Appraisal is a valuation conducted by a certified professional to assess the value of property, especially real estate. Appraisals are an important service in the real estate industry in particular. Where mortgage loans are being taken out from banks, including original mortgages, refinancing, home equity loans and lines of credit, as well as in business and estate valuations, the property appraisal will play an important role. Continue reading...
Appraisal Fraud is the intentional misrepresentation of the value of a home using an appraiser’s statement. Appraisals are necessary for large loans and real estate transactions, and appraisal fraud is common. Fraud can be committed in this manner by the appraiser or by a person falsifying an appraiser’s statement. A common example would be overstating the value of a home so that a borrower can get a larger home equity loan. Continue reading...
A home inspection is performed by a certified home inspector to determine the condition of a property and to find out if there any safety of compliance issues that the home or property may have. Home inspectors are typically hired by real estate professionals and homebuyers when a home is on the market. It is not required except for FHA loan termite inspection requirements, but it is always advisable for a potential home buyer. A home inspection is not to be confused with a home appraisal. Continue reading...
Assessed value is used to determine the property taxes due on real estate. Assessed value is normally lower than the appraised value of a residential property, because it is not looking as much at the value of the home, but rather the value of the property, for property tax assessment. While the assessed value does have to do with the market value of real estate, most calculations only use average home prices the area, found in local real estate listings, as part of the valuation. The “ask” prices are going to be higher than the prices at which they’ll sell. Continue reading...
An Abandonment Option can be worked into a contract for a capital project at a business, for example, or between an investment advisor and his or her clients. An abandonment option outlines the terms by which either party in an agreement can choose to cease their involvement in the project or a working relationship without penalty. This may be worked into the contract on a business partnership agreement, a capital project, or even something as simple as the relationship between a financial planner and his or her clients. Continue reading...
Book value is based on an accounting method that only considers certain factors, generally the more tangible or easily quantifiable ones, and excludes the more ethereal factors such as ‘goodwill.’ Book value can apply to an individual asset, a security, or a company, and tends to be pretty straightforward. Whatever value an asset is given on a balance sheet is its book value. For a tangible asset, this is calculated as the cost of the asset minus accumulated depreciation. Continue reading...
Mortgages take a while to process, but a broker or bank can lock in a rate for themselves or their clients. Locking-in rates costs money somewhere along the line, and the longer the rate is locked in, the more it costs. 60 days is generally the longest time frame you will see a rate locked in, due to the cost associated with that risk. Mortgage rates can be locked in for a period of time long enough to underwrite the loan. This might be for a period as short as 20 days or as long as 60 days. Continue reading...
A mortgage short sale occurs when a borrower and a lender settle for less than is owed on a mortgage because changes to the housing market or financial status has made it impossible to continue the arrangement. Lenders would rather take what they can get, while they still can, in this sort of situation. An example of a short sale would be an older couple reaching retirement age with a house that is bigger than they need in a neighborhood that has seen the property values decrease, and due to pension cuts they will have hard time affording the house in retirement. The lender would settle short to avoid having to go through a foreclosure and all that it implies. Continue reading...
Most mortgages require that an appraisal or at least inspection is done before any loan is made. There are exceptions to this, in the form of no-appraisal mortgages which are available to lower-income homeowners, qualifying members of the military and its veterans, and some farmers. Most no-appraisal loans are through federal programs such as HARP, FHA, and the VA. The purpose of these loans is to keep people in their homes and to keep the economy relatively stable. These are generally not first mortgages, but are relief, modification, and refinancing arrangements to qualifying homeowners that already have a mortgage outstanding. Continue reading...
Mortgage fraud is misrepresentation in mortgage contracts designed to benefit one or more parties to the contract. Sometimes it can be as simple as an applicant lying about financial information to make himself seem more credit-worthy. Sometimes it can involve a few people, such as a real estate agent, an appraiser, and a lender, all colluding to split the profits on a property that isn’t worth as much as they say it is. Continue reading...
No-fee mortgages are synonymous with no-cost mortgages, which might apply to first mortgages or refinancing arrangements where the closing costs are paid by the lender, broker, or bank, but a higher interest rate is charged on the loan as a means of recouping those waived fees. Closing costs and fees are calculated based on the total amount being loaned, and might be about 3% for a first mortgage and 1.5% for a refinanced mortgage. When the fees and closing costs associated with a mortgage loan are waived for the borrower, they are usually baked in to a higher interest rate on the loan. Continue reading...
Home equity loans give a homeowner the ability to borrow a lump sum against their home equity. Homeowners have the ability to use their home equity as collateral on a lump-sum loan from a lending institution. This may be done on a paid-off home or on one with an outstanding first mortgage. People sometimes use these to pay for large expenses such as their children’ s college, or as a debt consolidation tool. When used for debt consolidation, a homeowner will take out a large loan against the equity they have in their home and use it to pay off debts to credit card companies and other creditors. Continue reading...
Unlock the intricacies of escrow, a cornerstone in finance and real estate transactions. Originating as a protective mechanism, escrow ensures assets are securely held until specific conditions are met. Whether you're a buyer, seller, or lender, escrow plays a crucial role in safeguarding your interests. From understanding its anatomy to its application in real estate deals, this comprehensive guide sheds light on how escrow functions to protect all parties involved. Dive deep into the world of escrow and discover how it shapes the landscape of secure financial transactions. Continue reading...
Probate is the legal process that takes place after a person’s death, during which legal documents (such as wills and trusts) are reviewed and enforced. A person’s will generally must be validated by the court, after which the person’s assets are distributed to the heirs accordingly. If there is no will, then the probate court will decide how to distribute the assets, which may not be consistent with the deceased’s actual wishes. Continue reading...
The House Price Index (HPI) tracks average prices of homes using data from sales and refinancing, tracking the data for the same residential properties over many years. The Federal Housing Finance Agency (FHFA) publishes it quarterly and relies on data from Fannie Mae and Freddie Mac. The HPI is an important index for the real estate and mortgage industry, as well as the economy as a whole. It uses information from Fannie Mae and Freddie Mac about home sale prices and the refinancing value of homes, tracking the sales and refinancing prices of homes in the Fannie Mae and Freddie Mac databases, all the way back to 1978. They do this using a weighted repeat-sales method. It is published quarterly by the Federal Housing Finance Agency (FHFA). Continue reading...
An Assessor is a government employee who finds the value of properties and other assets for tax and insurance purposes. The assessor’s office is responsible for coming up with the assessed value of real estate property in a municipality, for the purpose of assessing property taxes. Assessors may have other roles, but this is the main one. Considering that assessors have to determine a value of every piece of real property in their district, it can certainly be an overwhelming task. Continue reading...
Ever considered tapping into your home's equity but unsure of the best route? Dive into our definitive guide on HELOCs, unravel its intricacies, and compare with other financing avenues. Equip yourself with the knowledge to leverage your home's value wisely and secure your financial future! Continue reading...
Ever considered tapping into your home's equity for a financial boost? Discover the essence of Home Equity Loans, how they stand apart from other lending options, and how they can be a pathway to fulfilling significant financial needs. Whether it's funding a major home renovation, consolidating debt, or even buying a second home, a Home Equity Loan could be your answer. Dive in to unravel the process, benefits, and considerations to ensure it's the right choice for you. Continue reading...
Navigating the world of home financing? FHA loans, backed by the Federal Housing Administration, offer a lifeline to potential homeowners facing financial barriers. Designed primarily for first-time buyers, these loans boast lower credit score requirements and minimal down payments. But what sets them apart from traditional mortgages? Dive into our comprehensive guide to understand the nuances of FHA loans, from their historical roots to the diverse loan types available. Learn about qualification criteria, the role of mortgage insurance premiums, and the financial implications of choosing an FHA loan. Whether you're a first-time homebuyer or considering a switch from a conventional mortgage, this guide offers insights to help you make an informed decision. Equip yourself with knowledge and step confidently onto the path of homeownership. Continue reading...
No-Cost Mortgages waive the initial closing costs by making a repayment structure for those costs into the interest payments on a mortgage loan. Closing costs can range from 2%-5% of the total cost of the home, and include attorney fees, underwriting fees, application fees, and so on. These costs are deferred and are paid in the form of additional interest on the loan. Closing costs are separate from down-payments of equity, and are a miscellaneous hodgepodge of a wide range of fees associated with closing a mortgage deal. These costs are sometimes covered by the seller, but most often they are paid by the buyer. Continue reading...