Atlanta mortgage loans
The city of Terminus, formally named Atlanta found its existence in 1837 at the new Junction of two railroad lines. Terminus was renamed as Atlanta in 1845. Atlanta was named the Best city for Business by the Fortune magazine in 1991. Atlanta being a home to many regional, national banking institutions and international banks is a powerful and capable financial center.
We all know that a mans basic needs are food, clothing, and shelter. We will now concentrate on shelter.
How does he arrange a cozy house for himself that would give him a feeling of security and take him through his good and bad times? The only solution to this is Mortgage loans. Let us have a look at Mortgage loans in Atlanta.
Now, what is Mortgage A Mortgage is one of the methods used for repayment of debt by using property as security for performance of an obligation. A Mortgage creates a security instrument that marks lien against real estate. This security instrument is called a Promissory note. Mortgages loans are secured on real estate rather than other property (such as ships) and in some cases only land may be mortgaged. Home purchases are generally funded by Mortgage.
Let us have a look at the major participants in a mortgage deal.
- Creditor: the creditor has legal rights to the debt or other obligation secured by the mortgage. Generally Creditors are Banks, insurers, or other financial institutions that provide loans for purchase of real estate. They are also referred to as Beneficiary, mortgagee or lender. A creditor could also foreclose the mortgage to recover the debt. This is one of the important features of mortgage.
- Debtor: the debtor is the person who owes the obligation secured by the mortgage. A debtor may be a single person or multiple parties. A debtor is bound by the conditions of the underlying loan. A debtor is also referred to as mortgagor or borrower. They are generally individual homeowners, landlords or businesses.
- Other Participants the interference of a lawyer or a solicitor is required due to complicated legal exchange. Mostly even debtors take the help of mortgage broker or a financial advisor to help them source an appropriate creditor, typically by finding the most competitive loan. Always be careful in choosing a good lender ! If a lending organization looks very green, then there might be some hidden costs, or a loan program that is not available when you get ready to close.
Mortgage lending is a major category of business finance in the United States. Example of mortgage is Commercial paper, which could be conveyed and assigned freely to other holders. The U.S Federal government sponsored various entities to foster mortgage-lending, construction and encourage home business. These programs include Government national mortgage association (Ginnie Mae), the Federal national mortgage association (Fannie Mae), and Federal Home loan Mortgage corporation (Freddie Mac). These programs buy a large number of mortgages from banks and issue Mortgage backed bonds to investors, which are known as Mortgage Backed Securities. This way the government helps both the investors and borrowers: This would help the banks create more mortgages than they could with the amount they have on deposit. This would also help the public to use these mortgages to purchase homes.
There are different types of Mortgage loans in Atlanta. Let us have a look at some of them:
1. Fixed rate mortgage: here the rate of interest is fixed throughout the period of loan.
2. Conventional mortgage: Generally a client gets conventional mortgage if they have good credit report. This type of loan is offered at least possible interest.
3. Adjustable rate mortgage- here the rate of interest could vary, it could either increase or decrease.
4. Equitable mortgage- here the borrower signs the Memorandum of Deposit of title of deed, which means that the borrower has deposited the title documents with the bank with their own wish to secure a loan from the bank. The lender is also secured by taking possession of all original title documents of the property.
5. Balloon payment mortgage - In this case, the payment doesnt get fully amortized over the term of the note: This means that a heavy amount needs to be paid by the mortgagor at maturity. Due to its large size, this type of mortgage is also referred to as Balloon mortgage. Such type of mortgage is more common in commercial real estate than in residential real estate. A balloon payment mortgage may have a fixed or a floating interest rate. Eg: 7-year Fannie Mae Balloon, which designs monthly payments based on 30-year amortization. In Atlanta, the amount of balloon payment must be stated in the contract.
There are two types of mortgage instruments in the United States: the mortgage (mortgage deed) and the deed of trust.
The mortgage
In all but a few states, a mortgage creates a lien on the title to the mortgaged property. A foreclosure generally requires a judicial proceeding declaring the debt to be due and in default, ordering a sale of the property to pay the debt.
The deed of trust
It is a deed by the borrower to a trustee for the purposes of securing a debt. In most states, it also creates a lien on the title and not a title transfer, regardless of its terms. Unlike mortgage, it could be foreclosed by a non-judicial sale held by the trustee. Foreclosure could be done through Judicial proceeding also.
The main advantage of deed of trust over mortgage is that foreclosure process is much faster in case of deed of trust as compared to mortgage. Also it does not incur any transaction costs, as there is no court intervention.
Therefore, both mortgage and deed of trust will create a mortgage lien upon the title to the real property being mortgaged. This lien is said to attach to the title when the mortgage is signed by the mortgagor and delivered to the mortgagee. And so this attachment takes priority over other liens on the property title.
However mortgages in Atlanta are recorded as deed of trust.
The Mortgage process in Atlanta
The process by which a mortgage is secured by a borrower is called Origination. First of all, when one intends to buy a house in Atlanta, they must have a good pre-approved, direct lender. This is obviously either a bank or a mortgage company that originates, processes, underwrites, and closes the loan in-house. Here a prospective mortgagor submits an application and documentation related to their financial history and credit history to the underwriter. Today, banks have become Customer friendly by offering no-doc or low-doc loans in which the borrower is required to submit only minimal financial information. Pre-qualification for a loan program depends on the in-file credit report and loan application. Generally pre-approval is based on a hard copy credit report (which includes the rating of all the three organization), verification of applicants employment income, and back up documentation required by a particular loan program. It is very common that ratings of different agencies are also different.
So, the lender generally takes the mid-value. However pre-qualification is not a loan approval. It requires further documentation. The originating mortgage company often sells these loans in the open market to large investors. They generally follow guidelines, which are suitable to these investors. The underwriter may also ask for additional documents, if they are not satisfied with the documentation provided by the borrower: This is done to give the lender a reasonable guarantee that the borrower can and will repay the loan. Generally a number of documents are required for traditional underwriter review. Some of them are also quoted below. But now, we have automated underwriting statistical models, which has reduced the amount of documentation required from many borrowers. These are Freddie Macs Loan prospector, and Fannie Maes Desktop Underwriter. Borrowers with excellent credit and acceptable debt positions are not required to submit any documentation of income or asset. Many of these are also not required for no-doc or low-doc loans.
Let us have a look at some of the documents required for obtaining a mortgage.
1. Cash or check for credit report and appraisal fees.
2. Name, address, account number and balances of all live bank accounts.
3. Copy of previous three-month bank statement on each open account.
4. Value of life insurance policies and amount of their net value.
5. Make, year and value of vehicles.
6. Copy of purchase agreement of the home you are buying.
Now I can proudly say that obtaining a mortgage loan in Atlanta is very much within the reach of a common man.
Other Articles
