Mortgage, loan and property. What is a mortgage?


A mortgage is putting a property as a guarantee to a lender as a security for a mortgage loan.

While a mortgage in itself is not a liability or a dept, it is evidence of a debt. It is a transfer of an interest in property, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the property when the terms of the mortgage have been satisfied or concluded.

In other words, the mortgage is a guarantee for the loan that the lender makes to the borrower. In all but a very few states, a mortgage creates a lien on the title to the mortgaged property.

Friday, June 20, 2008

A desperate home seller: the bank

Here are 3 useful tips on buying a foreclosed home

Who would have known? The latest desperate home seller is the bank. According to Realty Trac, over 197,800 homes were repossessed by lenders in the first four months of 2008 vs. 90,800 in that period last year.

Banks are not in the real estate business, and it looks like they don't want to be in the real estate business also! So much that sometimes they'll accept much less than you might think to get the those properties off their hands (and their books) - especially in markets having lots of trouble. But purchasing such properties from the banks has drawbacks. Here is what you need to know.

1. Specialized websites can help you find foreclosed homes. On Redfin.com, you can do a search (free) for so-called real estate owned (REO) properties - those for which the bank holds the deed – in many cities Boston, Los Angeles, Baltimore, San Diego, San Francisco, Seattle and Washington, D.C. Or you can locate them nationwide on Foreclosures.com or RealtyTrac.com for a paid subscription of $49.95 a month.

2. It's a good idea to go through a real estate broker. Disregard the idea of buying directly from the bank or at an auction (you will probably be bidding more than you should). The best thing to do is to work with brokers; the banks use them to sell the majority of homes. Once you have identified which properties are Real Estate Owned (REO), you will be a go position because you will know those are the ones for which a small offer is more likely to be accepted. Also, look for properties that have been on the market for more than 90 days and offer at least 10% to 30% less than the asking price.

3. Be careful, some repair costs may be heavy. Bank-owned houses typically need a lot of repairs: People who face foreclosure often neglect maintenance. Only buy an REO property after an inspection, and be sure to calculate repair and remodelling work into your price.

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