Tag Archive for: mortgage

How Mortgage Payments are Applied each Month.

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Here’s a quick quiz to test your knowledge.

Which one of the following statements is correct?

1. Principal and interest are for the month that you are paying.
2. Principal is for the prior month and interest is for the month that you are paying.
3. Principal and interest are for the prior month.
4. Principal is for the month you are paying and interest is for the prior month.

# 4 is correct.
Interest is always collected in arrears and this is why you pay interest on the remainder days of the month on the closing statement.

 

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Mortgage Preapproval – Scaling Back

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Banks are abandoning mortgage preapprovals. Among the top 25 mortgage lenders, preapprovals accounted for 4% of purchase mortgages that were originated by these lenders last year, down from 9% in 2007.

See the rest of the story here.

 

Mortgage Interest and Your Payoff Amount

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mortgage interest puzzleWhen we obtain mortgage payoffs, clients often question the amount of the payoff.  They frequently are looking at their last mortgage statement and wonder why the payoff is higher.
Almost always, it is because of the daily interest or “per diem” and they do not understand how the interest is calculated for the mortgage.
Interest will accrue from the date of the last payment due date to the date of the payoff.  Normal industry practice is to collect a few additional days of interest beyond the closing date in case of delays.
How is interest on your loan calculated:
a.)  In advance?
b.)  In arrears?
c.)  Prorated for the month?
d.)  For the due date?

 

The answer is b).
Interest is paid in arrears.  When you make your mortgage payment for August, it will contain interest for the month of July.

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Land Title Professionals

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Did you know that Land Title Professionals play an important role in our national economy?

The public benefits from our work in the following ways:
Access_Title_Agency_Land_Title_Professionals_2At no cost to taxpayers, the land title industry collects $1.75 Billion per year in back income taxes.
At no cost to taxpayers, the land title industry collects $3 Billion per year in delinquent real estate taxes.
At no cost to taxpayers, the land title industry collects $325 Million in delinquent child support payments.
The land title industry spends $225 Million a year to correct errors in the public property records.

 

Our work brings down the risk of a mortgage loan, which reduces the cost of borrowing for the consumer because investors are more apt to invest in mortgages that are backed by GSEs and title insurance.

The above is an excerpt from an article on the Florida Land Title Association Website.

 

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Lis Pendens

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What is a Lis Pendens?

Access_Title_Agency_Lis_PendensThe term in real estate known as” Lis Pendens” is Latin for “suit pending”. Recording of the document entitled Lis Pendens provides for the proper notice that a claim is or will be commenced and places it against the property involved. Title searches against properties will often disclose Lis Pendens when a foreclosure proceeding is in process for a mortgage or lien. They may also be filed in a situation where an interest in the property is claimed. Unless the lawsuit is commenced within 1 year from the filing of the Lis Pendens, it may expire of its own accord unless extended by the courts.

Note: No legal advice or suggestions are being given. The above is an excerpt only from an
Underwriting Manual.

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Leasehold Policies

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Throughout my 20 plus years in the title industry, and despite having handled many multi-million dollar commercial transactions, I have only seen 20 or so leasehold policies issued.

Access_Title_Agency_Leasehold_PolicyProspective tenants may execute a lease for a term of many years and make significant leasehold improvements to the property without having title to the premises examined or purchasing title insurance.

A title search and the subsequent issuance of a leasehold policy will answer questions, disclose any issues to the title, and afford protection for such things as:

Is the consent of a mortgagee (lender) needed to lease the premises?
Will the tenant’s possession of the premises be at risk due to a foreclosure of a mortgage, liens, non-payment of taxes or other issues?
Is the Landlord named in the lease the correct name or entity name as appears of record?
Are the leased premises subject to any covenants, restrictions, or easements that may limit development or use?

Note: No legal advice or suggestions are being given.

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