Jimmy Jenkins Ray asked:




A mortgage loan means a lending which is secured by mortgaging a property of the borrower. The borrower’s right to the property is pledged as a security to the loan. In day to day life the term ‘mortgage’ is used to refer to a loan secured by a property. The properties mortgaged can be personal properties or commercial properties. A conditional right is maintained by the lender on the property until the borrowed amount including the interest is repaid. The repayment amount is amortized.

The rate of interest on mortgage loan is comparatively less. This is because the property in hands of the lender reduces the risk of uncertainty of repayment. People generally opt for mortgage loan while procuring residential or commercial properties. The same property which is being purchased is pledged for the loan.

There are different types of mortgage loans available. They vary in terms of risk, rate and cost. Some of these are:
FRM Loans-These are fixed rate mortgage loans. The rate of interest remains the same during the lending period. ARM-The rate of interest fluctuates during the loan period. There are various factors that determine the change in the interest rate. Blanket Loans-These are loans which are secured by pledging more than one property. This type is mostly considered by real estate developers. Buy down Loans-The borrower can pay a part of the lending in lump sum in order to reduce the rate of interest of the loan. Convertible loans-The terms of the lending change after the passage of a predetermined period. Balloon loans-The lending period is short and the monthly payments are also low. The rate of interest is fixed. At the end of the period the borrower will have to pay a huge amount.

Jessica

C.L. Haehl asked:




Even when you already have a first and second mortgage on your home, you may want to secure a third mortgage. You may use the cash for some value-adding feature to your home, like a swimming pool or a new kitchen may be the reason. However, securing a third mortgage is not very easy.

A third mortgage loan stands subordinate to the first and second mortgage liens that exist. For this reason, it is very difficult to find lenders offering third mortgage home loans. The risk is much greater for the lender in case of a foreclosure. If the loan does get approved, which is difficult, it would be at a much higher rate of interest as compared to the earlier mortgages.

A third mortgage is a hard equity loan. The approval usually depends on the LTV or Loan to Value and SSR or Superior mortgage to Subordinate mortgage ratio.
LTV is expressed as a percentage of the present appraised value of the house, as against the total outstanding mortgage debt(s). Lenders expect the LTV for hard equity loans in the case of first mortgages to be sixty five percent and between fifty to sixty five percent, in the case of second mortgages. For third mortgages, it is anything between fifty to sixty percent.

The SSR is calculated by dividing the amount of the superior mortgage loan amount by the amount of the subordinate mortgage and expressed as a ratio between the two. For example, if the superior mortgage were for $100000 and the subordinate mortgage for $25000, the SSR would be 4:1. For hard equity lending, the SSR is usually in the range of 1:1 – 7:1. With a low LTV and SSR, a third mortgage loan may possible.

In a foreclosure proceeding, the first mortgagee is given preference over the subordinate/subsequent mortgagees as a general rule. This means that the entire debt of the first mortgagee is first satisfied, after which any remaining amount is applied towards the debt satisfaction of the second mortgagee. If anything is left after that, only then is the third mortgage paid off.

Bill

Jonathan Drake asked:


Current home loan rates are rather low these days. This is mainly due to the fact that the number of people who are looking for loans are dramatically decreasing because of global recession that everyone is currently experiencing. And so, to be able to attract more loaners, mortgage lenders just opt to lower down their interest rates since this is a much better choice compared to that of having nothing at all.

Applying for home loans are the easiest and fastest way that one can take so as to have one’s dream house. With a lot of mortgage lenders out there whom all of which are willing to provide one with the necessary assistance that one needs upon purchasing a home, it is just a matter of choosing the right mortgage lender that can satisfy one’s need.  Then again the task of choosing the right mortgage lender is quite difficult. This is because there are a variety of loans that is present out there from a 15 years loan mortgage to 30 years, 40 years and even 50 years. There are also those whom offer either a fixed rate or an adjustable rate of interest. In fact, there are other options that one must choose from, and so with that, it is no wonder that choosing the right mortgage is quite a difficult task to do. Then again, with the proper knowledge and patience, one can be rewarded with the best home loan that one can use so as to be able to purchase one’s dream house.

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BURTON