Refinancing matters: March 2007

Saturday, March 17, 2007

Types of Legal mortgage

There are essentially two types of legal mortgage.

Mortgage by demise
In a mortgage by demise, the creditor becomes the owner of the mortgaged property until the loan is repaid in full (known as "redemption"). This kind of mortgage takes the form of a conveyance of the property to the creditor, with a condition that the property will be returned on redemption.
This is an older form of legal mortgage and is less common than a mortgage by legal charge. It is no longer available in the UK, by virtue of the Land Registration Act 2002.

Mortgage by legal charge
In a mortgage by legal charge, the debtor remains the legal owner of the property, but the creditor gains sufficient rights over it to enable them to enforce their security, such as a right to take possession of the property or sell it.
To protect the lender, a mortgage by legal charge is usually recorded in a public register. Since mortgage debt is often the largest debt owed by the debtor, banks and other mortgage lenders run title searches of the real property to make certain that there are no mortgages already registered on the debtor's property which might have higher priority. Tax liens, in some cases, will come ahead of mortgages. For this reason, if a borrower has delinquent property taxes, the bank will often pay them to prevent the lienholder from foreclosing and wiping out the mortgage.
This type of mortgage is common in the United States and, since 1925, it has been the usual form of mortgage in England and Wales (it is now the only form - see above).
In Scotland, the mortgage by legal charge is also known as standard security.

Mortgage terminology

Like any other legal system, the mortgage business sometimes uses confusing jargon. Below are some terms explained in brief.
Advance This is the money you have borrowed plus all the additional fees.
Base Rate In UK, this is the base interest rate set by the Bank of England. In the United States, this value is set by the Federal Reserve and is known as the Discount Rate.
Bridging Loan This is a temporary loan that enables the borrower to purchase a new property before the borrower is able to sell another current property.
Conveyance This is the legal document that transfers ownership of unregistered land.
Disbursements These are all the fees of the solicitors and governments, such as stamp duty, land registry, search fees, etc.
Early Redemption Charge / Pre-Payment Penalty / Redemption Penalty This is the amount of money due if the mortgage is paid in full before the time finished.
Equity This is the market value of the property minus all loans outstanding on it.
First time buyer This is the term given to a person buying property for the first time.
Freehold This means the ownership of a property and the land.
Land Registration This is a legal document that records the ownership of a property and land. This is also known as a Title.
Leasehold This means the ownership of the property and land for a specified period, which may be sold separately from freehold, which may be owned by another person.
Legal Charge This is a legal document that records the data of the rightful owner of a property or land.
Loan Origination Fee A charge levied by a creditor for underwriting a loan. The fee often is expressed in points. A point is 1 percent of the loan amount.
Mortgage Deed This is a legal document that stated that the lender has a legal charge over the property.
Mortgage Payment Protection Insurance This is a form of insurance that ensures that the current mortgage payment will be paid if the borrower proves unable to do so.
Private Mortgage Insurance This is a form of insurance the lender has the borrower take for loans over 80% of the appraised value. This will pay the lender only the owed portion up to 80% on a defaulted loan.
Sealing Fee This is a fee made when the lender releases the legal charge over the property.
Subject To Contract This is an agreement between seller and buyer before the actual contract is made.

Refinancing/Loan/Mortgage

Refinancing refers to applying for a secured loan intended to replace an existing loan secured by the same assets. The most common consumer refinancing is for a home mortgage.

A loan is a type of debt. All material things can be lent but this article focuses exclusively on monetary loans. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.
The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt.
Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding. Bank loans and credit are one way to increase the money supply.

A mortgage is a method of using property (real or personal) as security for the payment of a debt.
The term mortgage (from Law French, lit. death vow) refers to the legal device used in securing the property, but it is also commonly used to refer to the debt secured by the mortgage, the mortgage loan.
In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than other property (such as ships) and in some cases only land may be mortgaged. Arranging a mortgage is seen as the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full value immediately. See mortgage loan for residential mortgage lending, and commercial mortgage for lending against commercial property.
In many countries it is normal for home purchases to be funded by a mortgage. In countries where the demand for home ownership is highest, strong domestic markets have developed, notably in Spain, the United Kingdom and the United States.

Sunday, March 11, 2007

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What is Loan ?
Types of Loans & abuses
What is Refinance ?
10 Ways to deal with Debt
Points / Premiums
External Links & References
Risk of refinance
Advantages of refinance
What is Mortgage ?
Mortgage Payment Types
Terminologies
Types of Legal mortgage
Mortgage terminology
Refinancing/Loan/Mortgage
Health Insurance Quotes
Affordable health insurance
Individual health insurance
Group health insurance
Types of insurance
More Types of insurance
Auto insurance risk selection
Patented risk selection systems
References
Casualty insurance
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Home equity Loan
Home refinance Loan
Home improvement Loan
Home/home-owners insurance
Home Equity Loan Fees
Open end home equity loan
Closed end home equity loan

Useful Links

Refinancing matters