Commercial Loan
A mortgage loan secured by commercial property, such as an office building, shopping plaza, manufacturing warehouse, or apartment complex.
Extra Information!
Extra Information!
Divorce Information
What Mortgage Options Do I Have After Divorce?
The sad reality is that many marriages end in divorce. Separation is heart-shattering for any couple, and it is even harder when you have to think about the division of assets and owning property as a divorcee. You and your partner may want to refinance the mortgage. This concept means that one partner will be able to maintain the property via a deed of transfer. While it may sound like an easy process, it comes with its fair share of challenges. Needless to say, making this decision is both financially and emotionally taxing. Additionally, some squabbles often occur over the property. These disagreements may result in a bitter legal battle. Either way, if you have been thinking about mortgage options after a divorce, here is everything that you need to know:
The mortgage options for divorced couples depend on factors like how the property was titled and financed, as well as whether you or your partner want to remain in the home.
Finally, the amount of equity that both of you have as well as your credit rating should be taken into consideration.
Here are your mortgage options after divorce:
Refinance Your Mortgage
Refinancing means that you will remove your divorced partner from the mortgage loan.
As refinancing is not a must, you and your partner can choose to sell the home if you cannot afford to refinance.
Removing Your Spouse from Your Mortgage after Divorce.
If both you and your partner are not able to maintain your home and settle the mortgage, then you may need to sell the house.
However, if you are the only one with the means to keep the property, then refinancing the mortgage is a viable option.
Remember, divorce does not absolve you from your current debts.
As such, you should be financially prepared to settle any pending money matters, mortgage loan included.
If you choose to keep the home and your partner agrees, then they will need to sign a quitclaim, to show that they are no longer part of the mortgage.
This is an important step as it will help you avoid any future problems.
It is important to seek legal advice from an experienced divorce attorney.
Selling the Home
Selling your home and dividing the profits amongst you and your partner is an option that you may have to consider if you choose not to refinance.
All you need to do is list the property on the market at the best possible price.
Keeping the Home
You may choose to keep your home after the divorce. This process means that you will have to buy out your partner’s share.
Your reasons may include an attachment to the house or stability for both yourself and the kids.
Costs that come with keeping the home. You will need to consider property taxes, maintenance costs as well as other financial responsibilities.
Regardless of the option that you choose, it is important to do your homework and gain all the necessary information so that you will be content at the end of the day.
Consult an attorney as they will always protect your financial interests.
The Bottom Line
Divorce is a stressful situation for all parties involved. It is even more stressful when the division of assets is involved. It is emotionally and mentally draining.
However, you do not want to go through your divorce blindly.
It is best to equip yourself with the right information when it comes to your mortgage loan. Ensure that you have an open mind throughout the process as you may not agree on everything with your partner, especially when it comes to keeping assets.
Be sure that you are protected every step of the way. When it’s all said and done, there is no right or wrong way to go about the mortgage process as a divorcing couple.
Ideally, come up with a set of guidelines that will satisfy both parties involved.
What Is Condo Insurance?
Most of the time, we think of insurance as something that protects us from the unknown:
What if you get into a car accident, or your house burns down?
At its most basic, condo insurance – also known as an HO-6 insurance policy – provides protection against damage to your condo and its contents caused by fire, smoke, theft, and vandalism. In fact, your lender will require it before approving your home loan.
Your condo insurance can even cover additional living expenses. Some of these expenses can include:
If you’re forced to live elsewhere while your condo is being repaired
Legal fees for accidents
Moving costs if you have to relocate
Your condo insurance policy (HO-6) is going to be very similar to a homeowners insurance policy (HO-3) but you won’t need both.
One difference with condo insurance is that you will also have some added coverage options.
For instance, if you were to experience a flood, a separate policy might be needed to cover the damage from the water.
In the same vein, you may be able to buy additional coverage to cover your liability if someone were to get hurt on your property.
What Does a Condo Association Insurance Policy Cover?
Your condominium building is probably covered under “master insurance policies” purchased by the condo association or homeowners association (HOA) unless stated otherwise by the bylaws.
You can think of condo association insurance as a policy that covers damages to the common areas of a building that are owned by a condo association. This could include the roof, the exterior walls, the hallways, the elevators, the exterior doors, and the common areas.
It’s important to remember that this type of policy usually does not cover the units inside the building.
Another way to determine what your specific condo association’s master insurance policy covers is to ask what kind of policy they have.
There are 3 main types of condo master insurance policies:
Bare walls coverage – This is a limited policy that covers the structure, furnishings, and most fixtures in a condominium’s common areas.
This also usually covers any property that is owned by the condo association.
Single entity coverage – This covers everything that is included in bare walls coverage as well as coverage for built-in property such as fixtures in your individual condo unit.
All-in coverage – This applies to either all properties owned by your condo association or all properties part of a condominium structure. This is the most comprehensive condo master insurance because it covers condo improvements and additions.
Knowing what your condo association covers already can help you decide what type of condo insurance HO6 you need for your specific unit.
You can think of condo association insurance as a policy that covers damages to the common areas of a building that are owned by a condo association.
This could include the roof, the exterior walls, the hallways, the elevators, the exterior doors, and the common areas.
What Does Condo Insurance Cover and Not Cover?
As a condo buyer, it’s important to consider how condo insurance can help protect your home and your loved ones.
Condo Owner Insurance HO6 Covers:
Dwelling coverage – the interior of your unit
Personal property coverages – damage or theft of your personal belongings
Personal liability coverage – legal fees and medical payments if guests are injured in your home
Loss of use coverage – living expense coverage if your condo becomes uninhabitable
Loss assessment coverage – your share of a loss assessment that the association charges all condo owners if there is damage to a common area or building exterior
What Condo Owner Insurance Does NOT Cover
It doesn’t cover the damages for the exterior of the building or the common areas of the condo
It doesn’t cover damage from floods, earthquakes, or hurricanes
Condo insurance also does not cover damages sustained by events that are not covered by your home insurance
Types of Condo Insurance
The types of condo insurance you need to be aware of are your own condo owner insurance HO6 policy and the master insurance policy that your condominium association pays for
Is Condo Insurance Required?
Just like with homeowners insurance HO3, condo insurance HO6 is usually required by your mortgage lenders so that their financial interest is protected for your loan period
How Much Condo Insurance Do You Need?
To determine how much condo insurance HO6 you need, you need to know how much the condo is worth
You can use an appraisal service or a condo insurance coverage calculator to determine how much your condo is worth
Mortgage Payoff
When you have been making payments towards your mortgage for many years, you may start to wonder how much is left to pay.
It could be that after looking at your current balance, you realize that it is low enough that you could seriously consider paying it all off and being mortgage-free.
Why is your Mortgage Payoff Higher than the Balance?
Your mortgage payoff is the amount of money that you owe to your mortgage provider taking into account the terms of your mortgage. This includes the interest you will be paying and other fees. Essentially, this is what the mortgage will cost you over the term of your mortgage when taking out the loan. Your current balance is different from this as it shows what you have currently paid, excluding the interest that is due. When looking at your statement you may think that you have nearly paid off the loan but when contacting the lender be told that the remaining balance is higher than anticipated. The balance on your loan statement is what is currently owed as of the date of the statement. However, interest will continue to accrue each day after that date.
Mortgage Interest is Paid in Arrears
In the U.S., mortgage interest is paid in arrears. This means that when you make your payment on the first of the month, you are paying the previous month’s interest.
Mortgage interest in arrears can affect your payments. If you close any day other than the first or last day of the month, then you’ll find that you owe some accrued interest.
Since mortgage loans are typically due on the first of each month, closing your loan during the month will result in owing interest from the closing day through the remainder of the month.
How much More is the Mortgage Payoff than the Balance?
Borrowers commonly confuse the current balance on their mortgage with their mortgage loan payoff.
However, the mortgage loan payoff is typically higher than the balance on your monthly statement.
The lender will continue to add interest to the loan until the payment has been received. When requesting your mortgage payoff amount, the interest will continue to be added right up to the moment you pay them. This is why the mortgage payoff could change again if you delay your payment.
Additionally, your mortgage payoff can include other fees charged by your lender.
The most common items found on a mortgage payoff statement are:
* The principal balance of your mortgage loan.
* The interest to be paid through the payoff date.
* Daily interest charges for the remainder of the month.
* The payoff statement fee.
* Any relevant escrow shortage or overage.
Selling a House with a Mortgage
As you can imagine the majority of all homeowners have a mortgage on their property.
This means that when moving you will have to sell your property that still has a mortgage on it.
This can bring up a few questions such as:
Can you sell your property with a mortgage?
Yes, of course, you can. There are essentially two options that you have to choose from.
If you sell your property before the mortgage is fully repaid, you can sell the house and use the money from the sale to pay off your mortgage.
What happens to my mortgage when I sell my home?
In most cases, the sale of your property will provide you with sufficient funds to pay off the mortgage that you have on the property.
Although it’s unlikely, if the sale of the property is less than the mortgage, then you are still required to pay the remaining balance.
What is Earnest Money?
Earnest money is the amount you present to home sellers to prove that you’re interested in the property and serious about going through with the sale. Sometimes, realtors and loan officers refer to earnest money as an “EMD or a deposit” since it shows a seller you plan to go through with the deal if the seller accepts your starting offer.
When a buyer and seller enter into a purchase agreement, the seller will take the home off the market while the entire process moves toward closing. During this period, the seller typically makes their home available for inspections and repairs.
If the buyer chooses not to move forward with the home purchase, the earnest money deposit will protect the seller as they will have to relist their home and begin the process anew. However, if the deal falls through as a result of a failed home inspection, then the buyer is allowed to recoup their earnest money deposit as it’s usually stated in the purchase agreement. If you’re a first-time homebuyer, it may seem odd that you need to pay earnest money; however, home purchases in the U.S. have relied on earnest money deposits for quite some time. The law may not mandate them, but earnest deposits are so common that not paying one is rare.
When you make an Earnest Money Deposit, Who Holds it?
The earnest money should never go directly to the seller. An escrow service, real estate agent, or title company will hold on to the deposit. It’s actually common for many first-time homebuyers to forget about the earnest money held in escrow until closing day!
If you choose to use an escrow service, your earnest money will be safe with a third party until you need it to offset the mortgage’s closing cost. The idea is to have a neutral party secure the money until it’s ready for a specific use, in this case, finalizing a real estate deal.
How can You Protect your Earnest Money Deposit?
Ideally, neither the seller nor the buyer can access the earnest money. If you could quickly get your hands on it, that would defeat the purpose of having a neutral party involved.
The escrow service, real estate agent, or title company will protect your deposit and specify the conditions when the buyer or the seller could access the funds, if at all. Keep the following tips in mind when deciding where to take your earnest money:
* Earnest money should never be given directly to the seller.
* Request a receipt for your earnest money and keep it in your records.
* Refuse any authorized release of your earnest money until closing.
One situation that can lead to a refund is a home listing that isn’t accurate or legal from the start. There have been instances where the person selling the home wasn’t the actual homeowner! In that case, you should receive a complete refund if the escrow agreement you signed specifies as much, which they usually do. That’s why it’s so vital to review and understand the terms of a sales contract before agreeing to pay a single penny to “hold” a home for sale until a mortgage loan is in place. The best advantage to having earnest money in escrow is that you can reclaim the money if you and the buyer can’t come to an agreement during final negotiations.
How Much Earnest Money is Necessary?
There is no set amount for an earnest money deposit. The general rule of thumb is that you should provide at least 1 – 3% based on the property’s listing price, yet many first-time buyers choose to deposit more, some as much as 10 percent of the listing price. Interestingly, state laws don’t require earnest money to begin a real estate deal. The main benefit of paying more earnest money than the minimum amount is that it can give you a leg up during a bidding war. If you put more money in earnest, the seller may consider your offer first. It’s critical to understand that earnest money is not the same as a down payment on a mortgage. Instead, an earnest money deposit is an arrangement between you and the home seller; a down payment is an arrangement between you and the mortgage lender.
Can you Lose your Earnest Money Deposit?
It is entirely possible that buyers can lose the earnest money deposit if the terms of the purchase agreement are not followed. Purchase contacts vary from state to state, so it’s important to know the details concerning earnest money before you sign. A standard purchase agreement will typically include a number of contingencies or conditions that need to be met in order for the home buying process to conclude with a final purchase. These contingencies can include:
* Home Inspection Contingencies – This allows buyers to back out of the agreement if something is discovered during the inspection process.
* Mortgage Financing Contingencies – This is a typical contingency to cover a buyer who is unable to secure a mortgage loan to complete the home purchase.
* Home Appraisal – An appraisal will verify that the property purchased is actually worth the amount that the buyer has agreed to pay. If not, this contingency allows the buyer to renegotiate or back out of the deal.
* Clear Title – Title contingencies allow a buyer to back out of a deal when a title company cannot verify that the property title is clear of any liens, disputes, or issues that can’t be resolved.
If a buyer decides to cancel the contract for any reason not covered under their contract contingencies, then the earnest money deposit is “lost” as it’s forfeited to the seller. Earnest money essentially assures the seller that the buyer won’t cancel the contract without a valid reason.
Lucrative Home Loans, Mortgage Brokers Are Here to Answer Your Questions
Earnest money can serve to make a buyer’s offer more favorable against those who would not be willing to provide the deposit.
In a competitive real estate market, buyers should take advantage of every asset that makes them stand out.
If you’re ready to put an offer on a home, make sure you’re ready to pay an earnest money deposit. The good news is that you’ll be able to offset closing costs with the earnest money deposit.
If you have a question that demands a reliable, trustworthy answer, the expert Mortgage Brokers at Lucrative Home Loans are here to help. If you’re interested in buying a home soon, please contact us today. We’d love to help you turn your dreams of buying a home into reality!
Interest Rates
As you start shopping for a home loan, your first question of each lender will probably be "What's your interest rate?”When your grandparents bought their home they were probably putting at least half the purchase price down. Their interest rate was probably around 10-15%. Rates stayed the same for years at a time. By the l980s, lenders were setting new rates on mortgage loans as often as once a week -and they still do today. When inflation hit a high in the '80s, some mortgage loans carried interest rates as high as 17 %. Rates dropped through the 90s, and by 2000 they had reached their lowest rates in decades. Homebuyers appear to have the most favorable conditions for mortgage borrowing since their grandparents' days -and without 50% down payments either. Every person, every loan, every situation is different, contact us today to get a quote on your interest rate.
Professional Home Inspections: Well Worth The Money
A home inspection is a reasonable effort to disclose the conditions of a house as it exists.
What Is a Home Appraisal?
An appraisal is an unbiased professional opinion of a home’s value. Appraisals are almost always used in purchase-and-sale transactions and are commonly used in refinance transactions. In a purchase transaction, an appraisal is used to determine whether the home’s contract price is appropriate given the home’s condition, location, and features. In a refinance transaction, an appraisal assures the lender that it isn’t handing the borrower more money than the home is worth.
Lenders want to make sure that homeowners are not over-borrowing for a property because the home serves as collateral for the mortgage. If the borrower should default on the mortgage and go into foreclosure, the lender will sell the home to recoup the money it lent. The appraisal helps the bank protect itself against lending more than it might be able to recover in this worst-case scenario.
Because the appraisal primarily protects the lender’s interests, the lender will usually order the appraisal. Per federal regulations, the appraiser must be impartial and have no direct or indirect interest in the transaction.
A property’s appraisal value is influenced by recent sales of similar properties and by current market trends. The home’s amenities, the number of bedrooms and bathrooms, floor plan functionality, and square footage are also key factors in assessing the home’s value. The appraiser must do a complete visual inspection of the interior and exterior and note any conditions that adversely affect the property’s value, such as needed repairs. To determine the condition of the home you will need to hire aHome Inspector.
The report must include a street map showing the appraised property and comparable sales used; an exterior building sketch; an explanation of how the square footage was calculated; photographs of the home’s front, back, and street scene; front exterior photographs of each comparable property used; and any other pertinent information—such as market sales data, public land records, and public tax records—that the appraiser requires to determine the property’s fair market value. An appraisal costs several hundred dollars and, the borrower pays this fee.
When you’re buying a home and are under contract, the appraisal will be one of the first steps to get you to the closing table. If the appraisal comes in at or above the contract price, the transaction proceeds as planned. If the appraisal comes in below the contract price, however, it can delay or derail the transaction.
Chances are neither you nor the seller wants the transaction to fall through. A low appraisal can serve as a negotiating tool to convince the seller to lower the price. The bank won't lend you or any other prospective buyer more than the home is worth. In fact, a maximum of 80% to 97% of the value is typical, depending on the type of mortgage and the borrower’s qualifications. Or you may come up with the difference if the seller does not lower the price.
While appraisals help buyers avoid overpaying for homes, a seller may feel that a low appraisal is inaccurate and be reluctant to drop the price. If a bad appraisal is standing between you and your home purchase or sale, look into getting a second opinion via another appraisal by a different person. Appraisers can make mistakes or have imperfect information. Better yet, present a factual case for a higher value to the original appraiser. He or she may agree with you and revise the evaluation.
Appraisal vs. Inspection
An appraiser is responsible for determining the value of a property. The appraiser is always an independent third party who measures the value of a property against comparable homes in the area with similar traits.
The mortgage lender is not allowed to loan more than the property is worth, so if the appraisal comes in lower than the sales price, the buyer must renegotiate or bring the difference to the closing table.
In addition to determining the value of the property, the appraiser also has to look out for repairs that have to be completed before the loan can close. These include any structural repairs or that affect the livability/safety of the property.
The inspector will walk through the home and be able to tell you which problems they see. They’ll also be able to indicate what may need maintenance in the future. A buyer may choose to negotiate with the seller in advance to have them pay for repairs that may be required following an appraisal or inspection. This arrangement would be made in the purchase agreement.
The Importance of a Real Estate Agent
A home inspection, appraisal, seller’s title to the home, and other headaches that pop up during a home sale can make an agent’s fee worthwhile.
A seller may try to convince you to not have an inspection or appraisal. But if you need a home loan to finance ahome purchase, the bank will require them. Without an agent to help you, you could be negotiating those areas on your own. That’s fine if you’re a good negotiator.
Realtors have a stronger knowledge of the fair market cost of home deficiencies and can help resolve them. When sellers and buyers are negotiating only with each other, that’s where more contracts get voided because they can’t reach an agreement.
Ask us for a real estate professional referral.
Title & Considerations
As part of a real estate sales transaction, there are matters related to title that will need to be considered. Purchasing title insurance helps to ensure all parties who have an interest in that property are satisfied and cannot later return to stake a claim on the property.
In a purchase transaction, there are typically two types of title policies. Both protect the insured against financial loss or damage related to title, but the type of policy indicates who is insured. Lender title policies are required because the lender’s loan to the borrower has to be protected against loss. With this policy in place, the lender is insured against title problems that could impact the mortgage. The lender’s policy does not provide protection to the buyer, however. That’s what an owner’s policy is for.
The owner’s policy is an optional expense but a long-term investment and well worth the cost because it’s valid for as long as the policyholder owns the home. Unlike other common types of insurance, an owner’s policy is paid for with a one-time payment due at closing. For many homebuyers, this can provide some peace of mind to what’s likely the biggest financial investment of their life. Mainly, the owner’s policy protects the owner from potential title claims in the future. If another party comes forward and makes an unbeatable claim to the property –without an owner’s policy in place, the title insurance pays off the lender, but any equity established by the owner will be lost.
Typically, the purchase agreement outlines information about whether an owner’s policy is being provided and who is paying for it, as well as other details, like who will be covering the cost of the transfer of title. If you’re putting the purchase agreement together yourself, you may want to do some research or consult with a professional.
It’s important to select a title agent at an early stage in the process because of the time it takes to review the history of the property. If you need help finding one, talk to us for help.
Homeowners Insurance
No lender will close a loan for a home that doesn’t have homeowner's insurance. Just as homeowners insurance protects you from loss of investment due to property damage, it protects the lender from losing the huge investment they put in your home.
It helps to shop around because different homeowners insurance policies have different limits and stipulations about what is and isn’t covered. You might want to start with your current auto insurance company. Typically, they’ll offer discounts if you begin to bundle services with them. In any case, make sure you have your insurance lined up before closing because the lender will need to see proof.