms, a mortgage is putting up real property (real estate) to secure a loan. This means that if you fail to meet the terms of the mortgage-for example, by failing to make your agreed-upon monthly payments-the lender can sell your house through a process called foreclosure to get back the money you borrowed to buy it.

You should familiarize yourself with certain technical terms used in the mortgage industry.

A mortgage is a two-party document-the mortgagor (borrower) gives the mortgage, and the mortgagee (lender) lends the money. Most people incorrectly say that they are going to "buy a mortgage." The expression has become so common that everyone knows that someone who says it is trying to borrow-not lend-money.

Another term that you should know-which is often used incorrectly-is pledge. To pledge something is to deliver physical possession of it, like if you are getting a loan from a pawnshop. When you do not give up possession, you hypothecate the property-you do not pledge it. Since pledge is a simpler word than hypothecate, it is commonly used-even though not technically correct.

How are mortgages structured?
There are two general ways that mortgages are structured. The structure affects how the foreclosure procedures are performed should you not make your mortgage payments. In title theory states, the lender owns the property and deeds it back to the borrower when the loan is repaid. In lien theory states, the borrower owns the property and the lender has a lien on it. Title theory states are more commonly found in the eastern part of the country, with more lien theory states in the western United States.

In either a title theory state or lien theory state, the general effect is the same. The lender's rights in the property are only for the purpose of securing the loan. If the borrower abides by the terms of the note and mortgage, the lender has no right to interfere with the borrower's use and enjoyment of the property.

Note: There is a third way mortgages are structured, which is a hybrid of title theory and lien theory. It is called the intermediary theory. In an intermediary theory state, the borrower has title, but the lender can take title if there is a default.

The differences in the theories may become important when the borrower fails to abide by the terms of the mortgage loan. The foreclosure process varies from state to state, with some state laws being more favorable to the borrower and some to the lender. Since state laws control the real property located within that state, every person must follow the laws of his or her particular state.

How are FHA and VA mortgages structured?
A lender that makes a loan backed by FHA insurance (insurance issued by the Federal Housing Administration to protect lenders) or a VA guarantee (insurance issued by the Department of Veterans Affairs to protect lenders) must follow the entity's guidelines. Government-backed mortgages are covered in a later chapter.

When the loan is repaid, the lien is released. As a practical matter, it comes down to this-if you make your payments, you will eventually have ownership of your home free and clear. If you fail to make your payments, you will lose your home through foreclosure.

Table of Contents

Introduction

Chapter 1: Introduction to Mortgages
Chapter 2: The Mortgage Industry
Chapter 3: Underwriting
Chapter 4: Interest
Chapter 5: Prequalifying for a Loan
Chapter 6: Terms of the Mortgage
Chapter 7: Payment Plans
Chapter 8: Fixed Rate Loans
Chapter 9: Adjustable Rate Mortgages
Chapter 10: Hybrid Mortgages
Chapter 11: Jumbo Loans
Chapter 12: Prepayment
Chapter 13: Government Loans
Chapter 14: Hard Money Mortgages
Chapter 15: Junior Mortgages
Chapter 16: Home Equity Loans
Chapter 17: Refinancing
Chapter 18: Mortgages on Manufactured Homes
Chapter 19: The Effect of Inflation on Mortgages
Chapter 20: Facing Foreclosure
Chapter 21: Purchase Money Mortgages
Chapter 22: Reverse Mortgages
Chapter 23: Subprime Mortgages
Chapter 24: First-Time Buyers
Chapter 25: The Right Loan for You

Conclusion
Glossary

Appendix A: Amortization Tables
Appendix B: Home Ownership and Equity Protection Act
Appendix C: The Real Estate Settlement Procedures Act

Index
About the Author