What is a Private Mortgage?

Private mortgages are a special and very interesting type of mortgage option that most people are not too familiar with. The most basic definition is a mortgage contract in which the lender is not a registered financial institution but may be a friend, family member or individual investor.

Because banks and other financial institutions have strict guidelines for lending that limit their ability to finance certain scenarios and borrower profiles, private mortgages are used to meet those unique needs. Some typical situations where a borrower may need private financing include:

- Financing for a cottage or unique property

- Financing for renovation projects and construction

- Financing for an individual who can't prove their income by conventional means

- Financing to consolidate debt or recover from a bankruptcy

- Financing for individuals who have income tax or property tax arrears

There are several benefits to the borrower and investor alike in this type of mortgage arrangement.

From the borrowers point of view, private mortgages can be an excellent alternative when a suitable bank mortgage is impossible to obtain. Reasons why a borrower may require a private mortgage include; need for a second mortgage, poor credit, income tax arrears, tax arrears, construction financing, financing on properties that institutional banks may not consider prime, cases where an individual has recently gone bankrupt or just can't prove their income. A private mortgage should never be a long term strategy for a borrower, as the interest rates tend to be higher and do not always have the features and flexibility that institutional mortgages offer.

Anybody can lend money through a mortgage. You don't have to be a bank to lend money, it is possible for anyone to offer a private mortgage so long as it is arranged through a licensed mortgage broker in Ontario. Private mortgages are a great investment vehicle which provides monthly income. In addition, mortgages are negotiable instruments which can be assumed, renegotiated, and transferred as needed. All the while the investor is protected by the security of the real estate on which the mortgage is registered.

Regardless of whether you are a borrower or an investor a knowledgeable mortgage broker who is specialized in private mortgages is necessary in order to arrange the mortgage and also provide the guidance needed to make informed decisions.

Christopher Molder is a Toronto Mortgage Broker who is continuing in the footsteps of his father Arnold Molder, a mortgage broker with over 4 decades of experience. His blog http://sonofabroker.com is a source of entertaining, enlightening and educational mortgage information for all Canadian homeowners. To learn more about Christopher and his unique perspective on mortgages visit his blog http://sonofabroker.com

Article Source: http://EzineArticles.com/expert/Christopher_Molder/521401

Facts and Tips about New Construction Home Loans

New construction home loans are not the same as your typical, everyday home loans. They tend to have different requirements and adhere to different rules. If you wish to know more about new home construction loans, read on. You just might find an easier way to own your dream home.

The Definition of New Construction Home Loans

When you ask for this type of loan, you're asking the mortgage provider to give you the money you need to build your own home.

The Basis of Approval

First and foremost, your mortgage provider would require a detailed explanation as well as accounting on the estimated costs for your home-building project. They'd want to know how much experience you have in the field of construction, how much you estimate you're going to spend on your house and how it's going to look in the end.

Only after you've passed the initial screening, they ask you to submit the usual documents that would enlighten them about your earning capabilities and credit reputation.

The Types of Construction Loans

There are different types of construction loans.

A construction to permanent loan is a two-in-one loan ideal for most people since it would only require you to submit documents and pay closing costs once. This type of loan is a combination of a construction loan and permanent financing. Rather than applying for a construction loan initially, then following it up with a typical home loan, an approved CTP loan can help you save money and time.

A remodeler loan is a second mortgage that's designed to provide financing for a home improvement or remodeling project.

A bridge loan allows you to use the equity on your present home as down payment for your new home.

Lastly, a lot/land loan gives you the resources to buy land instead of building a home.

Home Loans [http://www.WetPluto.com/A-Guide-To-Home-Equity-Loan-Rates.html] provides detailed information on Home Loans, Home Equity Loans, Home Improvement Loans, Home Equity Loan Rates and more. Home Loans is affiliated with Home Improvement Loans Info [http://www.i-homeimprovementloans.com].

Article Source: http://EzineArticles.com/expert/Kent_Pinkerton/44498

Mortgage Reducing Term Assurance (MRTA)

How much should I pay for insurance?

That's exactly how much you need to find out - The MRTA calculator gives you the figure you need to calculate your mortgage reducing term assurance or MRTA. First, the definition of MRTA.

MRTA is defined as Mortgage Reducing Term Assurance; reducing term life assurance specially designed to protect a loan borrower against death or TPD (total permanent disability) due to natural or accidental causes.

>> Firstly, check your MRTA Premium and how much you should pay for your insurance.

MRTA is very often a lump sum and the lending institution will arrange fire and Mortgage Reducing Term Assurance of insurance cover. Should anything happen to you during the period of the loan requested/applied, the Insurance Company which issued the policy will pay the outstanding balance of the repayment to the bank/finance institution.

How will MRTA benefit you? 

1. Premium financing Pay a small sum to accumulate over with the plan. It's affordable and reliable.
2. Single premium payment Full protection for a one-time fee. For life.
3. Liberal TPD explanatory If you cannot perform your regular work for six (6) consecutive months, TPD benefits will be feasible. Some packages offer only permanent disability.
4. Guaranteed acceptance Acceptance is guaranteed for loan borrowings up to RM150,000 and entry ages up to 50 years next birthday. Subject to other terms and conditions.
5. 24 hours worldwide coverage Anywhere in the world you're covered, not only in the respective country you apply.
6. Guaranteed benefit to settle your balance mortgage The repayment of your housing loan will be settle should there be any causes of death of TPD.

>> Get the MRTA Calculator here [http://www.fiscal-wise.com.my/FiscalWiseWeb/FinancialTool/MRTA.aspx].

Written by John of Fiscal

http://malaysiahomeloan.blogspot.com/

Article Source: http://EzineArticles.com/expert/John_Li/222723

What to Know Before Getting a Reverse Mortgage

After living in a home for years and years, many people consider using the equity in the home as a resource for financing other expenses, such as tuition or to pay down debt. A reverse mortgage is one option for those who have owned their home for a long time. Senior citizens primarily utilize them. The process is not more difficult than a traditional home mortgage, but there are many differences that the applicant must know about before moving forward.

Definition

This is a special loan that provides homeowners with the opportunity to use part of their home equity as a liquid asset. This essentially turns part of the home's value into tangible cash that can be used for other expenses. The accrued equity can be paid out to the homeowner to use as they see fit. While this sounds much like a home equity loan, there are some substantial differences. This type of arrangement does not require repayment until or unless the homeowner is no longer using the house as his or her primary residence.

Significant Differences in Home Equity Loans

There are some additional differences between a reverse mortgage and a home equity loan. Standard equity loans require a regular monthly repayment on the principal and interest on the loan. The reverse mortgage pays the homeowner rather than making payments to the bank. Utility payments, insurance, and any taxes will have to be paid, however.

Home Loans That Are Eligible

Not all housing situations are eligible for this type of specialized loan. The home must be a single-family house with the owner living in it. Any house that meets FHA standards is also approved for these loans, including condos and manufactured dwellings.

Questions About Inheritance

A common question that comes up when someone inquires about a reverse mortgage is how the house will be dealt with after they pass away. Many homeowners want to leave a home behind as an asset for family members to utilize. These specialized loans do not cause debt to be passed to the estate. Instead, any money paid to the owner, along with finance charges and interest, will have to be repaid to the bank. If it is sold and the profit is greater than the selling price, the extra money will be provided to the estate to be distributed among heirs.

Cancelling the Loan

While some find this arrangement appealing, others may decide to change their mind and cancel the loan. The owner has three calendar days to cancel the process. Different lenders will have varied approaches with how they handle this process, which is referred to as a three-day right of rescission.

Before jumping into a reverse mortgage, be sure to fully review the information provided by the lender in order to fully understand the process. If there are any questions, it is best to ask them well in advance of moving forward with the lending process.

When looking for a reverse mortgage, homeowners visit FirstBank Mortgage. Learn more at http://firstbankreversemortgage.com/.

Article Source: http://EzineArticles.com/expert/Andrew_Stratton/83489

Your Paying 161% Interest For Your Mortgage!

You read the title correctly and you're not in a deep sleep having a nightmare. I am sorry that you had to find this out from some stranger but this is a Truth. I am in the mortgage business and when I discovered this I almost fell of my chair. For example if you have a 200,000.00 for a thirty year term at 6% and pay it to full maturity the effective interest rate will be 161%. Now do you understand why 95% of all Americans will never own their own home and if you are reading this, odds are you are one of them! It blows my mind to think that Americans will make mortgage payments for 20, 30, and 40 and 50 years and still will never achieve home ownership, why!

What I discovered is there are two factors why we will never own our home. The first is a banking instrument called amortization and the second is to continually refinance your current Mortgage. Let's first take a look amortization and explain the origins of it and how it works. After the great depression the president of the United States, FDR realized the government needed something to stimulate the economy what they decided to do is to focus on new home construction. His advisors discovered that home construction was a viable way to jump start the economy. The benefits of new home construction are that it creates jobs and affects numerous sectors of the economy.

One of the obstacles in their plan was how to finance homeowners. Before the great depression homeowners would put down 80% and finance 20%. After the depression potential buyers didn't have the resources to make large down payment. What they proposed was to increase the term of the loan, great idea but now the lenders were taking on greater risk with longer term loans. Whenever the banks liability or risk increases the lending institute will then pass it on to the consumer in the form of compound interest or cost. To solve that problem and reduce the risk to the lender they created the bank instrument called amortization. A definition of amortization in its simplest form, the bulk of the interest on the mortgage will to be paid in the first 7 to 10years of the loan.

On a 200,000.00 mortgage for a thirty year term at 6% interest it is not until the 21st year of the loan does principal overtake interest? Let me give you an example for the above scenario. On this loan the payment would be approximately $1,199.00 per month, in your first month $1,000.00 would go to interest and $199.00 would be applied to principal. Don't take my word for it look at your Truth and Lending Statement and you will see that you'll pay two and a half times for your home. Albert Einstein said "Compound interest is the 8th wonder of the world. He who understands it earns it! He who doesn't pays it!" He could have said it about Relativity, Physic's or Electricity but he did not. He understood the power of compound interest and so do the banks.

Here is an example of compound interest. If you would open a savings account at 3% and would deposit $ 1,000.00 and leave it there for 48 years or a working lifetime you would have a return of $ 4,000.00. The banks will take the same $ 1,000.00 and will get 18% on there money and at the end of 48 years will accumulate a return of $ 4,096,000.00. No you don't need glasses you read it correctly. This is why there is a bank on every corner and more banks than churches.

The second component is refinancing your existing mortgage. Every time you refinance, you're resetting the amortization schedule which puts the bulk of interest in the first 7 to 10 years. The national average says Americans will refinance their home every 3 to 5yrs. Mr. Einstein also made another profound statement "the definition of insanity is doing the same thing over again and expecting different results". We have been taught to refinance our homes every time we are able to save a percentage point or more. That's what the lenders and mortgage companies want you to believe. Presently there are few options available to homeowners to reduce mortgage debt, one is a bi-weekly and the other is adding extra money to your current mortgage. Both will eliminate a few years off your debt but most individuals are not disciplined enough to do so and that includes myself.

By now you are probably asking yourself how I can stop the insanity. Now there is an award winning product revolutionizing the way we pay our mortgage. It is reducing mortgage debt by one third the time. A similar concept is being used throughout Europe, Australia and New Zealand and is reducing mortgages by fifty percent. Are they smarter than we are, no but they have found a solution. You need stop this cycle and let me show you how to become debt free through mortgage cancellation. My passion is to see you financially free.

For more information contact me at jmridings@paidinfull.org or go to http://www.paidinfull.org and watch the 10 min video overview. It will change your financial future. I want to help you please call me at 708-983-3431 for a free copy of 101 Ways to Stop the Money Leak.

A successful restaurateur in Chicago, One day I woke up and all that I had labored for was taken away. Starting over at 49 is a journal of my journey back to the place of achieving my goals for my life. Also to help Americans achieve financial freedom.

Article Source: http://EzineArticles.com/expert/John_Mark_Ridings/211378

Creative Financing For Commercial Real Estate Investors

Commercial Real Estate Investing

There are many income producing commercial real estate properties that are being offered below market that are great investment opportunities. The problem or barrier for most real estate investors buying these properties is the down payment required to acquire them. As a rule general rule to purchase income generating apartment buildings and mixed use multifamily properties one should be prepared to spend 25% to 35% of the purchase price for the down payment. Plus the investor must have closing costs and reserves of 6 months or more. This is a substantial investment that eliminates many potential buyers. This can often be overcome by these creative financing strategies for commercial real estate investors.

Creative Financing

This is a highly misunderstood concept in real estate. My simple definition has two parts. Creative Financing requires a property with substantial equity and a willing and motivated seller. If the seller is motivated yet there is no equity there is no opportunity to utilize creative strategies to acquire the properties. By the same token if the property has enough equity and the seller is neither willing nor motivated no strategy will work.

3 Creative Strategies to Purchase Commercial Real Estate

1. Seller Financing and / or Carry Back: There are many ways to structure a deal  where the seller can finance the property or hold a second mortgage for a short time and then the buyer can refinance the loan. Many lenders requires the loan to be seasoned one or two years. Yet there are lenders that we work with that will refinance immediately requiring no seasoning. These deals close within 3 to 6 months from the initial seller financing contract.
2. Transaction Funding Programs: These are programs where a private lender will finance the loan from One to forty - five days. The key is to have a buyer ready to close immediately or to be able to refinance at once. This only works when the end lender is aware of the transactional financing and they require no seasoning. As in point #1 above most lenders require one to two years of ownership seasoning so having the proper end lender is important.
3. Down Payment Assistance Program: If the property has equity and the seller is willing to use it to help the buyer acquire the home, then a down payment assistance program similar to Ameri-Dream or Nehemiah (programs used to purchase residential properties financed by FHA loans) may be a great option for you. Ultimately the Down Payment Assistance Company (DPA) gives the down payment and the seller reimburses the company at closing. This can only happen if there is substantial equity in the building.

As previously stated creative financing requires substantial equity in the commercial income producing property that the seller is willing and motivated to use to strategically sell there property as soon as possible. Lower the price simply is not the answer because the main problem still exist. Commercial Real Estate Investors do not have 25% to 35% for down payment plus closing costs and reserves. Let a professional help you structure your deals to make them close.

Commercial Real Estate Investing is an opportunity whose time has come. Louis Jeffries has been a mortgage banker for over 20 years helping real estate investors achieve their real estate investing goals. Learn more about commercial real estate investing, down payment assistance for commercial properties, conventional and creative financing options. Go to http://fbcfunding.com for more information.

Article Source: http://EzineArticles.com/expert/Louis_Jeffries/190848

Real Estate Appraisal Methods

Real estate appraisal is the practice of developing an opinion of value of real property. It is presumed that no two properties are exactly alike, and that all properties differ from each other in their location, which is one of the most important determinants of their value. Real estate appraisals are generally performed by a licensed or state certified appraiser.

Typically, there are three (3) approaches to value, to wit: the cost approach, the sales comparison approach, and the income capitalization approach. With respect to residential appraisals, all three forms are identified in a standardized form known as the Uniform Residential Appraisal Report. More complex appraisals are usually reported in a narrative appraisal report.

There are several types and definitions of value sought by a real estate appraisal. Some of the most common are:

• Market Value - the price at which a property should exchange on the date of valuation between an educated buyer and a reasonably motivated seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without undue influence.

• Value-in-use - The net present value (NPV) of a cash flow that an asset generates for a specific owner under a specific use. Value-in-use is the value to one particular user, and may be above or below the market value of a property.

• Investment value - is the value to one particular investor, and is usually higher than the market value of a property.

• Insurable value - is the value of real property covered by an insurance policy. Generally it does not include the site value.

• Liquidation value - may be analyzed as either a forced liquidation or an orderly liquidation and is a commonly sought standard of value in bankruptcy proceedings. It assumes a seller who is compelled to sell after an exposure period which is less than the market-normal time frame.

Price versus value

It is important to distinguish between Market Value and Price. A price obtained for a specific property under a specific transaction may or may not represent that property's market value: special considerations may have been present, such as a special relationship between the buyer and the seller, or else the transaction may have been part of a larger set of transactions in which the parties had engaged. In essence, price does not always equal market value.

State certified or licensed appraisers must conform to the Uniform Standards of Professional Appraisal Practice (USPAP). Thus, the definition of value used in an appraisal or CMA analysis and report is a set of assumptions about the market in which the subject property may transact. It becomes the basis for selecting comparable data for use in the analysis. These assumptions will vary from definition to definition but generally fall into three groups of methodologies for determining value - the cost approach, the sales comparison approach, and the income approach.

Mario D'Artagnan is a Broker Associate at Rossman Realty Group, Inc. in Cape Coral, Florida. Mario is a former real estate instructor, having taught pre and post licensure courses along with residential real estate appraisal. For comments or questions, please contact Mario at:mariodartagnan1953@gmail.com, or visit his website at: [http://www.mariodartagnan.com].

Article Source: http://EzineArticles.com/expert/Mario_D'Artagnan/1585633

The "Lingo" Of The Real Estate Appraiser

A real estate appraisal is a service performed, by an appraiser, that develops an opinion of value based upon the highest and best use of real property. The highest and best use is that use which produces the highest possible value for the property. This use must be profitable and probable. Also of importance is the definition of the type of value being developed and this must be included in the appraisal, ie fair market value, condemnation value, quick sale value, etc.

Types of value

There are several types and definitions of value sought by a real estate appraisal. Some of the most common are listed:

Market Value

- The price at which an asset would trade in a competitive Walrasian auction setting. Market value is usually interchangeable with fair market value or fair value. The legal definition of market value is usually given by some variant of the following: "The most probable price at which a property would trade in an arms-length transaction in a competitive and open market, in which the buyer and seller each act prudently and knowledgeably and in which the price is not affected by any special relationship between them".

Value-in-use

- The net present value (NPV) of a cash flow that an asset generates for a specific owner under a specific use. Value-in-use is the value to one particular user, which may be above or below the fair market value of a property.

Investment value

- is the value to one particular investor, which may be above or below the fair market value of a property.

Insurable value

- is the value of real property covered by an insurance policy. Generally it does not include the site value. It is important to distinguish between market value and price. A price obtained for a specific property under a specific transaction may or may not represent that property's market value: special considerations may have been present, such as a family relationship between the buyer and seller, or else the transaction may have been part of a larger set of transactions in which the parties had engaged. It is the task of the real estate appraiser/property valuer to judge whether a certain price obtained under a certain transaction is indicative of market value.

Three approaches to value

There are three usual approaches to determining the fair market value of a property, cost approach, sales comparison approach, and income approach. The appraiser will determine which of the approaches is applicable and develop an appraisal based upon information from each individual market area. Costs, income, and sales vary widely from area to area and particular importance is given to the specific location of the property. Consideration is also given to the market for the property appraised. Properties that are typically purchased by investors (ie. skyscrapers) will give greater weighting to the Income Approach, while small retail or office properties (purchased by owner-users) will give greater weighting to the Sales Comparison Approach. Single Family Residences are most commonly valued with greatest weighting to the Sales Comparison Approach.

Cost approach

The Cost approach is sometimes called the summation approach. The theory is that the value of a property can be estimated by summing the land value and the depreciated value of any improvements. It is the land value, plus the cost to reconstruct any improvements, less the depreciation on those improvements.

Sales comparison approach

The sales comparison approach looks at the price or price per unit area of similar properties being sold in the marketplace. Simply put, the sales of properties similar to the subject are analyzed and the sale prices adjusted to account for differences in the comparables to the subject to determine the fair market value of the subject. This approach is generally considered the most reliable, IF good comparable sales exist.

Income capitalization approach

Income Capitalization Approach

Often simply called the income approach, is used to value commercial and investment properties.

Automated valuation models

Automated valuation models (AVMs) are growing in acceptance. These rely on statistical models such as multiple regression analysis and geographic information systems (GIS). While AVMs can be quite accurate, particularly when used in a very homogeneous area, there is also evidence that AVMs are not accurate in other instances such as when they are used in rural areas, or when the appraised property does not conform well to the neighborhood. Because of the limitations, AVMs have begun to fall out of favor with many lenders but are widely used in other appraisal problems such as mass appraisals for ad valorem real estate tax purposes.

Michelle Hiller

Seasoned Loan Expert

[http://www.quoteinwrititng.com]

Article Source: http://EzineArticles.com/expert/Michelle_Hiller/9609

What Does a Lis Pendens Mean in the Foreclosure Legal Process?

One of the legal terms that homeowners in foreclosure often come across is lis pendens. They may initially find out about the term when attempting to refinance their house and the mortgage broker turns them down because of this type of document filed against the property. If a lis pendens has been filed, it will show up with the county recorder as a document affecting the title.

A lis pendens does not stop or prevent foreclosure at all, as it is merely a document serving notice upon any other party that is researching the particular property affected by the document. In most cases of a homeowner behind on the mortgage payments, the lender's attorneys will file the initial foreclosure lawsuit with the court and a lis pendens will be sent to the county clerk or recorder's office to indicate that a particular property is in the process of a pending litigation.

The term lis pendens is Latin for "lawsuit pending," and the lawsuit that it is referring to is the legal process of foreclosure. If the lender was not suing for the property to be sold for payment of the defaulted mortgage loan, this document would never be filed in the first place, as no lawsuit would be pending.

In fact, a lis pendens specifically indicates that the property is facing foreclosure, and the document will show anyone, such as a title company or prospective foreclosure refinance lender, researching the real estate that it is involved in a lawsuit. So the lis pendens is meant to signify the foreclosure; it does nothing to prevent the foreclosure, but it does not itself affect the homeowners' ability to save their home.

The most commonly used legal mechanism that would stop foreclosure is filing bankruptcy with the court, and even this only puts the process on hold while the creditor and debtor are coming to an agreement to negotiate a settlement of the debt.

Homeowners may also wish to consider getting rid of the lis pendens affecting their home by mounting a defense against the lawsuit that has led to the foreclosure process. This is a direct defense of the litigation, though, not an extra legal process like bankruptcy that may be used to put the suit on hold.

If a lis pendens is filed with the county recorder against a piece of property, this indicates that the house is already in some stage of the foreclosure process. The homeowners are no longer in the preforeclosure stage, or merely behind in payments. At this point, foreclosure can not prevented, as it is already being pursued by the lender and its attorneys -- it must be stopped, and homeowners need to begin putting together a realistic plan and researching various ways to stop foreclosure, such as a mortgage modification, repayment plan, selling the house, or a foreclosure bailout loan.

The ForeclosureFish.com website has been designed to assist homeowners in saving their homes from foreclosure on their own. Hundreds of pages of information, articles, and blog entries are available, describing various methods that homeowners may use to prevent foreclosure Visit the website today and begin learning how the foreclosure process works and what can be done to stop it before losing your home:http://www.foreclosurefish.com/

Article Source: http://EzineArticles.com/expert/Nick_Heeringa/62890

Commercial Mortgage Lender Explains Credit Tenant Lease (CTL) Financing

Credit Tenant Lease (CTL) Financing is a unique commercial mortgage lending platform designed to finance the purchase, refinance and development of single tenant, triple net (NNN) leased, buildings. The buildings can be retail, office, industrial or warehouse; CTL loans can be written against any real estate as long as it's occupied by a "credit tenant".

For the purpose of CTL lending, a credit tenant is defined as a corporate entity that has earned an investment grade credit rating from the major rating agencies. Generally, any company rated lower than BBB- (triple B minus) by Standard & Poors or Baa3 by Moody's, is not be considered investment grade and would not qualify for CTL financing.

CTL loans are very different than traditional commercial mortgage loans. Lenders who originate CTL financing are primarily concerned with the structure of the lease and the strength of the tenant rather than the value of the real estate or the credit of the borrower. CTL lenders count the lease and the income it generates as the main collateral backing the loan. This is a distinct difference as-compared to standard commercial real estate lending and represents a unique perspective in real estate finance.

CTL lending is possible because of the popularity of NNN leases among strong corporate tenants. When a landlord executes a true or "absolute" NNN lease with a good tenant, he has almost no management or operational responsibilities. The tenant is responsible for everything from paying the utility bills to maintaining the building, even large real estate issues, such as repaving the parking lot or replacing the HVAC system are all the responsibility of the tenant, not the land owner. Consequently a lender with a lien against a NNN leased property likewise needn't worry much about the building; even if they have to repossess it in a foreclosure, they won't have to actually run it. For buildings with long term NNN leases and excellent tenants, it only makes sense that lenders focus mainly on the lease.

CTL loans are originated by commercial mortgage bankers or direct CTL lenders. Bankers will issue and sell a private placement mortgage bond in-order to fund the CTL loan. Direct lenders also collateralize the lease into a bond, but often hold the debt in their own portfolios rather than sell it on the secondary market.

Because of the straight-forward nature of CTL financing loans amounts are typically larger than other institutional loans. Many CTL lenders will make no restrictions on loan-to-value or loan-to-cost and will write the maximum possible loan. The only real condition on the size of the loan is that the rent collected must cover the mortgage payment. Most CTL lenders require a minuscule debt-service-coverage (DSCR) ratio of only 1.01%-1.05%.

Speed of execution is another benefit of CTL loans. It only takes 45-60 days, from start to finish, to complete a CTL transaction. Bank loans, on-the-other-hand, are notorious for being long, drawn out bureaucratic affairs.

Borrowers who take advantage of CTL financing tend to be sophisticated commercial real estate investors who understand the business of NNN investing. They are generally seeking dependable, long term income from their real estate holdings and want permanent, fixed financing. The terms of CTL loans are "co-terminus" with the term of the underlying lease and the rates are usually fixed for the life of the loan. CTL loans are nearly always self amortizing mortgages written for 15-25 years. Developers also use CTL financing for build-to-suit construction loans.

The ultimate credit tenant is the US Government. Uncle Sam still enjoys the highest possible credit rating and leases real estate all across the country. Federal court houses, Social Security Administration buildings, Department of Homeland Security field offices, and US Post Offices are all examples of buildings that have been purchased using a CTL mortgage loan.

Investment grade corporate tenants include the drug store chains, Walgreens and CVS, as-well-as, retail giants Walmart and Target. McDonald's is, of course, the most popular credit tenant in the food service industry. Virtually any company that can boast of a superior credit rating and leases real estate on a NNN basis, can qualify for streamlined CTL financing.

CTL is a very specialized lending platform designed to accommodate a very specific type of commercial real estate investing. It is a very fast and efficient method of funding the purchase, refinance or development of a building that is NNN leased to a high quality tenant. CTL loans are perfect for the individual investor who buys income property or the small-to-midsized developer who builds only one or two projects at a time.

In a time of continuing economic turmoil and difficult credit markets, it's nice to know that there are still dependable sources of commercial real estate lending. If you are buying, building or need to refinance a building that's leased to a credit tenant you can depend on CTL financing.

MasterPlan Capital LLC - Commercial Mortgage Lender - Credit Tenant Lease (CTL) Financing - Private and Institutionally Funded - Equity Financing - Asset Management - Simple, 1 Page Commercial Mortgage Application Online - Quick Answers - Close in 10 Days - The author, Vincent Remealto, is a commercial real estate valuation and underwriting analyst for MasterPlan Capital.

Article Source: http://EzineArticles.com/expert/Vincent_Remealto/149102

Predatory Lending in the Housing Bubble - Were You a Victim?

The most egregious examples of predatory lending occurred when interest-only loan products where offered to subprime borrowers whose income only qualified them to make the initial minimum payment (assuming the borrower actually had this income). This loan program was commonly known as the two-twenty-eight (2/28). It has a low fixed payment for the first two years, then the interest rate and payment would reset to a much higher value on a fully amortized schedule for the remaining 28 years.

Seventy-eight percent of subprime loans in 2006 were two year adjustable rate mortgages. Anecdotal evidence is that most of these borrowers were only qualified based on their ability to make the initial minimum payment. The low starting payment rate is often called a "teaser rate" because it is a temporary inducement to take on the mortgage. There was a widespread belief among borrowers that one could simply refinance from one teaser rate to another forever in a process known as serial refinancing.

This practice did not fit the traditional definition of predatory lending because the lender was not planning to profit by taking the property in foreclosure. However, the practice was predatory because the lender was still going to profit from making the loan through origination fees at the expense of the borrower who was sure to end up in foreclosure.

There were feeble attempts at justifying the practice through increasing home ownership, but when the borrower had no ability to make the fully amortized payment, there was no chance of sustaining those increases. In many ways, people were more stable in their homes prior to the financial innovations. Long-term renters can stay in their rentals for extended periods, particularly if private landlords are more concerned with vacancy than with collecting top dollar for their rental. Renting from the bank for two years prior to a foreclosure hardly seems a beneficial move.

The advantage of interest-only, adjustable-rate mortgages (IO ARMs) is their lower payments. Or put another way, the same payment can finance a larger loan. This is how IO ARMs were used to drive up prices once the limit of conventional loans was reached.

Subprime borrowers took out 2/28 loans in large numbers. The majority of these borrowers defaulted on their loans because they could not afford the payment recast. This was predatory lending. Despite the fact that lenders lost a great deal of money on these loans, they wrote the loans to profit from origination fees. Lending for a profit at the expense of borrowers is the definition of predatory lending, and many lenders were guilty of it during the Great Housing Bubble.

Lawrence Roberts is the author of The Great Housing Bubble: Why Did House Prices Fall?

Learn more and get FREE eBooks at: [http://www.thegreathousingbubble.com/]

Read the author's daily dispatches at The Irvine Housing Blog: http://www.irvinehousingblog.com/

Article Source: http://EzineArticles.com/expert/Lawrence_D_Roberts/189743

Do You Find Yourself With An Underwater Mortgage?

Being underwater with your mortgage is a terrible thing and no one buys a house thinking about the fact that it could happen to them. Some people might not even be aware of what an underwater mortgage even means let alone what they can do to solve the problem.

In the following article we will talk about what the term underwater mortgage means and different things you can do if you find yourself in that situation.

The Definition of Underwater Mortgage

You will not start out with an underwater mortgage but it can happen if you make poor financial choices, and sometimes just because of bad circumstances. Before you buy a home through a bank they will typically want an appraiser to take a look at the home and say what it is worth so the bank knows how much they should borrow you for the home. When you take out the mortgage for the first time it will be for the value of the home, minus whatever down payment you put on it. Over time however things can change and it can end up that you owe more on the house then it is actually worth. Basically even if you sold the house at current fair market value you would still not be able to cover the cost of the current mortgage. This is the definition of an underwater mortgage.

How can an underwater mortgage occur?

As stated earlier, a homeowner will never start out with an underwater mortgage, but circumstances can happen over time that will result in an underwater mortgage.

Sometimes an underwater mortgage can happen when the homeowner refinances the house. When you refinance the lending institution will want a current appraisal on the home because they will not be willing to use the one that you had when you first bought the house. If your property value has gone down you will not have enough equity in the home and you may find yourself with an underwater mortgage situation.

Underwater mortgage can also result in a homeowner borrowing too much against the home. Sometimes, people decide to borrow against the mortgage because the loan rates for the mortgage are at a much better rate than taking out another loan. The lender will decide to offer the loan depending upon the homeowner's credit rating, secure job, and good financial standing, and sometimes does so even if the mortgage has not been paid off. Then, months later, the homeowner's financial situation dramatically worsens by a sudden job loss, unexpected medical bills, etc. and the home is worth less than the amount of the mortgage must pay on it.

The situation that many homeowners fall into is the circumstance that they have the least control over. They bought their property and over time the property lost value while the mortgage amount stayed the same. In this case, the neighborhood may have worsened or the local real estate market is experiencing a heavy buyer's market. Or, the neighborhood is experiencing a high volume of foreclosures. Regardless of the reason, the value of the home is lower than the mortgage.

What can I do if I have an underwater mortgage?

If you find yourself underwater the best thing to do is speak with your current lender. Some banks, and lending institutions, will convert your loan to something with either more time, or maybe lower rates to help get you out from being underwater. Each situation will be handled differently so make sure you speak with the lien holder to try to find the right solution for your problem.

If you find yourself in a neighborhood that is going downhill fast it might be better to just sell the home for what you can and move to a new place. This is when working with a real estate investor would be a good thing because they can help you sell a house quickly.

Let us help you out if you are in a tough spot and trying to sell your home [http://www.sellmyhousesanfrancisco.com/sell-my-house-fast/88/things-to-consider-before-paying-all-cash-for-houses-if-youre-in-san-francisco.html/]. We will buy houses in all sorts of conditions and we might want to buy your home as well. Avoid the headaches of a traditional home sale and let us buy your home.

Article Source: http://EzineArticles.com/expert/Melissa_Gifford/1520795

Debt Yield - What Is It and What Is Acceptable?

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Debt Yield is a relatively new metric and is still not used by most commercial banks who are portfolio lenders. It is used primarily by investment banks and conduit lenders to calculate their cash-on-cash return on their investment if they were to foreclose on the asset they are lending on. It is calculated by dividing the property's NOI by the 1st Trust Deed loan amount and multiplying that by 100. For instance, suppose your commercial property has a NOI of $500,000 annually and you received a $5,000,000. The Debt Yield Ratio would be calculated as follows:

Debt Yield Ratio: ($500,000/$5,000,000) x 100 = 10%

So, the lender would receive a 10% cash-on-cash return on their investment if they were to foreclose on your property. Why is this important to certain lenders? This ratio allows lenders to quickly analyze the loan amount in reference to property's NOI to determine the maximum loan amount that they are willing to offer. This metric was adopted because many lenders were getting into trouble by only using a debt service coverage ratio to determine maximum loan amounts. This ratio will not take into account cap rates, amortization on the loan, or even interest rate. It is only used to compare NOI to the 1st Trust Deed loan amount.

Most lenders will require a Debt Yield above 10% on all of their loans. Some conduit lenders may consider a property with a slightly lower yield because it is has a superior location or is a superior product, but 10% is a good rule of thumb because this generates a loan-to-value ratio of approximately 65% - 70%, target leverage for conduit lenders. Although this is currently used mostly by conduit lenders, don't be surprised if commercial banks soon adopt the Debt Yield Ratio to determine acceptable maximum loan amounts.

To summarize, if you are considering financing to purchase a new property or refinance one of your existing properties, take a moment to calculate the Debt Yield Ratio on your property that would be acceptable to a lender. This will allow you to go into a meeting with your prospective lender with a good idea of what they may offer you in terms of a loan amount. If you are looking for mezzanine financing on top of your 1st Trust Deed loan it is important to know that the mezzanine loan will not have any effect on your Debt Yield Ratio.

Posted by Chad Pitt

President

Commercial Alternative

Phone (714) 943-8818

Fax (866) 724-8171

cpitt@commalt.com

http://www.commalt.com

Article Source: http://EzineArticles.com/expert/Chad_Pitt/222646