mortgages

Another stupid meme and some info . . . .


We are expecting the book to be finalized in the next day or so and will be sending out copies shortly. If you wish to receive a free copy and have not already done so, please go to www.gocondo.nyc and sign up (providing us with your email). I really appreciate everyone’s support.-Thanks, Phil

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Another stupid meme . . . .

Go to http://www.gocondo.nyc to sign up for a free copy of my book, “How to buy a condo in NYC” in exchange for an honest review on Amazon.

WE ARE TARGETING A NOVEMBER 1ST LAUNCH DATE!

A SMART INVESTMENT IN UNSURE ECONOMIC TIMES, PURCHASE MONEY FINANCING

A Seller stepping into the shoes of an institutional lender is a creative way to ensure that a Purchaser will be able to buy a home. For Seller it can be a very attractive option. Sellers taking back a mortgage (referred to as a “purchase money mortgage”) are able to obtain a secure investment collateralized by the home being sold and earn an interest rate higher that a lot of other investments that are currently available. Additionally, a Seller can defer a portion of the gain from the sale of a property to the extent that loan principal is paid back to the Seller over the term of the loan. This is also a very attractive alternative for a purchaser in that they would be assured of obtaining financing and would save on the cost of fees typically charged by an institutional lender. Customarily the Purchaser will pay the cost of the legal fees associated with drafting the mortgage and note prepared by the Seller’s attorney. The cost of such preparation should really be agreed upon under the terms of the contract if contemplated at the time the agreement was executed by the parties.  The downside for the Seller is that sale proceeds incorporated into the loan principal cannot be received until the expiration of the loan term.  If a Seller does not wish to tie up the sales proceeds for an unusually long time, the purchase money loan term may only be a year or two. This means the Purchaser who enters into a purchase money loan will need to refinance the mortgage at the end of this period. The attorney who represents Purchasers entering into a purchase money loan should review the proposed loan terms and ensure that the Seller will agree to assign the mortgage to a subsequent institutional lender to save mortgage recording tax utilizing a CEMA (consolidation, extension and modification agreement). Please be advised that some institutional lenders will not accept an assignment from a private lender or an individual.

Lavenderlawblog Post: Amendment to Real Property Law – Mortgagor Right to Recover Legal Fees

I received an email from Stewart Title Insurance Company concerning a bill that was recently signed into a law to allow borrowers in a foreclosure proceeding access to legal representation by providing that mortgage agreements which allow a prevailing lender to recover attorneys fees in a foreclosure proceeding shall be read to allow prevailing borrowers to recover attorneys fees as well, thereby enabling borrowers with meritorious defenses to foreclosure to obtain the legal representation necessary to assert those defenses, similar to the reciprocal attorneys fees rights given tenants by Real Property Law Section 234.

It takes effect 60 days after it becomes a law (December 20, 2010) and apply to all real property mortgages that are in existence on or after such date to all actions and proceedings
commenced on or after such date.

Bill for Amendment to Real Property Law

The effect of this law could be to cause banks who are foreclosing to think twice before advancing an action where the loan was improperly underwritten. This in turn may prompt banks to settle foreclosure suits where they not only risk being unable to collect on their loan but be responsible for a borrower’s legal fees as well.

Financing your purchase.

Unless you have the cash to buy a home, determining the amount and type of loan and who to obtain it from is one of the most important bits of homework you will have to do. In today’s current lending market, lenders and appraisers for lenders are much more conservative in their processing loans and the valuation of the property securing the loan.

Lets say you found a house that you and your spouse or signifcant other just love and want to buy. Your first step is to determine how much money you have to put down towards the purchase price and closing costs. Typically you will have to put down between 10% of the purchase upon the signing of the contract with the balance of the purchase price paid through a combination of cash that you have available and a loan you anticipate taking out.  In determining the amount of the loan you are able to get , you should know that the industry standard of the amount of a loan that a Seller will make a contract contingent on is 75%-80% of the purchase price of the home. This is because the larger your loan to value ratio is (the percentage of the purchase price you wish to obtain a mortgage for) the more difficult it is to obtain that loan. It has been my observation that lenders are not lending more than 80% of the value of the property to be financing. Although not as prevelant in this current economy, a loan that is more than 80% of the purchase price is subject to PMI (Private Mortgage Insurance). PMI is extra insurance that lenders require from homebuyers who obtain loans that are more than 80 percent of their new home’s value. In other words, buyers with less than a 20 percent down payment are required to pay PMI. PMI protects a lender against loss if a borrower defaults on a loan. Lender’s typically will look to avoid PMI by splitting the loan into two parts; a first mortgage that is 80% of the purchase price and a second mortgage or home equity line of credit that is 10% of the purchase price. Speak with a qualified loan representative to review the terms of these loans, the costs of obtaining them and the projected monthly costs to pay them off including escrowed payments of real estate taxes and hazard insurance. Additional costs of projected common charges must be taken into consideration when you are purchasing a condominium unit. Whether you are a buying a home or investment property it is in your best interest to educate yourself on the process and cost of financing. It will make the process less stressful and costly (hopefully).