Mortgage is a mechanism under which real estate is used as a security or collateral by the lender. Mortgage in itself is not loan, but it security for the loan that lender makes available to the borrower. In other words we can say mortgage acts as an evidence of debt of the borrower.

Mortgage may be classified into two broad categories, namely

Residential mortgage

Commercial mortgage

In the residential mortgage, residential property or house of the borrower is used as security for the loan by the lender. In case of commercial mortgage real estate other than house or residential property is used as security for securing loan from the lender. Commercial mortgage is used for securing real estate for office, factory, storage etc.

Commercial mortgage is also used by businesses to secure money for

Working capital

Purchase of equipment

Compared to home or residential mortgage commercial mortgage is much more complex. This complexity arises because of liability and credit worthiness of the business in case of commercial mortgage.

Usually there is difference in the rate of interest for residential and commercial mortgage. Because of higher risks involved in commercial mortgage, their interest rates are appreciably higher compared to those of residential mortgage.

Besides these two broad categories, rate of mortgage play significant role. Based on the rate of interest, mortgage may be classified as

Interest only

Fixed rate

Adjustable rate

Balloon

Reverse

In case of interest only mortgage, borrower’s schedule payment consists of only interest on the mortgage. Usually this type of mortgage is available for fixed term of 5 to 7 years. After the fixed term is over borrower has to pay for principa
In case of fixed rate mortgage, rate of interest remains same through out the term of the loan. Borrower will pay same amount as monthly installment through out the tenor of the loan.

In case of adjustable rate mortgages you may be able to find lower initial interest rate than the prevailing market rates. In this type of mortgage interest rate of the mortgage are linked to certain market indices and fluctuate according to market.

In case of balloon mortgages, loans are of short duration and interest rates are fixed. Monthly installments are also fixed in this type of mortgage. Borrower usually gets lower interest rate compared to prevailing market rate for these mortgages.

Balloon mortgage is usually 2 term process. In the first term, borrower pays fixed monthly installments. In the second term borrower make a single payment for the full amount of the mortgage.

In case of reverse mortgage, borrower gets money from the lender. This type of mortgage is usually available for senior citizens.

When you plan to buy a house or commercial property, you must enquire about the best and lowest mortgage rates. Find answers to all your quarries online. Make choice of mortgage and realize your commercial or residential dream.

Every real estate investing deal is an opportunity for both profit and education. Well my first deal was a good combination of both. When I decided I wanted to get involved in real estate investing it took me eight months to decide to do my first deal.

This particular deal came as a result of networking in my local real estate investor group. A local Memphis investor found a deal on a 3 bedroom, 2 bathroom home in a moderate to lower income area where people still like to buy homes. This was a wholesale deal for the other investor and he assigned his contract to me to close on the deal. I was buying the property for $58,000 and $5,000 of that went to the investor for assigning the contract to me and $53,000 went to the seller of the property. I had the cash available so I paid all cash for this deal and for $4,000 in repairs this property needed. The after repaired value of the property was approximately 95k.

I had decided I wanted to do a rent to own or lease option deal with this property. I put a yard sign out with property flyers and had links to a website with inside pictures of the property. At the time I was doing this a more experienced investor told me I should try to retail the property and take the quick cash and go on to the next deal. Well as a new investor I wasn’t sure how long it would take for me to find my next good deal so I wanted to get the maximum out of this property. After about a month(and about $800 in ads) I found a tenant I considered suitable and agreed to take a $2500 option fee plus $875 per month and a sales price of $99,000. If the tenant pays the rent by the first of the month then $100 counts as pay down towards the purchase price. If I had sold the property quickly I may have sold for $89k and paid $5k in selling fees and netted about $20k and would have paid about $7k in taxes on that income. Instead by going after lease option it may take 2-6 years to sell and I should get a $99k or better selling price with much less selling costs and should net about $35k of which about $5k will be taxed as capital gains. The lease option method will net me about double what retailing would have done, however it would have been nice to have access to that cash for doing more deals. I think the $15,000 profit quickly would have been better than $30,000 in a couple of years plus the things I could have done with the $62,000 in cash I put into the property.

The tenant I chose has not once in the first nine months paid the rent on time so he hasn’t earned the $100 monthly rent credit, and has on average had to pay an extra $100 each month in late charges. I don’t expect this tenant will be able to refinance, however his job status and income have been going up while he has been in the property, and the current market value is now $105k. The tenants father is a mortgage broker and if I get to the point of evicting the son the father has told me to let him catch up the sons rent before filing for eviction so that part is really in my favor.

From a humanitarian perspective I like lease option deals as I am really helping someone who could not rent otherwise. I will only do a lease option to someone I believe is improving their credit and job situation and should be able to buy the house within 24 months. With 12 months of on time payments verified by copies of checks many mortgage brokers can get your tenant financed as a refinance type of deal.

In the event the tenant doesn’t buy the property within the first 2 years I can either lease option to another tenant or just try to outright sell the property. Even though the property provides great cash flow I would rather sell it and get a big check and use the cash to go after the next deal.

Some things I learned on this deal that you can use: 1. We had a yard sign with flyers in a flyer tube plus links to view pictures on a website. Before we would show the inside of the property we insisted any prospects should view the pictures online first. We ran ads in the major local newspaper and we got 20 times as many calls from the yard sign than we did from the newspaper. However this street had decent traffic, other properties I have are more secluded. Always use a yard sign and flyer box and have pics online with good descriptions and always highlight the kitchen and bathrooms. 2. If I had the deal to do all over again I would have retailed the house and tried to sell it quickly. I could have rolled this deals cash into more and more deals and made much more money. My opinion now is that every investor who isn’t already financially well off needs to go for the quick income first and progress to long term deals second. 3. I probably should have waited a little longer for a stronger tenant. 4. You can not do this type of lease option transaction in Texas now due to some strange laws that got passed in 2005. However I live in Tennessee and we don’t have any anti-investor state wide laws yet. We do have a bad local one related to trash left over from evictions but that is minor in comparison.

You have many options when fighting foreclosure, but which one will work best for you? The best defense you have in saving your home is educating yourself in order to make the right choice when making that life changing decision. Whether you want to save your home or feel it would be best to walk away, it will be the hardest choice you will ever have to make. There is an option for those fighting foreclosure which is to seek professional help but when you are unable to make mortgage payments, it may be difficult to find the money to pay for legal proceedings. You can do it yourself through education and knowing your fighting foreclosure options.

Option 1: Forbearance – If you are just in the beginning stages of fighting foreclosure or it has proceeded to an intermediate point, Forbearance may be an option for you. This term is used for an agreement that gives you a temporary break from making the mortgage payments. This works well if you are suffering from temporary financial crisis such as a job layoff. This option can give you the time you need in order to get your life back on track.

Option 2: Loan Modification - A loan modification is an adjustment of an existing mortgage that can include a lower interest rate, longer term or reduction in principle balance. When you are accepted for a loan modification, the new note is considered current at the time it is created which means your efforts of fighting foreclosure is stopped immediately.

Option 3: Pre-Foreclosure Sale/Short Sale/Friendly Foreclosure – This option will allow you to avoid foreclosure by selling your home for less than what is owed on your mortgage. To qualify, your loan must be at least 2 months delinquent, appraisal of your home meets their criteria and your debts outweigh your assets.

Option 4: Partial Claim/For FHA Loans Only – You may be able to work out with your lender a one-time payment from the FHA Insurance Fund to bring your mortgage current. To qualify you must be at least 4 months behind on your mortgage but no more than 12 months and you are able to start making full mortgage payments. This claim filed by your lender to the U.S. Department of Housing and Urban Development will result in an interest free Promissory Note which will be due when you pay off the first mortgage or when you sell the property.

Option 5: Deed-In-Lieu of Foreclosure – This involves voluntarily giving your home back to the lender. Although this won’t save your home or forgive the debt, it will not damage your credit as much as a foreclosure will. If you have done all you can in fighting foreclosure and do not qualify for any of the other options, this may be a choice that cannot be ignored.

These are just your options but do you know about the laws that are out there to protect you as your fighting foreclosure? Knowing these laws is a vital step in protecting your home. Do not contact your lender until you are fully aware of your rights. Find out what the latest new legislation in Congress is going to do for homeowners fighting foreclosure. Did you know there are Foreclosure Assistance Programs? Are they really legitimate or something to avoid? Find out whether selling your home right now is a real option for you. Fighting foreclosure may be one of the most intimidating experiences you will go through. Don’t do it alone. Learn what you can do to stop foreclosure now.

If you’re having trouble paying your mortgage in need to understand what the differences between a foreclosure and a short sale. With a foreclosure the bank takes over possession of your house and they will sell it to the highest bidder. When you have a foreclosure it will be a negative mark on your credit score and can last for up to seven years. With a short sale you actually talk with your lender and agree to sell your house for less then what is owed. Doing this kind of cell will still show a negative mark on your credit score but it is better than having your house go into foreclosure.

Get Free: Buy a Short Sale

With a short sale the house can sit on the market for a long period of time and you have to make your full mortgage payments until it sells. Also with a short so in many cases the buyer will want to negotiate with the lender to get the best price possible. Before you choose one of these options you should try to negotiate with your lender to see if you can get your payments lowered. Because of a  high rate of foreclosures, many banks are willing to work out some kind of deal so that you can keep your house and they do not have to worry about selling it in a bad market.

How to: Short Sale Home

Remember that with a short sell and a foreclosure will even look negative mark on your credit score. The differences with a short sell you will be able to sell your house for a lower rate than what is owed on the mortgage. The problem is you will still have to pay your full mortgage until the house sells and in a bad housing market this can take some time.

Homebuyers of San Diego real estate ask about Encinitas homes for sale more than any other area. I think it’s because of the combination of east meets west culture, the breathtaking terrain, and the healthy outdoor attitude of this area. The first thing you need to realize is that Encinitas homes for sale actually encompass four separate areas: Leucadia, Cardiff-by-the-Sea, Encinitas, and Olivenhain. Encinitas homes for sale in each of these areas will have a different feel and style. Describing the differences between the distinct Encinitas homes for sale requires its own article. So here, I will give you an idea of the area as a whole.

Culture in Encinitas Homes for Sale

One of the most attractive features of Encinitas homes for sale is the blend of old world charm and modern amenities. It also combines western technology with eastern wisdom. Upon entering Encinitas one of the first things you’ll see is the Self-Realization Temple and Ashram. Established by a yogi in 1937 the hermitage includes a meditation garden and koi pond. But that doesn’t mean that buyers of Encinitas homes for sale give up on modern amenities. Rather, it means that residents of Encinitas homes for sale are offered enough diversity to find whatever they want.

Outdoor Activities Near Encinitas Homes for Sale

Without a doubt one of the best things about buying Encinitas homes for sale is the terrain and weather of this area. With a near perfect year-round temperature and access to the ocean and lagoons, the options for outdoor activities here are endless. Year-round golf makes Encinitas homes for sale especially attractive to buyers from northern climes.

Swami’s Beach is a renowned surfer’s beach located below the Seacliff Roadside Park. It’s a lure for surfers statewide and is named for the founder of the Self Actualization Temple. Other outdoor sports are popular near Encinitas homes for sale. Families adore the Moonlight State Park for its sandy beaches, volleyball and tennis courts, and history of moonlit picnic dinners. Campers near Encinitas homes for sale will thrive in the San Elijo State Park located near Cardiff-by-the Sea. Fences protect campers on cliff sites overlooking the breath-taking coastal view.

Home Styles of Encinitas Homes for Sale

Old Encinitas offers 1950s style houses on a wide grid of city streets. These Encinitas homes for sale offer the old-fashioned feel of a neighborhood accessible with sidewalks and downtown cafes and vendors. Other neighborhoods offer the grand and luxurious, or smaller and remodeled styles of homes. The variety of old and new is , again, key to the allure of Encinitas homes for sale. Whether you lean towards Olivenhain or the newer section of Encinitas, there is certain to be something right for you.

Michigan foreclosures are gaining popularity; the reason for this is that people who take such financial help from banks and other institutions find it difficult to pay it back because of several reasons including financial hardships. The present economic crisis has only added to the problem. It is most distressing to find a foreclosure notice at your doorstep which asks you to leave your home in a few days time.

If you are looking for the best way to avoid such Michigan foreclosures, it is to opt for a short sale. Short sale is a process by which your lender agrees to accept an amount that is much lower than the amount you owe them. If your home has come under the Michigan Foreclosures you need to first convert it as a short sale home.

This process of making your home a short sale home is made much easier, if you take the help of reliable realtors. There is plenty of talking and convincing that you need to do. Lenders do not agree so easily for such a short sale, because they do incur a loss of a small amount. But if you present your situation perfectly, the lender might be able to help you.

You need to first qualify for certain issues if you want to proceed with the short sale home. You need to be in a state of financial hardships because of which you are not able to pay off the loan. Also you need to convince your lender regarding the fact that you do not have any other means or additional properties using which you can clear off this loan.

Why not proceed with these foreclosures is a question that can haunt you? The problem is that it affects your credit history very badly. You will not be able to regain any hold in this credit area for seven years, if such a Michigan foreclosure entry is made in your credit record.

If you are looking to buy a short sale home, the best place to look for is Metro Detroit, with the large number of Michigan Foreclosures that happen every year. You can go through a realtor as this will make proceedings very easy. Though you have to pay them some money, you need not have to worry about the proceedings to own such a short sale home. There are several websites online who aim at providing you with such help.

When you look for an agency to help you, you need to take care when choosing, because you do not want to fall prey for another scam. You can even handle this directly by calling the bank and finding all the details about the property that you are interested in. But the best method would be to use some help. There is a necessity to talk to several people including those in the bank and this can be handled well, if a professional is involved. There are several online services that are available which will enable you to find help easily. With an initial investment that is very small, you will be able to own a home that is much cheaper; also you can sell your home that is under foreclosure easily.

Statistically, foreclosures and short sales have engulfed the housing market as homeowners anxiously seek for ways to improve their own financial difficulties. As people are laid off and hours are curbed, many people are perplexed and wonder if the right plan of action is to sell or relinquish their home. The first thing to consider is the distinctions between a foreclosure and a short sale, including advantages and disadvantages for each.

The Logistics of a Foreclosure

A foreclosure ensues when a mortgage lender secures a court order. Such a court order ends the mortgagor’s equitable right of redemption. This denotes that the borrower has defaulted on their loan and has lost the ability to pay the remaining debt to the lender. The mortgagor’s house has been repossessed by the lender, and the borrower will have to leave the property when the home is sold. On the other hand, some states give borrowers from four months to a year to stay in their foreclosed homes free-of-charge. Regrettably, this has been the outcome for thousands of Americans, who in the last couple of years, have been unable to make payments and bear the painful task of waiting for their home to be sold before they move.

If you are a homeowner who is having trouble paying your mortgage, prior to allowing your home go into foreclosure, determine whether your financial situation is short-term. If so, you may be able to refinance your mortgage to your benefit, keeping you in your home.

How Short Sales Operate

If your mortgage holder agrees to cut its losses, it may grant a discount on a mortgage to avoid a foreclosure. This course can only succeed when the homeowner and bank work together to sell the home. Some lenders will reject a short sale, which makes it essential to hire either a lawyer or a realtor to assist you. Also, if you have cash resources, the lender may confiscate those assets in payment for the defaulted loan. A short sale does not ensure that your house will not fall into foreclosure but may be the best choice to paying off some of your mortgage. With a short sale, if you owe $500,000 on your mortgage and you negotiate with the lender to give them $430,000 from the sale of the home, then if the lender accepts this proposal you can walk away from the home. But why would the lender choose to give up $70,000? At this point, a lender merely wants to recoup as much of its funds as it can and not become responsible for the upkeep of a home.

Your Credit After Foreclosure or Short Sale

It may shock and depress you that your credit score will be affected by a foreclosure and a short sale in a very negative. However, the amount of time that it takes for a lender to loan you money for another home is significantly shorter when you decide in a short sale. A homeowner who has gone through a foreclosure will have to wait up to 24 to 75 months to be able to take out another loan. Conversely, a homeowner who has gone through the short sale course will only have to wait 18 to 27 months.

In short, it is wise to examine your financial predicament before choosing such a crucial decision and get advice from a real estate agent who specializes in short sales will help you make the right option.