Mortgage Fraud Schemes in South Carolina - A Review For SC Criminal Attorneys, Lawyers & Law Firms

Mortgage fraud is problem that has reached epidemic proportions in the United States (US) in general and in South Carolina (SC) in particular. The white collar practitioner should be aware that mortgage fraud is generally investigated by the United States Federal Bureau of Investigation (FBI), although other agencies routinely assist the FBI and/or take the lead in investigating a case. Some of the other federal agencies which investigate mortgage fraud crimes for criminal prosecution include, but are not limited to, the Internal Revenue Service-Criminal Investigative Division (IRS-CID), United States Postal Inspection Service (USPIS), U.S. Secret Service (USSS), U.S. Immigration and Customs Enforcement (ICE), U.S. Department of Housing and Urban Development-Office of the Inspector General (HUD-OIG), Federal Deposit Insurance Corporation-Office of the Inspector General (FDIC-OIG), the Department of Veterans Affairs-Office of the Inspector General (DVA-OIG) and U.S. Bankruptcy Trustees.

The FBI works extensively with the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the United States Department of the Treasury, created in 1990, that collects and analyzes information about financial transactions in order to fight financial crimes, including mortgage fraud, money laundering and terrorist financing. The FinCEN network is a means of bringing people and information together to combat complex criminal financial transactions such as mortgage fraud and money laundering by implementing information sharing among law enforcement agencies and its other partners in the regulatory and financial communities. South Carolina lawyers can keep abreast of mortgage fraud developments by visiting the respective websites of the FBI and FinCEN.

In South Carolina, mortgage fraud is generally prosecuted by federal prosecutors. The United States Attorney's Office (USAO) and the U.S. Department of Justice's (DOJ) Criminal Fraud Section handle the criminal prosecutions of mortgage fraud cases. The USAO in South Carolina has about 50 prosecutors in the state, and has offices in Charleston, Columbia, Florence, and Greenville. In the investigation stage, a person with possible knowledge or involvement in a mortgage fraud may be considered a witness, subject or target of the investigation. A subject is generally a person the prosecutor believes may have committed a mortgage fraud crime, whereas a target is a person the prosecutor believes has committed a crime such as mortgage fraud and the prosecutor has substantial evidence to support a criminal prosecution. Criminal prosecutions of mortgage fraud felony cases are usually initiated through the federal grand jury process. A federal grand jury consists of between 16 and 23 grand jurors who are presented evidence of alleged criminal activity by the federal prosecutors with the aid of law enforcement agents, usually FBI special agents. At least 12 members of the grand jury must vote in favor of an indictment charging mortgage fraud. South Carolina criminal defense lawyers are not allowed entry into the grand jury at any time, and prosecutors rarely fail to obtain an indictment after presentment of their case to the grand jury.

Often targets of a mortgage fraud prosecution are invited by the prosecution to avail themselves of the grand jury process and to testify in front of the grand jury. Generally, a South Carolina criminal defense attorney should not allow a named target of a federal criminal mortgage fraud investigation to testify before the grand jury. Subjects and witnesses in a mortgage fraud prosecution are often subpoenaed by the prosecutors to testify before the grand jury. A criminal defense attorney should likewise generally advise a witness or subject to not testify if any part of the testimony would possibly incriminate the client. With respect to a federal mortgage fraud investigation, when a citizen receives a target letter, subject letter, or a subpoena to testify before the grand jury, or is contacted in person by a law enforcement officer such as an FBI special agent, a South Carolina criminal lawyer who is experienced in federal prosecutions should be consulted immediately. One of the biggest mistakes a mortgage fraud target, subject or witness can make is to testify before the grand jury or speak to criminal investigators prior to consulting with a criminal defense attorney. The 5th Amendment to the Constitution allows any person, including a target, subject or witness in a mortgage fraud prosecution, to not incriminate himself or herself. Interestingly, there is no 5th Amendment protection for a corporation. Obviously, if a defendant has been indicted or arrested for a federal mortgage fraud crime in South Carolina, an experienced SC mortgage fraud lawyer should be consulted immediately.

An important practice tip for South Carolina attorneys representing clients who have decided to testify before the grand jury is to accompany the client to the grand jury court room. While not allowed in the grand jury proceeding itself, the attorney can wait just outside of the court room and the client is allowed to consult with the attorney for any question which is posed to the client by prosecutors or grand jurors. This is an effective way to help minimize any potential damaging statements by the client, and a great way to learn the focus of the prosecutor's case. This approach makes it much easier to gain insights from the client as to the questions asked during the grand jury proceeding as opposed to debriefing the client after a sometimes long and grueling question and answer session which can last for hours.

South Carolina white collar criminal attorneys need to be aware of the types of mortgage fraud that are prevalent in the state in order to effectively identify and represent clients who are involved in mortgage fraud activities. Consumers need to be aware of the variations of mortgage fraud so that they do not unwittingly become a part of a scheme to defraud a bank or federally backed lending institution. Federal mortgage fraud crimes in South Carolina are punishable by up to 30 years imprisonment in federal prison or $1,000,000 fine, or both. It is unlawful and fraudulent for a person to make a false statement regarding his or her income, assets, debt, or matters of identification, or to willfully overvalue any land or property, in a loan or credit application for the purpose of influencing in any way the action of a federally backed financial institution.

Some of the applicable federal criminal statutes which may be charged in mortgage fraud indictments include, but are not limited to, the following:

• 18 U.S.C. § 1001 - Statements or entries generally

• 18 U.S.C. § 1010 - HUD and Federal Housing Administration Transactions

• 18 U.S.C. § 1014 - Loan and credit applications generally

• 18 U.S.C. § 1028 - Fraud and related activity in connection with identification documents

• 18 U.S.C. § 1341 - Frauds and swindles by Mail

• 18 U.S.C. § 1342 - Fictitious name or address

• 18 U.S.C. § 1343 - Fraud by wire

• 18 U.S.C. § 1344 - Bank Fraud

• 18 U.S.C. § 2 - Aiding and Abetting

• 18 U.S.C. § 371 - Conspiracy

• 42 U.S.C. § 408(a) - False Social Security Number

While states experiencing the highest number of mortgage fraud cases are California, Florida, Georgia, Illinois, Indiana, Michigan, New York, Ohio, Texas, Utah, Arizona, Colorado, Maryland, Minnesota, Missouri, Nevada, North Carolina, Tennessee, and Virginia, the state of South Carolina has seen a huge rise in the number of mortgage fraud cases being prosecuted by the USAO, DOJ and FBI.

In South Carolina, a disproportionate number of mortgage fraud cases have occurred in the coastal region. Some of the South Carolina counties with high concentrations of mortgage fraud or bank fraud cases include Horry County, Florence County, Georgetown County, Charleston County, Berkeley County, Dorchester County, Beaufort County, Colleton County and Jasper County. Some of the South Carolina cities with high concentrations of mortgage fraud or bank fraud cases include Little River, North Myrtle Beach, Myrtle Beach, Murrells Inlet, Georgetown, Awendaw, Mt. Pleasant, Charleston, North Charleston, James Island, Isle of Palms, Sullivan's Island, Folly Beach, Kiawah Island, Hollywood, Ravenel, Beaufort, Bluffton and Hilton Head Island. The reason for the increased number of mortgage fraud and bank fraud criminal prosecutions in these areas is because large number of condominium, condotels, townhouse and similar real estate projects which proliferated in these areas. These real estate developments were popular in areas close to the waterfront and bank lenders were willing to loan money at a furious pace due to a perceived enormous demand.

There are a wide variety of schemes, artifices and conspiracies to perpetrate mortgage frauds and band frauds with which the South Carolina white collar criminal defense lawyer and consumers must be familiar. Typical mortgage fraud schemes or conspiracies that have occurred in South Carolina and elsewhere throughout the United States include the following:

Air Loans. The air loan mortgage fraud scheme is a loan obtained on a nonexistent property or for a nonexistent borrower. Professional scam artists often work together to create a fake borrower and a fake chain of title on a nonexistent property. They then obtain a title and property insurance binder to present to the bank. The scam artists often set up fake phone banks and mailboxes in order to create fake employment verifications and W-2s, home addresses and borrower telephone numbers. They may establish accounts for payments, and maintain custodial accounts for escrows. Phone banks are used to impersonate an employer, an appraiser, a credit agency, a law firm, an accountant, etc..., for bank verification purposes. The air loan scam artists obtain the loan proceeds and no property is ever bought or sold, and the bank is left with an unpaid loan that never had any collateral.

Appraisal fraud. Appraisal fraud is often an integral part of most mortgage fraud scams and occurs when a dishonest appraiser fraudulently appraises a property by inflating its value. In most cases, after the seller receives the closing proceeds, he will pay a kickback to the appraiser as a quid pro quo for the fake appraisal. In most cases, the borrower doesn't make any loan payments and the house or property goes into foreclosure.

Equity Skimming. In an equity skimming mortgage fraud scheme, an investor often uses a straw buyer, false income documents, and false credit reports to obtain a mortgage loan in the straw buyer's name. After the closing, the straw buyer signs the property over to the investor in a quit claim deed which relinquishes all rights to the property and provides no guaranty to title. The investor does not make any mortgage payments, and rents the property until foreclosure takes place several months later. Equity skimming also occurs when a scam artist purchases a residential property whose owner is in default on his mortgage and/or his real estate taxes, and then diverts rental income from the property for personal gain and does not apply this rental income toward mortgage payments, the payment of taxes and other property-related expenses.

Flipping. A flipping scheme occurs when the seller intentionally misrepresents the value of a property in order to induce a buyer's purchase. Flipping mortgage fraud schemes usually involve a fraudulent appraisal and a grossly inflated sales price.

Foreclosure schemes. Foreclosure scheme scam artists prey on people with mounting financial problems that that place them in danger of losing their home. Homeowners in the early stages of foreclosure may be contacted by a fraudster who represents to the homeowner that he can get rid of his debt and save his house for an upfront fee, which the scam artist takes and then disappears. In a similar foreclosure scheme, Homeowners are approached by a scam artist who offers to help them refinance the loan. The homeowners are fraudulently induced to sign so-called "refinance" documents only to later find out that they actually transferred title to the house to the fraudster and then face eviction.

Nominee Loans/Straw buyers. One of the most frequent types of mortgage fraud occurs when a "straw buyer" is used to hide the identity of the true borrower who would not qualify for the mortgage. The straw buyer or nominee buyer generally has good credit. The scam artist usually fills out the loan application for the straw buyer, and falsifies the income and net worth of the straw buyer in order to qualify for the loan. These fraud scams were popularized with the advent of the "stated income" loans which did not require a borrower to prove his true income and net worth - the bank just believed the income and net worth that was "stated" on the loan application. Straw buyers are often duped into thinking that they're investing in real estate that will be rented out, with the rental payments paying the mortgage, and are sometime paid a nominal fee outside of closing. In most case, no payments are made and the lender forecloses on the loan. Sometimes straw buyers are actually in on the scam and are getting a cut of the proceeds.

Silent Second. In the silent second mortgage fraud scheme, the buyer borrows the down payment for the purchase of the property from the seller through the execution of a second mortgage which is not disclosed to the lending bank. The lending bank is fraudulently led to believe that the borrower has invested his own money for the down payment, when in fact, it is borrowed. The second mortgage is generally not recorded to further conceal its status from the primary lending bank.

A mortgage fraud is usually reported to the FBI by the financial institution upon which the fraud has been committed. Pursuant to the Bank Secrecy Act of 1970 (BSA), a bank must file a Suspicious Activity Report (SAR) with FinCEN if a customer's actions indicate that the customer is laundering money or otherwise violating a federal criminal law such as committing mortgage fraud. See 31 C.F.R. § 103.18(a). A bank is required to file a SAR no later than 30 calendar days after the date of initial detection by the bank of facts that may constitute a basis for filing a SAR, unless no suspect was initially identified on the date of the detection, in which case the bank has up to 60 days to file the SAR. See 31 C.F.R. § 103.18(b). Once FinCEN has analyzed the information contained in the SAR, if a criminal activity is found to have occurred, then the case is turned over to the FBI and the DOJ or AUSO for investigation and prosecution. The rise in FBI SARs reports involving mortgage fraud went from approximately 2,000 in 1996 to over 25,000 in 2005. Of those 2005 SARs reports, 20,000 of involved borrower fraud, approximately 7,000 involved broker fraud, and approximately 2,000 involved appraiser fraud.

The FBI has identified a number of indicators of mortgage fraud of which the South Carolina criminal white collar lawyer needs to be aware. These include inflated appraisals or the exclusive use of one appraiser, increased commissions or bonuses for brokers and appraisers, bonuses paid (outside or at settlement) for fee-based services, higher than customary fees, falsifications on loan applications, explanations to buyers on how to falsify the mortgage application, requests for borrowers to sign a blank loan application, fake supporting loan documentation, requests to sign blank employee forms, bank forms or other forms, purchase loans which are disguised as refinance loans, investors who are guaranteed a re-purchase of the property, investors who are paid a fixed percentage to sell or flip a property, and when multiple "Holding Companies" are used to increase property values.

One of the first and biggest South Carolina mortgage fraud prosecutions occurred in the Charleston Division in the 1990's. It involved nominee borrowers and straw loans made by Citadel Federal Saving and Loan. Over 10 straw purchasers were enticed into the real estate loans by getting paid fees for signing up for the loans. They did not put up any of their own money as part of the deal and when the loans went sour the bank was left with properties that were upside down, that is, the real estate was worth less the the amount of the loan. Some bank insiders were part of the scheme and got convicted for their respective roles.

The range of defendants that a SC criminal lawyer will represent in a typical mortgage fraud case may include straw borrowers or nominee borrowers, real estate agents, developers, appraisers, mortgage brokers, and sometimes even closing attorneys and bankers. Bankers often get involved in mortgage fraud scams because they are receiving kickbacks from the borrowers or are paid bonuses for the volume of loans made and thus ignore proper banking loan requirements and protocols in order to make more money. Close scrutiny should be given to bank loan applications, appraisals, HUD-1 closing statements, borrower's W-2 and tax returns when analyzing a potential mortgage fraud case for a potential client.

Federal judges who impose sentences for mortgage fraud normally rely upon the United States Sentencing Guidelines, which are now advisory as a result of the U.S. v. Booker case, when determining a sentence. A federal court calculates a particular guideline range by assessing a defendant's criminal history, the applicable base offense level, and the amount of the actual or intended loss. Section 2B1.1 of the USSG sets forth a loss table which increases the base offense level according to the amount of money involved in the mortgage fraud. Generally, the more money which is lost in a mortgage fraud scam, the greater the sentence the defendant receives. In some cases, a defendant may be subjected to sentencing enhancements which means the defendant receives a greater sentence. A defendant may receive an enhancement for the role in the offense if the court determines that the defendant was an organizer, supervisor, or a recruiter, or used a sophisticated means to facilitate a crime, abused a position a trust, or targeted a vulnerable victim such as a disabled or elderly person. However, federal judges now have wide latitude for imposing a sentence because they must consider the broad statutory factors set forth in 18 U.S.C. 3553(a)which include the nature and circumstances of the offense and the history and characteristics of the defendant, the need for the sentence imposed to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense, the need to afford adequate deterrence to criminal conduct, the need to protect the public from further crimes of the defendant, the need to provide the defendant with needed educational or vocational training, medical care, or other correctional treatment in the most effective manner, the kinds of sentences available, the sentence recommended by the Sentencing Guidelines and any applicable guidelines or policy statement therein, the need to avoid sentence disparities, and the need for restitution.

There are some important strategic decisions which need to be made for the defendant who has been charged or indicted for mortgage fraud. The defendant and his lawyer should seriously consider the consequences of pleading guilty if he has in fact committed the crime. A mortgage fraud defendant can receive up to a 3 level downward departure for pleading guilty. A criminal lawyer representing a mortgage fraud defendant can also file a motion for a downward departure and/or a motion for a variance and argue factors to the court in support of an additional decrease in a defendant's sentence. The mortgage fraud defendant's criminal attorney should closely scrutinize the circumstances of the case and the defendant's background and criminal history in order to help minimize the amount of time to be served. A valuable tip for an attorney representing a criminal mortgage fraud defendant in South Carolina is to consider mitigating factors such as disparate sentences, 5K departures for cooperation, aberrant behavior, property values, family ties, extraordinary rehabilitation, diminished mental capacity, extraordinary restitution should be considered as possible justifications for a lesser sentence.

A white collar criminal defense attorney in South Carolina must have an understanding of the basics of the mortgage fraud in order to adequately represent clients who have been charged or indicted with mortgage fraud violations. Recognizing the difference between the status of being a target, subject or witness can have important consequences in how a case is handled. A white collar bank fraud or mortgage fraud criminal conviction can have life altering consequences for those defendants convicted of the same. A defendant who is charged or indicted with the federal crime of mortgage fraud should consult with a SC criminal lawyer who is knowledgeable about the different types of these scams, how the scams are carried out, the law enforcement investigatory process, the grand jury process, substantive law regarding mortgage fraud, the applicable federal sentencing guidelines and approaches available to minimize a defendant's potential sentence.

© 2010 Joseph P. Griffith, Jr.

MORTGAGE

Finding the Right Mortgage Broker for You

In each state there are thousands of mortgage brokers. How do you know which one to choose so that you will end up at the closing table on time with the interest rate, loan terms and fees promised to you? Here are some tips and data that hopefully will give you the information and tools needed to find the right mortgage broker, how to work with them and to help minimize the risks before you get to the closing table.

First let's eliminate some of the ways borrowers typically choose a mortgage broker. This may just remove most of the problems before they occur.

How Not to Shop for a Mortgage

As a lot of people do, you could go to the Internet and call the first few mortgage brokers that pop up, check the local Sunday Real Estate Section to see who has the best rate, or call someone from out of the Yellow Pages. However these should be defined as ways NOT to shop for a mortgage:

Searching On-Line

Most every mortgage broker is listed on the Internet. While it is a great resource, it is not the best way to shop for a mortgage. It may be obvious to some, but just because a mortgage broker's Web site shows up high on search engine listings does not mean they have the lowest rates or have the best service or are even reputable. High search engine rankings do not speak to these factors, but rather to the fact that the webmaster who built the Web site probably spent hundreds of hours building and fine-tuning their site to show up on the Internet listings when you type in certain mortgage "keywords". Search engines do not rank listings by the quality or reputation of a broker but more by the amount of other similar Web sites that link to that Web site, the amount of visitors it receives, how much the broker may have paid to be listed there and many other factors.

Once I had a customer call me and say "You must be reputable as you showed up #1 in Google." Yes, I am reputable, and I do like to think we offer very good service and low rates, but that is not why my broker was listed at the top. (Number one out of over 275,000 listings for the term "atlanta mortgage".) It was because the webmaster spent hundreds of hours building and fine tuning all of the pages within the site to show up with high rankings.

There are many Web sites that list mortgage company's rates on-line. I don't put too much stock in sites that list these company's rates online. Typically mortgage brokers pay to be listed on those sties and some are "affiliate" sites. Which means they are charged a fee when the visitor goes to the link that was clicked on. To find out if you are on an "affiliate" site, click on the link it takes you to and examine the web address. If it has a code at the end of the domain name, such as "http://www.anybroker.com/source=2519" it is generally an affiliate. There is nothing wrong or illegal about this, just realize some of the sites may be biased by the companies that pay or give an incentive to be listed on their site.

Another tip is not to waste time in clicking on sponsored links. On Google they are listed in the right column, (and recently at the top of every page in a shaded box) while AOL's links are lightly colored boxes at the top and bottom of the page and on Yahoo they are listed in the column on the right side and at the bottom of the page in a colored box. As they name implies they are "sponsored" links which means to be listed the broker has paid to be there.

Be aware that if you complete a form on a mortgage Web site concerning wanting more information prepared to be flooded with calls or emails from mortgage brokers wanting your business. There are a lot of Web sites that are only "lead" sites. They get your information and then sell that information to mortgage brokers across the nation. Only submit information on the Web site of the mortgage broker that you know you will be working with.

The bottom line is the Internet is a great way to find out more about a mortgage broker that you are considering using but it may not be the best way to find one you can trust.

Choosing a Mortgage Broker Based Solely On Rate

The interest rate obtained on a mortgage is one of the most important factors of a loan, but it is not everything. There can be over 30 separate closing fees that can factor into the total cost of obtaining a mortgage loan.

Don't be fooled by brokers advertising that they have the lowest rates. Most mortgage brokers and lenders have about the same rate on comparable programs on any particular day. They may quote them with or without Loan Origination fees and/or Discount Points, which makes it even more confusing. When selecting a mortgage broker the interest rate is an important factor but let's take it a step further to get a better picture of the total cost to you.

Sometimes when a prospective client calls me asking "What's your rate?" I ask them what they would like 6%, 5% or even 4%. The fees to obtain such a low rate may be exorbitant, but we offer it. So again, rate isn't everything. It is the total cost that the borrower ends up paying that makes the difference.

You have probably seen mortgage brokers advertise rates at 1%. Do you really believe that 1% money is available? The answer is No. This is what the monthly payment is based. Don't be deceived by just rate.

The Liar's Rate Sheet

Another way some borrowers shop for a mortgage broker is by comparing rates in the Sunday Real Estate section of their local newspaper. In the industry this is referred to as the "Liar's Rate Sheet". Here is how it works. Mid-week the mortgage companies forward rates and APR (Annual Percentage Rate) to the newspaper for the different loan programs. They may quote the actual rate for that day or they may be quoting what they think it will be on Monday. All mortgage companies know you can't call them until the first business day of the week so they may hedge the rate a little to get the phone to ring on Monday. I am not suggesting that all or even a majority of the mortgage companies that list their rates in the newspaper do this. Most mortgage brokers and loan officers that I have met over the last 20 years are honest and ethical. But this is a very competitive business and there is a lot of money to be made on every loan.

Another flaw in the Liar's Rate Sheet is in the APR's that are listed. A simple definition of APR is, the true cost of the loan including certain designated closing costs. There are some loan officers that do not know how to calculate APR correctly. So do not base your decision on choosing a mortgage broker solely on the APR quoted.

Here is a sample of 10 recent rates and APR's quotes in a major metropolitan newspaper by local lenders and mortgage brokers: (These are based on $175,000 loan amount with 20% down payment, 30 year fixed rate loan.)

Note Rate APR Origination Fee Discount Points

5.875% 6.050% 0 1.90

6.000% 6.103% 0 0

6.125% 6.603% 1.00 .13

6.125% 6.270% 0.16 0

6.250% 6.122% 0 0

6.250% 6.305% 0 0

6.250% 6.425% 0 0

6.250% 6.624% 0 1.00

6.375% 6.289% 0 .75

6.375% 6.470% 0 00

If you were trying to make a decision as to what mortgage broker you may want to contact based upon the note rate (interest rate) or the APR you would not only be terribly confused, you would also be misled. The only way you can accurately compare rates and fees among mortgage brokers is with an accurate and complete Good Faith Estimate and complete Truth in Lending forms.

It is also important to remember that many, if not all of the mortgage companies and brokers listed typically pay to be listed there each week.

If you want a partial list of mortgage brokers in your city use the Sunday paper for that reason. Utilizing the phone book or Internet will give you a bigger list. If you want a full list go to your state's Web site that lists all licensed mortgage brokers in your state.

Where to Start

When you are looking for any type of professional service person, accountant, dentist, etc, who do you turn to? People typically ask the opinion of someone they trust, be it family, friends, neighbors, co-workers, attorney, accountant or other professionals. The referral method can also be used to help find a mortgage broker.

Make a list of 10 people (who have a mortgage) and ask the name of the broker they worked with. Be sure and get the name of the person they worked with. Keep in mind that service between one broker or loan officer and another can vary widely so you will want to contact that specific person, not just anyone in that broker. Also be sure to ask if they were happy with the rate and service they received.

Collect at least three names of loan officers or brokers or maybe even up to seven or eight. Why so many? Because it may have been a few months or years since your referral source last used this individual and it is possible that they have moved to a different company or even changed careers. In addition, not every mortgage broker is going to want to work with you concerning items that we are discussing. Also list any broker or loan officer that you have used in the past and were happy with.

A wise business man once told me. "Know who you are dealing with". Now that you have a preliminary list of names let's try to find out a little more about whom you are dealing with. To help with this I have put together two simple approaches:

1. Background checks

2. Making contact (Parts A and B).

Step 1 - Simple Background Checks

Don't worry, there is no need to hire a private investigator or do any "dumpster diving" to gain secret information. I do, however, suggest that you do a little investigative work. It should only take about 30 minutes and it will not cost you anything. In fact, it may save you a bundle of money and stress later in the process.

Visit the government Web site for the state in which the mortgage broker is located that you are researching. Locate the page that has a list of mortgage brokers or lenders. If the company you are researching is not listed they may be listed under a different name. Also you may be able to search by the individual or loan officer's name.

If they are listed on the State's Web site, it may also list how long the broker has been licensed (you should do business with them only if they have been in business for a minimum of two years), how many loans they have closed in the previous year, how many employees they have, and if they have had any consumer complaints made against them, administrative fines levied or regulatory orders (such as "cease and desist" orders) placed on them, any of their employees or broker. Be sure to search under the individual broker or loan officer's name, keeping in mind that some states do not license loan officers so that person may not be listed. Checking with the Better Business Bureau may give you some additional information but in my experience most mortgage brokers and lenders are not members of the BBB.

Find their Web site and read about them. Do they post their rates and update them daily? Do they offer informative articles or information? Read their bio's, Mission Statement and Privacy Policy to try to get a sense of what they are about, what they stand for and their vision of how they conduct their business. In addition, look for membership in professional associations, awards, etc. If they do not have a Web site I would not deal with them.

Check to see if they are a member of the National Association of Mortgage Brokers. http://www.namb.org. I highly recommend working only with a broker or loan officer that has such designation because it shows a higher degree of professionalism and dedication to the industry.

Another organization to check with is the Association of Professional Mortgage Women. http://www.napmw.org Members of this association are made up of individuals in all aspects of the mortgage industry, however, you typically will not find many brokers or loan officers as members. This is a great resource for finding mortgage professionals in affiliated services in the mortgage industry such as title insurance brokers, appraisers, closing brokers and real estate attorneys.

There are also local mortgage associations that are not affiliated with a national association and I would still give credit to the broker or loan officer for being a part of a group that offers ongoing education and sets goals of ethical standards to their members.

Look on the company Web site to see if they are a member of any of these mortgage organizations or other trade associations. However, keep in mind that just because you see one or all of these logos or references on their Web site, does not mean that the person you are working with holds the designation or is a member of that association.

Here is a recap of information to research as you are narrowing down your top candidates:

o Broker or Lender?

o State Web site for complaints?

o How long in business?

o BBB complaints?

o Has a Web site?

o Rates are posted daily?

o Member of any national or local mortgage association?

o Professional designations?

STEP 2 - MAKING CONTACT

The next step is to contact the mortgage broker or loan officer to whom you were referred.

Part A - Approaching the Broker

If you were referred to a specific loan officer try to stay with that person. If you just have a broker name or if the individual you were referred to is no longer there and you still wish to check out the broker, ask for the broker or manager of the company and not just any loan officer who gets the phone. While this may not always be possible or practical, unlike a loan officer, the broker does not have to split the income with anyone else. In a larger broker the broker may not be able to give your loan the full attention it needs. But always start with the broker or manager and work down.

Many years back I received a phone call from a gentleman stating he was looking for a mortgage broker to "establish a business relationship with." That struck me as a professional way to do business. I ended up doing a couple of transactions with him and felt we had a good working relationship. He approached me as a professional and I treated him as such. The point is, when you contact the person you are considering working with, let them know you are looking for a mortgage broker to establish a business relationship with.

Here is a suggest way to start the conversation:

"My name is _________ I am shopping for a mortgage and am calling a few brokers that have been recommended to me to see who I would like to establish a business relationship with. I was recommended to you by __________.

Do you have a few minutes to speak?

Great, I have just a few questions:

If they agree to speak to you, briefly lay out what you are doing, including if you are looking for financing for a purchase or refinance and the loan amount. In addition, mention your credit scores or credit history, the percentage of down payment. Then ask, if they offer the type of financing you need. If the person starts to offer rates, terms etc. politely let him know that you are not shopping for the rate and program now, rather you just want to get some basic information.

Ask if they are a broker or lender. If you are speaking with a loan officer then ask if the broker is a broker or lender. If they are a lender, try to politely end the conversation or tell them you need to work with a broker. (I recommend only using a mortgage brokerage broker, not a mortgage lender for your transaction.

Another good question to ask is how long they have been in business. (If speaking with a loan officer - how long they have been with this broker as well as how long they have been in the mortgage business.) I suggest you work with someone that has been in the mortgage business for at least two years.

It is important not to commit to a meeting on the phone or let them send you a Good Faith Estimate. The most important information is if they are a broker or lender, how long they have been in the business and maybe if they offer the type of financing you are looking for.

Part B - The Interview

Once you have narrowed down your list of potential mortgage brokers that you may want to deal with, it is time for the interview.

Start by calling them back and let them know you may be interested in working with them and you would like to get more information. I always suggest that you meet face-to-face at their office to get a feel for them and their broker. If you can't meet with them at their office you can do it over the phone. Be prepared with your list of questions listed below, as they may want to do the interview immediately.

When you speak with them, again mention what type of loan you will need, (purchase or refinance, conventional, construction, investment, etc.) and be prepared to go into some detail about your financial situation, including employment status, credit history, down payment amount and the source of it and a rough idea of your financial assets. Do not let them start taking an application on you. You are there to interview them, not the other way around.

Do not give out your social security number during this interview. There is no need to do this yet as you are not going to decide on what broker to deal with until you have interviewed everyone on your list.

Questions to Ask the Mortgage Broker

Here is a list of suggested questions to ask the broker or loan officer.

Application Questions

o Will I get a signed Good Faith Estimate?

o Will you guarantee your estimate of closing costs? If not all at least yours?

o Who will pay for any extra charges that are over and above your Good Faith Estimate?

o Will you update the Good Faith Estimate as we move through the process?

o Is there an extra cost if I do not set up an escrow account (commonly called waiving escrows) providing the loan program allows that to be done?

o If my credit score affects the interest rate and/or program is it possible that you will help me raise my score to obtain a better rate and program?

o Does your credit reporting system offer a Credit Score Analyzer so we can work on raising my score?

o What is your approximate closing ratio for loan applications taken?

Service Questions

o Do you have in-house or contract processing? (If you are scoring these answers then in-house processing gets an extra point.)

o Will it be okay if I speak directly with your loan processor?

o How often can I expect to be updated on the progress of my loan?

o (If purchasing). My contract has a date to get approved for financing Can you make that deadline?

o What will you provide me to give to the seller to satisfy that stipulation?

o Will I get a copy of the appraisal, title commitment, and credit report? Note: Some, but not all states require the mortgage broker to give you a copy of the credit report that they have pulled. If they are not allowed to give you a copy they must at least give you a form that shows the credit scores on your report.

o Do you utilize Automated Underwriting?

oMay I pick my own title or closing broker or attorney?

o Will I have a Preliminary Closing Statement 24 hours prior to the closing so that my attorney and I have time to review it?

o Will you be present at the closing?

Fee Questions

o Do you charge an application fee? (Be aware that some brokers charge a non-refundable up-front loan application fee. Is the fee applied towards the appraisal and credit report? Ask if you will receive a refund of the unused portion).

o What is your typical Loan Origination fee on a loan of this size?

oI s there a separate broker fee? If so, how much is it?

o What is your processing fee?

o Is there an admin fee or any other fees that will be paid directly to you?

o Will you refund any overage on the credit report or courier fees?

Note: Do not mention the word or imply that there are any junk fees. It may be construed as offensive to a broker or loan officer. Be specific when addressing the fees or charges.

Rate Questions

o Do you have a rate float down policy?

o What if I lock a rate and the rate goes down? Will you lower the rate?

Privacy Questions

o How will you secure my private financial information?

o Do you have a written information and privacy plan?

Note: The Gramm-Leach-Bliley (GLB) Act requires financial institutions to ensure the security and confidentiality of all personal information collected from potential customers and to have a written policy and plan in place that all employees must abide by. Ask for a copy of their privacy policy (If they don't have one, you may not want to give this broker all your personal and financial information, including data needed for someone to steal your identity).

Miscellaneous Questions

o How long have you been in the business?

o About how many lenders are you approved with?

o What professional associations are you a member of?

o Do you have any professional designations?

o Tell me about your broker and why I should choose you to handle my loan transaction?

Loan Program Question

If you are unsure or if you would like more input ask: What loan program would you suggest?

Cost Estimate Question

Would you mind preparing a Good Faith Estimate and Truth in Lending statement?

Broker Questioning Opportunity

Do you have any questions of me?

When the interview is complete, thank them for their time and let them know that you will get back with them. If at this point you feel comfortable with working with this broker or loan officer you may ask that he forward a Good Faith Estimate and Truth in Lending to you so you can review these forms and estimates.

EVALUATING THE BROKER

After your interview you may want to ask yourself some other questions to help determine or grade the mortgage broker regarding how you think they will handle your loan.

Consider these points:

Did the mortgage broker have any questions for you?

Did you feel he wanted to know more about your overall financial goals and how this mortgage fits with those goals?

Take time to evaluate which broker you wish to work with. Do not make a commitment to anyone until you have reviewed the Good Faith Estimate and Truth in Lending disclosures closely.

When you do receive the Good Faith Estimate, and hopefully, the Truth in lending statement, it should look professional and be complete have accurate dates and other information disclosed.

Hopefully, after you have done all of your homework you will be able to find a broker you feel comfortable with and that you believe will give you honest and ethical service.

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How to Choose your UK Mortgage

This quick guide shows you potential mortgage choices for each type of borrower. Please note that this is a general guide and we should stress that you are always better off talking to a specialist mortgage adviser

General

One thing that applies to almost all types of mortgage is the choice of a fixed rate mortgage or one with a variable interest rate.

The best choice depends on your own circumstances and to an extent on interest rate levels at the time, but things to consider are:

* Can you afford to have your payments go up each month? This could happen with a variable rate mortgage.

* Are rates generally low at the moment? It could be a good time to get tied into a fixed rate mortgage.

* Do you want the security of a fixed monthly payment for several years? Fixed rate periods from 1 to 10 years are available.

* Are you having difficulty borrowing enough money? An interest only mortgage can mean lower monthly repayments ie you can borrow more against your salary. But there are drawbacks.

To understand which option will suit your circumstances, discuss your options with a UK mortgage specialist, who will advise you on suitable choices.

Here are some specific tips depending on your particular mortgage needs

First Time Buyers

As a first time buyer, you are likely to have some particular requirements. You will probably have a very small deposit or possibly no deposit at all. You may be having to push your budget to the limit just to afford a mortgage, but are determined to get a foot on the property ladder.

There are several suitable solutions:

· 100% mortgages to many lenders offer 100% mortgages aimed at first time buyers. These are normally repayment mortgages and can be a good option to get you started.

· If you have a deposit, but can't afford large monthly payments, an option to consider might be an interest-only mortgage, where your monthly payments only consist of interest, and you don't make any payment towards the capital sum.

· Choose a mortgage term longer than 25 years to it may seem daunting but many lenders will offer mortgages with terms up to 40 years.

Any of these choices can be a good way to get started in home ownership, with a view to moving to a better deal in 2-5 years time when you have some equity in your property and are perhaps able to afford larger monthly payments. Remember, very few people stick with the same mortgage for 25 years anymore. It is normal to change mortgages for a new deal every 2-5 years.

Self-Employed Mortgages

Getting a mortgage for self-employed people has always been a bit more of a challenge. Even if your business is well established, it can be hard to prove your income and since mortgage lenders assess your ability to pay based on net income, you could find that they underestimate your borrowing ability.

So what are the choices?

· Self-Certified Mortgages. It is not necessary to provide audited accounts and to prove your income, although you will still be required to provide some evidence that you can afford the monthly payments.

· If your business is well-established, and you can provide 3 years or more of audited accounts, showing a stable income, you should not have too many problems. Lenders are more flexible than they once were.

As with other specialist mortgages, it can be worth getting the advice of an Independent Financial Adviser to make sure you get the best deal for you.

Already a Homeowner?

If you are already a homeowner (with or without a mortgage) then you might want to release some equity from your home to give you a cash lump sum.

This means that if you have paid off a significant amount of your mortgage and/or property prices have risen, you can benefit from some of the "profit" that is locked into your house without having to sell the house.

Lenders provide a variety of packages for doing this, but they are generally described as "equity release" mortgages.

Typically you will be able to borrow up to 95% of the equity in your home, given to you in a lump sum which you then pay back like a normal mortgage. This can be used to pay for home improvements, lifestyle changes, home repairs to almost anything, really.

Get a Better Mortgage Deal

Don't forget that just because you have a mortgage, it doesn't mean that you can't get a better one that will cost you less, or alternatively a mortgage with a shorter term so that you can pay it off sooner.

Hunt around to whether you want to find a more competitive interest rate, a long-term fixed rate deal or you want to increase or decrease the remaining duration of your mortgage to you will probably find a lender who is able to offer just what you want, and could save you a significant amount every year.

Discussing your requirements with an IFA can often help uncover the best mortgages, which sometimes come from quite minor building societies.

Big Bonuses, But a Low Basic Salary?

If this is you, then you might find it difficult to get a repayment mortgage that meets your requirements. This is because bonuses and overtime are hard to predict, not guaranteed and are normally excluded from your assessed income by mortgage lenders. This means you could end up being offered a much smaller mortgage than you think you can afford.

The solution to this could be a flexible mortgage. A relative of the interest-only mortgage, flexible mortgages have monthly payments which are interest-only, but allow you to make ad-hoc repayments towards reducing the capital sum.

For example, if you get a quarterly bonus, every 3 months you could make a payment towards reducing the capital sum of your mortgage, whilst paying smaller, interest-only payments each month [from your salary].

Flexible mortgages like these can be helpful for anyone with an unevenly distributed income who receives occasional large payments, rather than solely receiving salaried income.

Are You An Expatriate?

As an expatriate, your mortgage needs are a little different. Buying property abroad is difficult with a UK mortgage, although there are some high street lenders that have affiliated with foreign lenders, particularly in Spain, to provide easy access to mortgages in some other countries.

On the other hand, many expatriates look to buy a property in the UK in preparation for their eventual return. This is more straightforward and there are several big lenders who can assist with this.

The best approach is probably to find an IFA who has experience of setting up this kind of mortgage and see what they can offer you. There may be some complications but it should certainly be possible.

Buying To Let?

Buying to let has become very popular in recent years. Whether you count yourself a professional landlord or are just looking to buy a second property to rent out as an investment, buy to let mortgages are fairly mainstream now and as such are quite widely accessible.

You may notice some differences to residential mortgages:

· Can only borrow up to around 75% of property value

· Mortgage terms may not be extendable beyond 25 years, often less still for interest-only deals.

As with all mortgages, you will have to undergo a credit check and will have to provide some evidence that the property you are buying is a suitable business proposition to i.e. you can rent it for a suitable amount and/or can make the payments yourself if needed.

Want To Let Out Your Home Temporarily?

There are times when homeowners want to let their home on a temporary basis to perhaps they are moving abroad for a year or two, or elsewhere in the UK, but want to maintain their main home and rent it out to cover the costs of the mortgage.

Most residential mortgages will allow you to do this to exact terms and conditions will very from lender to lender, but as long as you tell your lender you want to let, you will probably find they are happy for you to do so.

Are you a Muslim, Looking for a Sharia-Compliant Mortgage?

Islamic mortgages used to be almost impossible to obtain in the UK, but in the last 5 years, the number of lenders offering mortgages that comply with Sharia law has grown considerably. It is now possible to get an Islamic mortgage for your house from several high street lenders with no more difficulty than a regular mortgage.

Islamic mortgages available in the UK fall into two main categories. By far the most popular are mortgages based on the Ijara principle. Also available are mortgages based on the Murabaha principle but these tend not to be affordable to most borrowers, especially younger people just starting out.

Getting Divorced, Need Two Mortgages?

Getting divorced can be a difficult and traumatic experience, often not least because of the financial complications. These can cause people with previously exemplary financial records to get into problems, and can sometimes make it difficult for the divorced individuals to get mortgages.

A few lenders now offer mortgages aimed specifically at the needs of the newly-divorced, with a number of features designed to help people back onto their feet, financially:

· Fixed interest rate for up to 5 years

· First few months at 0% interest

· The lender will include maintenance payments (alimony) in their assessment of your income when determining the amount that can be borrowed.

· Can borrow 100% of property value if needed

· Choice of repayment or interest-only mortgage

There are not many of these packages around (Yorkshire Building Society offers one example), but they can really help divorced people through the difficult process of finding a new home and re-establishing their financial situation.

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Mortgages and Remortgages - Which One Will Suit My Circumstances?

If you're using a mortgage to buy your home but are not sure which one will suit your needs best, read this handy guide to mortgage types in the UK. Taking out a mortgage has never been easier.

Fixed Rate Mortgages - the lender will set the APR (Annual Percentage Rate) for the mortgage over a given period of time, usually 2, 3, 5, or 10 years as an example. The APR for the mortgage may be higher than with a variable rate mortgage but will remain at this 'fixed mortgage rate' level, even if the Bank of England raises interest rates during the term of the mortgage agreement. Effectively, you could be said to be gambling that interest rates are going to go up, above the level of your fixed rate mortgage interest rate. If this happens, your mortgage repayments will be less than with a variable rate mortgage.

Variable Rate Mortgages - the lender's mortgage interest rate may go up or down during the life of the mortgage. This usually happens (though not exclusively) soon after a Bank of England interest rate change. Most people consider that opting for a variable interest rate mortgage is best done when interest rates in general are likely to go down. They can then take advantage of these lower rates when they occur. It's a bit of a gamble but if they are right, it could really work in their favour.

Tracker Mortgages - have a lot in common with variable interest rate mortgages in that the APR of the mortgage can go up or down over the term. The key difference between a tracker mortgage and a variable interest rate mortgage is that the lender will set a margin of interest to be maintained above the Bank of England base lending rate. So, as the Bank of England, in line with monetary policy, raises or lowers the base lending rate of interest, so the tracker mortgage interest rate will follow. Over the lifetime of the mortgage, it could be said that the borrower will neither be better off nor worse off because of interest rate fluctuations.

Repayment Mortgages - you will be required to pay a proportion of the capital element of the mortgage (how much you originally borrowed) together with a proportion of the interest that will have accrued on the capital element, with each monthly repayment. In recent years, repayment mortgages have become highly popular over the previous favourite - endowment mortgages. This is because, unlike endowment mortgages, as long as you keep up your monthly repayments, you are guaranteed to pay the mortgage off at the end of the agreed term. Monthly repayments may possibly be a little more expensive but many borrowers say that at least, they have peace of mind.

Interest Only Mortgages - very common amongst borrowers who are looking to secure a second property. The reason being, with an interest only mortgage, the borrower will only be required to make monthly repayments based on the interest element of the mortgage. The lender will require the capital element to be repaid at the end of the term of the mortgage. Again, as with variable rate mortgages, this could be regarded as being a little bit of a gamble because the borrower is hoping that the property will be worth at least as much at the end of the term of the mortgage, as it was at the beginning, allowing it to be sold and the capital element of the mortgage to be paid off. Any capital gain on the property (although possibly subject to tax) is yours. It could be argued that experience tells us that property prices rarely go down in the long term, but it can never be guaranteed.

Capped Mortgages - a combination of the fixed rate mortgage and the variable interest rate mortgage. A cap or ceiling is fixed for a set period of time. During this period, if interest rates in general rise, above the capped interest rate, the borrower will not pay anything above the capped level. Correspondingly, if interest rates fall, then the rate of interest charged by the lender, will also fall so it could be argued that the borrower gets the best of both worlds. It could also be said that a capped rate is like having a set of brakes on your mortgage, but beware, the lender is also likely to charge a redemption penalty on this type of mortgage, making it less portable than some of the other options available.

Discounted Rate Mortgages - here, the lender may offer a reduced level of interest to be charged over a set period at the start of the mortgage term. Many first time buyers or people who expect their salaries to rise considerably during the discounted rate period opt for this type of mortgage but it should be noted that the reduced rate period will come to an end and when it does, the monthly mortgage repayments to the lender may rise sharply. The lender may also charge a slightly higher rate of interest compared with other types of mortgage over the rest of the term of the loan in order to recoup the monies that they have foregone during the discounted rate period. There's no such thing as a free lunch!

Offset Mortgages - an interesting newcomer to the UK mortgage market, although still comparatively rare in terms of choice and availability. The mortgage is linked to the borrower's current account. Every month, the minimum mortgage repayment is paid to the lender but where there is a surplus of cash in the account after other uses and debts have been paid, this is also paid to the lender. Over the months and years, the borrower can potentially pay off their mortgage much quicker and have accrued much less interest than with other types of mortgage provided that a reasonable surplus is maintained in the current account.

So, to sum up, the UK mortgage market has many types of mortgage; any or all of which may be open to the potential borrower, dependent on their circumstances. If you're looking to take out a mortgage [http://www.feelgoodloans.co.uk/mortgages.php], remember that whilst your broker will take care of the vast majority of the work on your behalf, it may still take around 3 months to complete as there is an enormous amount of work that goes on behind the scenes with solicitors and searches, valuations etc. At least now you're armed with all of tehinformation you need on each type of mortgage available to you.

This article is free to distribute however, please ensure that all links remain as in the original.

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Mortgage Refinancing Questions

Mortgage Refinancing is way to replace the existing mortgage with another mortgage. The replacement can happen with the current mortgage lender or a different mortgage lender. Mortgage Lenders created numerous mortgage options which add to the complexities of mortgage. Here are a collection of common questions and answers about mortgage refinancing.

What are the steps to mortgage refinancing?

First, you analyze your current financial situation. This tells how well your financial situation. After, you shop for the best mortgage. Most mortgage lenders have a website. Borrowers can research on the internet. Once the borrower found an advantageous mortgage, the borrower applies for the mortgage refinancing.

How to choose the right mortgage lender, or mortgage broker for mortgage refinancing?

The mortgage lenders differ in mortgage options such as interest rates, mortgage terms, down payment, closing costs, and more. To choose the right mortgage lender requires many mortgage refinance calculations and considerations.

What do I need to complete mortgage refinancing application?

Borrowers need to supply the full names, current addresses, previous addresses, social security numbers, employers information, gross monthly income, property information, asset information, and liabilities information.

When should you do mortgage refinancing?

The life of the mortgage is divided into several mortgage terms. When the mortgage matures at the end mortgage term, the borrower refinances the mortgage. This process is repeated until the mortgage is completely paid out.

The borrower does not necessarily have to wait for the maturity date of the mortgage. Sometimes, the mortgage lender offers a mortgage that is too good to pass. When mortgage lender offers a very good mortgage, the borrower can refinance the mortgage.

If the new mortgage can reduce the life of the mortgage, and reduce the mortgage payment on pay period, it is advantageous for the borrower to refinance the mortgage.

What are the costs involve in mortgage refinancing?

The borrower may have to pay the penalty to refinance a mortgage before the mortgage reaches the end of the mortgage term. Since the mortgage lender loses the interest to be paid to them, the mortgage lender charges penalty. However, a low interest rate on the new mortgage may offset the penalty.

The borrower can pay for the discount points as well. It is the amount to bring down the monthly mortgage payment, or any mortgage payment. Each discount points means one percent.

The borrower also pays the application fee, title search fee, and appraisal fee every mortgage refinancing. Mortgage lender charges a fee to process the mortgage application called application fee. Mortgage lender also needs who the real owner of the property. Hence, the borrower pays the title search fee. Lastly, the appraisal fee tells the fair market value. The mortgage lender needs to find out if the value of the property can pay off the mortgage in case of default on mortgage payment.

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The Benefits of Using an Independent Mortgage Adviser

Types of mortgage advice

So what are the different types of mortgage advice and where would you expect to find them?

Non-advice

This type of mortgage broker offers the least consumer protection, they will simply ask a set of questions to narrow the customers requirements and thus filtering the number of mortgages available. They then present the customer with a small list of possible mortgages for the consumer to choose one appropriate. The consumer protection here is based on the script of questions the broker asks. The script is a process determined prior to the consumer appointment, and is impersonal. Therefore specific personal circumstances are unlikely to be assessed. It also assumes that the customers answers are factually correct and the final choice is made solely by the consumer. Although no advice is offered these brokers do handle the arranging of the mortgage on the consumers behalf, and therefore dealing with all the chasing and removing stress from the process.

Where would you expect non-advised brokers to exist?

Well believe it or not many non-advised brokers are within the high street banks and building societies.

Advice-only

This type of services is where a mortgage adviser uses their knowledge and skills to provide the most suitable mortgage to suit a consumers personal circumstances. This will involve a full fact finding interview, affordability assessment, discussion on the consumers future plans and aspirations, all of which provide key facts on a consumers requirements, and therefore a means for the adviser to identify suitable products. The adviser will not however, handle the arranging of the mortgage, and therefore the consumer would need to deal directly with the bank or buildings society to arrange the mortgage.

Where would you expect advice-only advisers to exist?

These advisers generally do not exist alone this is often a service provided through the 'Independent Mortgage Adviser' type below. And often comes about when the most suitable mortgage is only offered direct through high street (i.e. not through mortgage advisers/brokers). The adviser would therefore offer an advice-only option to the client and often charge a fee for this service. Although the client must deal directly with the bank or building society their mortgage adviser often provides support to the consumer.

Tied mortgage advisers

Tied mortgage advisers come in two forms 'only offering mortgages from one lender or its own mortgages' or multi-tied 'only offer mortgages from a limited number of lenders'. This clearly limits the number of mortgage products available to match a consumers personal circumstances and in a lot of cases they may not be able to offer the most suitable mortgage product and therefore advice may result in the best mortgage they can offer, being woefully inadequate.

Where would you expect tied mortgage advisers?

High street branches. A consumer calls into their local building society branch and their in house mortgage adviser can only offer mortgage products from that building society. Consumer choice and mortgage product suitability are considerably reduced. Whats more, high street branches often offer low mortgage rates/fees as a loss leader (marketing term to bring in business) and then try to sell their tied insurance products which are often also woefully inadequate and expensive.

Whole of market advice By far the best coverage these advisers can offer mortgages from all the UK mortgage lenders (having mortgage adviser/broker routes). The vast amount of mortgages available through these advisers is likely to cover the individual circumstances of a consumer. Whole of market mortgage advisers offer advice through conducting a full fact finding interview, affordability assessment, discussion on the consumers future plans and aspirations and then can arrange the mortgage through the lender thus alleviating the stress which comes when purchasing a house.

Where would you expect whole of market advisers?

These advisers are usually separate firms often found in the yellow pages or through the internet they are sometimes linked to estate agents. On an initial meeting mortgage advisers should declare if they are whole of market and this will be disclosed in the 'Initial Disclosure Document' they provide you. If you are not sure if an adviser is whole of market then ask them.

Independent whole of market mortgage adviser

Finally this type of adviser has the ultimate scope of the mortgage market, not only can they offer mortgage advice from the whole of market (lenders with mortgage adviser routes) but can also offer an advice only process if they identify a high street direct deal is more suitable. The 'Independent' statement indicates that the adviser must offer the consumer a fee based service if required. This means that rather than the adviser taking commission as payment for the mortgage advice, the consumer can opt for paying a broker fee and any commission is rebated to the consumer. The benefit of the fee based service is the consumer knows the adviser will not be swayed by higher commission mortgage products when selecting a suitable mortgage, however these days this is highly unlikely as the mortgage adviser must prove to the regulator why a particular mortgage is most suitable. Some occasions where the commission is quite considerable this would mean the consumer could receive more money than the broker fee paid and therefore would be better off taking the fee based approach.

Where would you expect to find Independent Whole of Market Advisers?

Like the author of this document Independent Mortgage Advisers are usually separate firms often found on the high street, yellow pages or through the internet and they are sometimes linked to estate agents. On an initial meeting an independent mortgage adviser would declare that they are whole of market and that they offer a fee based approach if required and this will be disclosed in the 'Initial Disclosure Document' they provide you. If you are not sure if an adviser is independent and/or whole of market then ask them.

What do independent whole of market mortgage advisers do for consumers?

The benefits of opting for an independent whole of market mortgage adviser include but are not limited to the following: -

Treat customers fairly.
Take time to gain key factual details of the consumers personal circumstances and aspirations.
Support and inform the consumer from initial enquiry right through to completion and beyond.
Provide an informed view on the housing market in general (price negotiation, leasehold issues etc).
Provide a individually tailored service specific to the customers needs, not a faceless "one size suits all" (non-advised) service.
Advise consumers to thing about their long-term interests as well as the short-medium term thus minimising risks.
Work for the consumer - estate agents, lenders and insurance providers have a different agenda.
Explain the features and benefits of different mortgage and protection options.
Free to act based on conscience and fairness as not usually directly targeted on specific areas.
Protect consumers data and privacy.
Provide general support during what is acknowledged to be one of the most stressful events in life.
Provide a knowledgeable "Ally" in what can be a very worrying process.
Provide proficient, impartial, examination of mortgage products.
Identify when specific lending criteria restricts consumers personal circumstances.
Expert guidance in complex scenarios (shared ownership/shared equity, right-to-buy, adverse credit).
Identify the potential lender in unusual situations, thus avoiding the need for multiple credit checks.
Select the best protection providers for consumers with health issues or unusual insurance histories.
Choose the most appropriate products, from the whole of market for each aspect of a consumers mortgage and protection needs, and thus increasing their ability to afford their commitments, even when things go wrong.
Highlight unusual exclusions on protection and general insurance products.
Ensure the provision of appropriate and customized protection products.
Quickly find an alternative lender if declined without wasting the consumers time.
Can arrange property insurance in ample time to be ready for exchange of contracts on purchases.
Encourage competition and innovation from lenders.
Assist in calculating affordability, ensuring that consumers can afford their mortgage and protection commitments, along with their other commitments.
Perform data input/entry for the consumer, reducing errors, omissions and most importantly non-disclosure.
Take responsibility for the advice and recommendation provided, thus increasing consumer protection.
Protect the consumer from corporate sales tactics used by some lenders and estate agency chains.
Understanding the urgency of some transactions and "go the extra mile" to meet deadlines.
Collate, verify and supply documentation for the lender, thus reducing delays in processing and expedite the process for the consumer.
Liaise with third parties in the transaction, tracking progress and any developments updating consumers throughout.
Use past knowledge and awareness to predict problems and resolve them in advance.
Act as advocate for the consumer during the application process.
Explain the mortgage offer and assist in fulfilling the offer conditions.
Can find appropriate lenders and insurers for unusual properties ( thatched roof, flying freehold flats etc).
Protect consumers from aggressive third-party marketing.
Often personally available outside of normal working hours to answer questions or resolve issues.
Care about consumers and provide an ongoing long-term service, often several generations of the same family.

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What Type Of Mortgage Loan Is Right For You?

Homebuyers and homeowners need to decide which home Mortgage loan is right for them. Then, the next step in getting a mortgage loan is to submit an application ( Uniform Residential Loan Application ). Although we try to make the loan simple and easy for you, getting a mortgage loan is not an insignificant process.

Below is a short synopsis of some loan types that are currently available.

CONVENTIONAL OR CONFORMING MORTGAGE Loans are the most common types of mortgages. These include a fixed rate mortgage loan which is the most commonly sought of the various loan programs. If your mortgage loan is conforming, you will likely have an easier time finding a lender than if the loan is non-conforming. For conforming mortgage loans, it does not matter whether the mortgage loan is an adjustable rate mortgage or a fixed-rate loan. We find that more borrowers are choosing fixed mortgage rate than other loan products.

Conventional mortgage loans come with several lives. The most common life or term of a

mortgage loan is 30 years. The one major benefit of a 30 year home mortgage loan is that one pays lower monthly payments over its life. 30 year mortgage loans are available for Conventional, Jumbo, FHA and VA Loans. A 15 year mortgage loan is usually the least expensive way to go, but only for those who can afford the larger monthly payments. 15 year mortgage loans are available for Conventional, Jumbo, FHA and VA Loans. Remember that you will pay more interest on a 30 year loan, but your monthly payments are lower. For 15 year mortgage loans your monthly payments are higher, but you pay more principal and less interest. New 40 year mortgage loans are available and are some of the the newest programs used to finance a residential purchase. 40 year mortgage loans are available in both Conventional and Jumbo. If you are a 40 year mortgage borrower, you can expect to pay more interest over the life of the loan.

A Fixed Rate Mortgage Loan is a type of loan where the interest rate remains fixed

over life of the loan. Whereas a Variable Rate Mortgage will fluctuate over the life

of the loan. More specifically the Adjustable-Rate Mortgage loan is a loan that has a

fluctuating interest rate. First time homebuyers may take a risk on a variable rate for qualification purposes, but this should be refinanced to a fixed rate as soon as possible.

A Balloon Mortgage loan is a short-term loan that contains some risk for the borrower. Balloon mortgages can help you get into a mortgage loan, but again should be financed into a more reliable or stable payment product as soon as financially feasible. The Balloon Mortgage should be well thought out with a plan in place when getting this product. For example, you may plan on being in the home for only three years.

Despite the bad rap Sub-Prime Mortgage loans are getting as of late, the market for this kind of mortgage loan is still active, viable and necessary. Subprime loans will be here for the duration, but because they are not government backed, stricter approval requirements will most likely occur.

Refinance Mortgage loans are popular and can help to increase your monthly disposable income. But more importantly, you should refinance only when you are looking to lower the interest rate of your mortgage. The loan process for refinancing your mortgage loan is easier and faster then when you received the first loan to purchase your home. Because closing costs and points are collected each and every time a mortgage loan is closed, it is generally not a good idea to refinance often. Wait, but stay regularly informed on the interest rates and when they are attractive enough, do it and act fast to lock the rate.

A Fixed Rate Second Mortgage loan is perfect for those financial moments such as home improvements, college tuition, or other large expenses. A Second Mortgage loan is a mortgage granted only when there is a first mortgage registered against the property. This Second Mortgage loan is one that is secured by the equity in your home. Typically, you can expect the interest rate on the second mortgage loan to be higher than the interest rate of the first loan.

An Interest Only Mortgage loan is not the right choice for everyone, but it can be very effective choice for some individuals. This is yet another loan that must be thought out carefully. Consider the amount of time that you will be in the home. You take a calculated risk that property values will increase by the time you sell and this is your monies or capital gain for your next home purchase. If plans change and you end up staying in the home longer, consider a strategy that includes a new mortgage. Again pay attention to the rates.

A Reverse mortgage loan is designed for people that are 62 years of age or older and already have a mortgage. The reverse mortgage loan is based mostly on the equity in the home. This loan type provides you a monthly income, but you are reducing your equity ownership. This is a very attractive loan product and should be seriously considered by all who qualify. It can make the twilight years more manageable.

The easiest way to qualify for a Poor Credit Mortgage loan or Bad Credit Mortgage loan is to fill out a two minute loan application. By far the easiest way to qualify for any home mortgage loan is by establishing a good credit history. Another loan vehicle available is a Bad Credit Re-Mortgage loan product and basically it's for refinancing your current loan.

Another factor when considering applying for a mortgage loan is the rate lock-in. We discuss this at length in our mortgage loan primer. Remember that getting the right mortgage loan is getting the keys to your new home. It can sometimes be difficult to determine which mortgage loan is applicable to you. How do you know which mortgage loan is right for you? In short, when considering what mortgage loan is right for you, your personal financial situation needs to be considered in full detail. Complete that first step, fill out an application, and you are on your way!

MORTGAGE

Mortgage Management - Essential Refinance Considerations

The Single Largest Financial Obligation

Your mortgage is probably the single largest financial obligation that you will have in your life. The investment that you have in your home can have great long term value, but on a month by month basis it represents a significant expense. The math for most people is simple, the more you pay on your mortgage, the less you have to spend on other things.

To underline this point it might be of interest to note that in 1980 the average person spent 25% of their gross monthly income on housing expenses. By 2005 that percentage had risen to over 43%. This is not really a surprise. We are all aware that home prices have risen significantly during this period of time. Income levels have not kept up with home prices and as a result home buyers are finding more of their paycheck going towards their mortgage payment.

Florida mortgage holders have acutely felt the impact as home prices in recent years have rivaled those of California. Your mortgage may consume more or less than the average 43% of your gross monthly income, but it is probably safe to say that it deserves to be intelligently managed.

Mortgage Management

I've been a licensed Florida mortgage broker since 1989. My company Power Mortgage Corp. a Florida Mortgage Company is also licensed in Georgia, Massachusetts, and Virginia. Over the years I have originated, refinanced, and analyzed countless mortgages. I'm always happy when we can help a customer make an intelligent decision about their mortgage. Active, regular mortgage management can make a big difference in your life. The right choices will save you money. Sometimes lots of money.

To Refinance or Not to Refinance

Active mortgage management does not always mean taking action. Active mortgage management means an intelligent periodic review of available options. Call your friendly mortgage broker from time to time! We like to hear from you. We will always take the time to help you understand your options. And always make sure that you know all of the costs involved.

Request a Good Faith Estimate. Make sure that your mortgage broker includes all third party charges and statutory costs along with the lender fees. It is equally important to consider your personal goals; how long will be in the home? Do you plan to retire soon? What type of personal saving plans do you have? What is your aversion to risk? Is an adjustable rate mortgage suitable?

Fixed or Adjustable

Fixed rate mortgages are pretty easy to understand. Adjustable rate mortgages on the other hand can be surprisingly complex. And there are literally thousands of variations of adjustable rate mortgages. Over the last five years negative amortization adjustable rate mortgages have become popular. Florida mortgage borrowers have embraced these programs for the advertised low payment rates. But these loans are complex; I believe that very few people that get this type of mortgage understand them. I also believe that there are mortgage brokers actively selling these programs that do not understand them.

Please take your time. Ask lots of questions. Take notes. Ask more questions. Make sure you understand the index, the margin, the adjustment period for both the note and the payment. It wouldn't hurt to look at the worst case scenario. Can you live with it? If your mortgage broker can't answer your questions find a new mortgage broker. Your financial life may depend on it.

How About a 15 Year Fixed?

There was a time when the interest rate on a 15 year fixed rate mortgage was consistently and significantly lower than the rate on a 30 year fixed rate mortgage. Between June of 2004 and June of 2006 the Federal Reserve increased the Federal Funds rate 17 times. This rate directly impacts all short term interest rates such as the Prime Rate. During the same period of time the long term rates remained more or less steady. The net effect was to close the gap between rates on shorter term mortgages like the 15 year fixed and longer term mortgages like the 30 year fixed.

At the time of this writing the rates on these two loan products happen to be exactly the same. But this should not take the 15 year fixed rate mortgage out of contention. For many people it is an excellent option. And it can still save lots of money.

For example, the payment on a 30 year fixed rate mortgage for $100,000 at 6% is $599.55. The payment on a 15 year fixed rate mortgage for $100,000 at 6% is $843.85. That is an extra $244.30 per month on the 15 year mortgage. But consider that the total payments made on the 30 year loan would be $215,838, versus $151,893 on the 15 year mortgage. By choosing the 15 year mortgage you would save $63,945. And you get to stop making mortgage payment in 15 years!

Interest Only

Given the high cost of homes it is no surprise that interest only programs have become so popular. Florida mortgage customers have flocked to these programs to make increasingly expensive homes affordable. An interest only mortgage can be appropriate if your sole concern is cash flow. During the interest only period you will not be paying any principle off. There are many types of interest only mortgage programs. The majority of interest only mortgage programs are "fixed period adjustable rate mortgages". This means that they are fixed for a limited period of time; typically 3, 5, 7, or 10 years.

The interest only period usually corresponds to the fixed rate period. Once the fixed rate period ends the mortgage becomes adjustable. A new version of the interest only mortgage worth considering is the 30 year fixed rate mortgage with a 10 year interest only period. You get the benefits of the low interest only payment for 10 years - but with no adjustable rate risk waiting for you at the end of the interest only period.

It's Your Money

How often do you balance your checkbook, get a physical exam, go to the dentist? Your mortgage can have a huge impact on the quality of your life. Think of your mortgage from time to time. Call your friendly mortgage broker. Have a chat. Ask questions. It's your money.

Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.

MORTGAGE

Glossary of Mortgage Terms

Additional Security Fee

An Additional Security Fee (Mortgage Indemnity Guarantee policy) is the fee taken to get an insurance policy that will cover your lender so that if you default on payments, he will not suffer any loss. You have to pay the Additional Security Fee and the premium along with your mortgage advance. Although you are paying the premium, remember that this policy is for the protection of your lender and not for you.

Administration Fee

The administration fee is the amount charged by your lender to start working on the documentation part of your mortgage application. It includes the home valuation fee as well. The administration fee will not be refunded even if your valuation is not done or if your application has been rejected.

Adverse Credit

Adverse credit occurs when you have a history of bad credit, bankruptcy, CCJ, or loan arrears. Adverse credit can also be called as bad credit, poor credit, or it can be said that you have a low credit score.

Agricultural Restriction

An agricultural restriction is a rule which will restrict you from holding a property if your occupation is in any way related to agriculture.

Annual Percentage Rate

The Annual Percentage Rate is the rate at which you borrow money from lender. It includes all the initial fees and ongoing costs that you will pay throughout the mortgage term. As the name suggests, annual percentage rate, or APR, is the cost of a mortgage quoted in a yearly rate. The annual percentage rate is a good way to compare the offers from different lenders based on the annual cost of each loan.

Apportionment

Apportionment, or sharing out, is a facility that allows you to divide the responsibility for utilities, property taxes, etc. with the buyer or the seller of the property when you are either selling or buying the property.

Arrears

Arrears happen when you default on your mortgage payment or any other type of debt payment. If you have arrears on the record of your current mortgage, you will face problems when you want to look at remortgaging or getting a new mortgage.

Arrangement Fee

An arrangement fee is the amount you have to pay your lender to access particular mortgage deals. While searching for a fixed rate, cash back, or discounted rate mortgage, you will pay this fee at the time that you submit your application, it must be added to the loan upon completion of the term, or it will be deducted from the loan on completion.

Assignment

An assignment is the document transferring the lease of the property or rights of ownership from a seller to a buyer. It may be an endowment policy to the building society in connection with a mortgage.

ASU

ASU is Accident, Sickness, and Unemployment insurance which covers your mortgage payments in case of an accident, a sickness, or involuntary unemployment.

Auction

An auction is the public sale of a property to the person who quotes highest bid. The highest bidder has to sign a binding contract that ensures that he do all valuations, searches, etc. before the sale of the property.

Authority to Inspect the Register

An authority to inspect the register document is a document fro the legal or registered owner of a property allowing the solicitor of the purchaser to get information concerning the property.

Banker Draft

A banker draft is a way to make a payment. In appearance, it is the same as a cheque, but in effect it is a cash payment. The money is given to the bank, and they issue a cheque that is certified to be good for the given amount.

Base Rate Tracker

Base rate tracker is a type of mortgage in which the interest rate is variable, but it is set at a premium (above) the Bank of England Base Rate for a period or for the full term of the mortgage. The best part about this type of mortgage is that it has little or no redemption penalty. This means that by making overpayments, you will be able to save money on interest by paying off your mortgage earlier than the agreed upon date on the initial mortgage contract.

Booking Fee

A booking fee or arrangement fee is charged when applying for a fixed or a capped rate loan. Booking fees are normally non-refundable if charged upfront, but sometimes the booking fee is added to your final mortgage payment.

Bridging Loan

A bridging loan is useful when you want to purchase a property, but your ability to do so is contingent upon the sale of your old property. This is a very short term loan that is paid off as soon as your old property sells. Speak with a loan adviser before taking out a bridging loan to be sure it is the best option for you.

Broker Fee

A broker fee is paid to your debt advisor or other intermediary that assists you in finding the best mortgage or loan deal for your circumstances. BSAThe BSA, or the Building Societies Association, is a group that works in the interest of member societies.

Building Societies Commission

The Building Societies Commission is a regulatory organization for Building Societies. This commission reports to the Treasury Ministers.

Building Society

A Building Society is a mutual organization that gives you money to buy or remortgage residential properties. This money comes from individual investors who are paid interest on their funds. A portion of building society funds is also raised through commercial money markets.

Buy-to-Let

When you purchase a property for the sole purpose of renting it out, you can apply for a buy-to-let mortgage. The payments for this type of mortgage are calculated based on your projected rental income instead of your personal income.

Capital and Interest

Your monthly mortgage payments consist of two parts: the interest and the capital. The interest payment is a payment on the interest balance of your loan. The capital payment is a payment on the amount that you borrowed.

Capital Raising

Capital raising generally means remortgaging for a higher amount than you need to pay off your existing mortgage in order to use the excess money for other personal financial uses.

Capped Rate

A capped interest rate is an interest rate that will not exceed the standard variable interest rate for a set period of time (from 1-5 years) that is decided by you and your lender. If the standard variable rate falls below your capped rate, your interest rate will decrease accordingly.

Cash Back

Cash back is the amount you receive when you take out a mortgage, the amount may be fixed or a percentage of your mortgage amount.

CCJ

CCJ stands for County Court Judgment. This is a decision reached by a county court against you when you have defaulted on your debt payments. If you clear the debt in question in a set amount of time, a satisfactory note will be put on your credit report to signify that the debt is taken care of.

Centralized Lender

A centralized lender is a mortgage lender that does not rely on a branch network for distribution. Centralized lending is now provided by several building societies. These societies operate separately from their branch networks, and they rely exclusively on mortgages from intermediary sources.

Charge

A charge is any interest on a mortgage to which a freehold or leasehold property can be held.

Charge Certificate

A charge certificate is a certificate issued by HM Land Registry to you with your name as the registered title for a given property. This certificate contains details of restrictions, mortgages, and other interests. It has three different parts: a charges register, a property register, and a proprietorship register. If there is no mortgage on the property, it is called a Land Certificate, and it is issued to the registered proprietor.

Chattels

Chattels are moveable items in your house such as furniture or your personal possessions.Chief RentChief rent is paid by the owner of a freehold property. This is the same as the ground rent that is paid by a leaseholder.

CML

Council of Mortgage Lenders

Completion

Completion is a term that explains that you have become the owner of your house after finishing the formalities of the sale and the purchase of the property.

Conditional Insurance

When you take out a fixed or discounted rate mortgage, your lender may try to persuade you to take out an insurance policy that will cover any missed payments due to an illness, an accident, or unemployment.

Contract

A contract is a legally binding sale agreement. There are two identical copies signed by both the buyer and the seller, and each party keeps a copy for their records. Once both parties have signed the contract, they are committed to the terms of the agreement.

Conveyance

A conveyance is the deed by which a freehold, unregistered title is transferred. The deed is called an assignment if your property is unregistered or leasehold. If the property is registered, the deed is called a transfer.

Conveyancing

Conveyancing is the legal process by which the buying and the selling of a property take place.

Covenant

A covenant is an assurance given in a deed.Credit ScoringCredit scoring is the procedure by which a lender evaluates your paying capacity before offering a loan or mortgage.

Credit Search

A credit search is done by a lender and a credit bureau to search your records for CCJs and other indicators of bad credit.

Debt Consolidation

Debt consolidation is the process by which you take out a loan or mortgage in order to pay off a number of high interest debts. By doing this, you will only need to make one payment each month, and you will save significantly on interest charges.

Deed

A deed is a legal document that denotes the owner of a given property. You can transfer a title to both freehold and leasehold with a deed.

Deposit

A deposit is the amount of money you put down toward buying a property.

Disbursements

Disbursements are any amount you pay to solicitors against land registry fees, searches, faxes etc.

Discounted Rate

Discounted rates are used to attract new borrowers to lenders by setting the interest rate below the standard variable rate for a guaranteed period of time. If you repay the entire discounted rate mortgage within the first few years, your lender may charge you early redemption penalties.

Early Redemption Penalty

An early redemption penalty is charged by your lender if you do a part or full payment of your mortgage amount before the completion of your mortgage term. These penalties will also be charged if you decide to remortgage and move your mortgage to a new lender. Early redemption penalties mainly apply to fixed rate, discounted rate, and cash back mortgages.

Easement

Easement is the right held by one property owner to make use of the land of another for a limited purpose, like a right of passage.

Endowment Mortgage

An endowment mortgage is an interest only mortgage supported by an endowment policy. During the term of the mortgage you will pay only interest to the lender, and your premiums are alternately paid into an endowment policy which will mature over the term of your mortgage. The endowment policy is designed to pay off your mortgage as well as act as life insurance. However, you cannot depend on this amount to be sufficient to pay all of your debt.

Endowment

There are different types of endowments, but here an endowment is a life insurance policy that will pay off your interest only mortgage.

Equity

Equity is the amount of value in your home. It is the value of your home less the amount left to be repaid on your mortgage.

Equity Release

Equity release is a means of releasing money from the value of your home either in a lump sum or in monthly installments. This money may be used for home improvements, debt consolidation, or other large expenses.

Exchange of Contracts

Exchange of contracts occurs when the buyer and the seller of a property sign and swap the contracts which detail the property, the price, the date, and the terms of the arrangement. When the contracts are signed, they become legally binding, and legal action can be taken against anyone who breaks the contract.

Existing Liabilities

Existing liabilities are all financial commitments outside of your mortgage. Existing liabilities may include bank loans, credit card debt, maintenance payments, etc.

First Time Buyers (FTB or FTP)

A first time buyer is one who has never owned property before.

Fixed Rate

A fixed rate is when you pay a fixed amount of interest on a loan for a fixed period of time. Lenders provide fixed rate loans for short periods of time (three-six months) all the way up to 25 years. Early redemption penalties apply if you pay off the mortgage before the end of the fixed rate term.

Flexible Scheme

A flexible scheme is a new way of calculating mortgage interest charges. Lenders calculate interest on a daily basis instead of on an annual basis. The new interest rates will only affect the remaining balance of the mortgage. By making regular overpayments, you can repay the loan faster thereby saving a lot on interest charges.

Fixture

A fixture is an item attached to your property, and therefore it is legally part of the property.

Freehold

Freehold means that you have ownership of a property for an indefinite period of time. This is in contrast to leasehold which means that the property is only under your control for a limited period of time.

Further Advance

A further advance is an add-on loan to your existing mortgage from your existing lender. The money from a further advance may be used for home improvements, to purchase a freehold property, or for personal purposes such as debt consolidation.

Guarantor

A guarantor is a person who guarantees the lender that the borrower is eligible for a loan or mortgage. If the borrower fails to make payments, the guarantor will make them.

Gazumping

Gazumping occurs when a seller agrees to sell a property to one person, and they proceed to decline that offer in favor of a higher one.

Ground Rent

Ground rent is the amount which a leaseholder needs to pay to the freeholder each year.

Home Buyer Report

A home buyer report is made by a lender after a mortgage valuation has been done and before the full survey takes place in order to give the borrower a complete understanding of the property they are thinking of buying.

Income Multipliers

An income multiplier is a type of calculation that a lender will use to calculate the amount a borrower can receive. The most common income multiplier is three times a single income or two and a half times joint income. The lender will choose the one that yields the higher figure. Lenders are more flexible if your LTV ratio is low.

Income Protection Insurance

With income protection insurance, your monthly payments will be covered in the case of illness, accident, or unemployment.

Intermediary

An intermediary is a mediator who finds the best mortgage for you, and they also arrange the mortgage for you on your behalf.

Land Registry Fee

A land registry fee is paid when you want to register your ownership of a property or when you want to change the registered title of a property.

Leasehold

Unlike freehold in which a property is owned, leasehold is when a property is owned, but the land that it is built on is not owned by the leaseholder. Their control of the property is only for a set number of years.

Licensed Conveyancer

A licensed conveyancer is like a solicitor in that they specialize in the legalities of buying and selling property.

Local Authority Search

A local authority search is made by the solicitor of the people that plan to buy your property. They check to make sure there are no planned developments on the property such as roads or buildings. They will check for any planning permissions or enforcement notices posted on your property.

LTV

LTV, or loan to value, is the percentage derived from dividing the value of your property by the amount of your mortgage. A low LTV is much less risky for lenders than a 100% LTV.

Loan Consolidation

Loan consolidation happens when a loan is taken out to repay another loan with a higher interest rate or to repay a number of high interest debts. Loan consolidation is often achieved through remortgaging.

MIG

A MIG, or mortgage indemnity guarantee, is insurance one takes out to cover their lender in the case that their property is repossessed, and the lender is unable to get their money back. A MIG is paid for upon completion of a mortgage.

MIRAS

MIRAS, or mortgage interest relief at source, was a tax relief given to those with mortgages, but this relief was abolished by the government in April of 2000.

Mortgage

A mortgage is a loan that allows someone to buy a property. The property itself is the security for the loan.

Mortgagee

The mortgagee is the company or organization that finances your mortgage.

Mortgagor

The mortgagor is the person taking out the mortgage to buy a property.

MPPI

MPPI, or mortgage payment protection insurance, is insurance one takes out in the case of an accident, an illness, or involuntary unemployment that would render them incapable of making their monthly mortgage payment.

MRP

MRP, or mortgage repayment protection, is insurance taken out through your lender during the term of your loan.

Negative Equity

Negative equity occurs when the money you owe to your mortgage lender is greater than the value of your property. People find themselves in negative equity situations when they take out 100% LTV mortgages.

Overpayment

Overpayment happens when you pay more than the regular monthly payment on your mortgage so that the mortgage is repaid before the end of the mortgage term. With overpayments, you can save money on interest, but you may also be charged an early redemption penalty.Payment HolidayA payment holiday is a period during which you make no mortgagee payments. This is normally available with flexible mortgages only.

PEP

A PEP, or personal equity plan, allows you to own shares or unit trusts without paying any taxes.

Personal Pension

A personal pension provides for your financial needs after retirement. You make structured payments into your pension savings during your working years. Often, some of this money may be taken out to pay off your mortgage liabilities.

Portability

Portability is a term used to describe a mortgage that can be transferred between properties when you move from one house to another.

Redemption

Redemption is when you pay off your mortgage, when you remortgage, or when you move to a new house.

Remittance Fee

A remittance fee is charged by a lender for sending the amount of a mortgage to your solicitor.

Remortgage

A remortgage is a loan taken out from a new lender or a loan renegotiated with your existing lender to pay off your existing mortgage. This is done to decrease the interest rate you are paying or to raise extra capital.

Repayment Mortgages

A repayment mortgage is when part of your monthly payment goes toward the interest and another part of the payment goes toward the principal. This is also known as a capital and interest mortgage. If payments are made regularly, the entire sum of the loan will be repaid by the end of the term.

Retention

Retention is the amount that your lender keeps pending until certain conditions of your mortgage are met.

Repossession

Repossession is a legal process by which your mortgaged property comes under the control of your lender due to incomplete repayment. Your property may then be sold at public auction.

Right to Buy

Right to buy means that you are legally able to purchase the property at a discounted rate if you have been a tenant for a long enough period of time.

Sealing Fee

A sealing fee is an amount charged by your lender when you repay your mortgage.

Self Certification of Income

Self certification of income means that you confirm how much you earn, and the lender does not need proof of your income from a third party. Self Certification is useful for self employed people or contract workers.

Shared Ownership

Shared ownership is a scheme devised by housing associations that requires you to pay mortgage payments on the part of a property that you own while you also make monthly rent payments on the portion of the property owned by the building association.

Solicitors

Solicitors are the people who give legal advice and carry out all the legal work for mortgage and remortgage transactions.Stamp Duty Stamp duty is a tax paid to the government on the purchase of a property.

SVR

The SVR, or standard variable rate, is the base rate of the lender. It is subject to change at any time depending on the lender. The SVR will fluctuate based on the Bank of England Base Rate.

Structural Survey

A structural survey is the thorough inspection of a property carried out by a professional surveyor.

Tenure

Tenure means the type of rights a person has over a property or the land it stands on. Tenure could be freehold or leasehold, for example.

Term

The term of a mortgage is the number of years over which you plan to pay your mortgage off.

Tie-in Period

A tie-in period is an amount of time for which you are bound to a lender. Tie-in periods often exist with special mortgage deals like fixed, capped, or discounted rates. If you move your mortgage to a different lender during this period, you are subject to an early redemption fee.

Title Deeds

A title deed is a legal document that validates the ownership of your property. A title deed proves your true and legal right to your property.

Transfer Deed

A transfer deed is a legal deed used for transferring the ownership of your property to a buyer.

Unencumbered

The term unencumbered means that you own your property outright with no mortgages or loans against it.

Valuation

A property valuation is a survey conducted on a property by a qualified surveyor in order to assess the value of the property. This valuation is done on behalf of your lender so that they are able to confirm the value of your property.

Variable Rate

A variable rate means that your interest rate may change from month to month thereby causing your payments to fluctuate monthly.

Vendor

A vendor is the person from whom you purchase a property.

MORTGAGE