ASM Law – Mortgage Rates Elgin IL – Call 847-231-3999
New to the home buying experience? Here is some basic information about mortgages you’ll need to know:
A mortgage is a form of legal document that you sign to purchase a home. It provides your lender the right to retake the home in the event you do not pay back the loan. Copies of the mortgage go on file in in county records in the form of a lien against the home.
The word “mortgage” may also be a reference to actual loan. When purchasing a house with a mortgage, you’ll provide regular payments until the balance is paid off. Mortgage payments can cover a variety of different costs such as:
-The principal. This is the amount that is remaining for you to pay. The principal is your initial loan minus the payments you’ve already provided against the balance. For instance, if you borrow $150,000 and repaid $20,000 toward that initial amount, the principal balance that remains is $130,000. With respect to an amortizing mortgage, such as a 30-year fixed-rate loan, some of every payment lowers the principal. Additionally, some goes to pay for the interest. The total balance is to be paid fully by the conclusion of the loan term.
-Interest. Your mortgage’s interest rate sets how much you’ll pay your lender.
-Taxes. A lender collects property taxes in addition to your mortgage payments. The money remains in escrow until your property’s tax bill becomes due, when it pays it upon your behalf.
The fundamentals of supply and demand impact mortgage rates. Factors like economic growth and inflation, the Federal Reserve’s monetary are all factors. And of course, your financial condition is also a significant factor when it comes to the interest rate you’ll receive.
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Conditions and trends in the current housing market impact Mortgage Rates Elgin IL too. When less homes are under construction or available for resale, there’s a decrease in home buying. Consequently, that leads to a decrease in demand for home mortgage loans and interest rates go down. Another factor that can push rates down is when more consumers opt to rent instead of buy their home. Such fluctuations in the availability of houses and consumer’s demand influence how lenders set Mortgage Rates Elgin IL.
-Homeowner’s insurance. This form of insurance is typically a requirement for mortgage lenders. It can provide coverage for fires, accidents, severe storms and other unforeseen events. The lender might collect premiums along with your mortgage payments. Then, the lender pays the insurance bills out of the escrow account as it becomes due.
-Mortgage insurance. When you supply a down payment of less than 20 percent of the sale price, lenders usually require mortgage insurance. It serves to protect lenders against the risk that you default on your loan. The premiums are usually on the bill for your mortgage loan statements.
A second mortgage is simply a home loan on a home that already has a primary mortgage. Like that primary mortgage, a second mortgage utilizes the home as a form of collateral. If you cannot make your primary mortgage payments and your home gets sold, the second mortgage is next to be paid.
An examples of a second mortgage would be a home equity line.
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It is certainly legal to refinance a mortgage without a lawyer. However, it’s usually a good idea to consult with a lawyer before moving ahead with the refinancing process.
First, the commitment for a refinancing transaction may not match up to your application. Or, the loan documents might not match with terms of the commitment. The mortgage lender will probably not help you with these issues. While they might handle the whole transaction, they are not representing your best interests. Specifically, they’re not looking out for your interests as they review refinance terms that might not be in your favor.
Secondly, it is imperative that the mortgage you’re paying off through refinancing receives proper discharge of record. If it doesn’t, you might encounter difficulty getting clear title in the future when
selling the property. Many closings experience a delay because an earlier mortgage of record did not receive timely discharge. Frequently, it is the result of an incorrectly handled refinance transaction.
For these and other reasons, refinancing and other real estate transactions call for the attention of an experienced real estate lawyer.
An Overview of Reverse Mortgage
A home equity conversion mortgage is the most common form of reverse mortgage. It is basically a home loan specifically for homeowners who are at least 62 years of age.
A reverse mortgage loan has some similarities to a conventional mortgage. It enables the homeowner to borrow money with their home serving as security for the loan. Also – like a conventional mortgage – the title to the home remains in the borrower’s name. However, a difference is that with a reverse mortgage loan the borrower doesn’t make mortgage payments every month. Instead, the loan gets paid when the borrower no longer lives in the home.
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Interest and additional fees add on to the balance monthly as the balance keeps growing. According to a reverse mortgage loan, borrowers must pay their property taxes and homeowner’s insurance. In addition, the property must serve as their main residence and there is an obligation to maintain the house sufficiently.
The terms of a reverse mortgage mean the balance the homeowner owes goes up over time. This is because the interest and fees get added to the balance every month. As the balance grows the borrower’s equity in the home decreases.
Certainly, a reverse mortgage is not “free” money. It’s simply a loan where borrowed money plus interest and fees every month equals a growing balance. Eventually, the homeowner must pay for the loan, typically by selling the home.
Be aware of reverse mortgage scams:
Beware of disreputable contractors who approach you about obtaining a reverse mortgage to pay for renovations to your home. It could be a scam. Do not let a contractor pressure you into taking out a reverse mortgage.
Also, watch out for scams that target veterans. Reverse mortgages are not something the Department of Veterans Affairs offers. Some mortgage advertisements falsely portray or imply approval of reverse mortgages by this department.
Remember that there is a three-day period in which to cancel a reverse mortgage loan for any reason.
To do so, you have to notify your lender. Submit your cancellation letter via certified mail. Request a receipt so that you’ll have confirmation of sending the letter and of the lender receiving it.
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Retain copies of any correspondence between yourself and the lender. After cancelling, your lender must return any funds you paid to finance the reverse mortgage loan within 20 days. If there’s reason to cancel the reverse mortgage but it’s been longer than three days, call ASM Law for assistance.
Call ASM Law for legal expertise if you are looking to buy or refinance a home. We serve clients in communities throughout Kane County including St. Charles, Bartlett, Carpentersville, South Elgin and Elgin. For a free consultation call 847-231-3999.