What Happens To My Mortgage When I Sell My Home

Author: Raynor James

You've decided to make the plunge and sell you home. More than a few people have innocently asked me, ""What happens to my mortgage when I sell my home?""

What Happens to My Mortgage When I sell My Home

If you own a home, you undoubtedly are carrying a mortgage on it. A mortgage is simply a loan from a bank or financial institution for percentage of the value of the home, which you pay to the person you purchased the home from when you bought it. Depend on the type of mortgage you have, the amount due on the loan should have decreased during the time you lived in the home and made monthly payments.

When you go to sell your home, the simple question is what happens to the then due balance on the mortgage? The simple answer is the financial institution is going to be paid out of the proceeds of the sale before you see anything. As a result, it is critical that you calculate in the loan repayment amount when determining if it makes sense to sell a home. If you have a home worth $300,000 and owe $280,000 on the mortgage, you are going to realize little or no profit after the costs associated with the sale and probably shouldn't sell it.

If you have plenty of equity built up in the home, your mortgage can still end up costing you more than you originally expected. Many modern mortgages have restrictive penalties built into them. These penalties are designed to encourage you to hold onto the home for a set period of time, usually a couple of years, so the bank can recover a certain amount of interest up front. Put another way, the bank is trying to lock in a certain amount of profit on the loan.

When it comes to these restrictive penalties, lending institutions get pretty creative. Many will include a penalty if you sell or refinance the property within the first two years of the loan period. The penalties can be anything from the equivalent of three months of payments to a preset amount or even a percentage of the loan. State law often influences these issues, so you need to read your mortgage loan documents closely.

Regardless, you mortgage is going to be paid off as part of the sales process. The exact amount will depend upon the nature of your loan.

About the author: Raynor James is with the FSBO site - http://www.fsboamerica.org - FSBO homes for sale by owner. Visit our ""sell my home"" page - http://www.fsboamerica.org/seller.cfm - to sell your house yourself with a free 1 month listing.

Choosing the RIGHT MORTGAGE BROKER for you!

Author: Harry Pontikis

It wasn't so long ago, that when you wanted to buy a house, you simply put on your best suit and went to see your local bank manager and accepted whatever loan he was prepared to offer you. It may not have been the best loan, or the cheapest, but it was certainly a straightforward process.

These days with new lenders and new products popping up almost every day, there are a huge range of loans, offers and specials on the market. There is certainly a much greater chance that the right loan for you is out there - the biggest challenge, is finding it!

This is where the finance broker comes in. Instead of you going from one lender to another, making endless phone calls, researching on the internet and sifting through the endless amount of industry jargon, a finance broker can do it all for you. If you choose the go-it-alone route, you might be lucky to compare three or four different products. Brokers can compare hundreds!

A Home Loan broker will also help you understand the various deals that are on offer, explaining all the features and details that might make a big difference to your repayments. And what is more, your broker will lodge your application and chase it through with the lender - so you don't have to. Your broker is a single point of contact throughout the entire process and has a whole processing team supporting them.

How do I recognise a good one from the rest? - The mortgage broker you choose should offer a free service as their commissions are paid by the banks.*

- They should be Members of the Mortgage Industry Association of Australia (MIAA) as membership is offered only to brokers who have undergone thorough training and maintain high technical and ethical standards.

- The broker should also subscribe to the Credit Ombudsman Scheme which is a voluntary dispute resolution scheme. This means that if there is a dispute between you and your broker, you can take advantage of the independent dispute resolution process.

- Ensuring the broker is also part of a large and reputable Aggregator, ensures they have access to a large range of lenders. One Aggregator (Professional Lenders Association of Australia) also has a minimum industry education and compliance criteria for all their members.

- The reputation of the broker is essential to using them. Ask friends, your family and business contacts you have, to recommend brokers they have used and are happy with.

* If you have complex commercial requirements, or ask the broker to use a lender which does not pay commission, you may expect to be charged a small brokerage fee

Where do I find a good mortgage broker?

Choosing a mortgage broker is like selecting any professional - you need to find one who is experienced and whom you can trust. Getting their details from a friend, a family member, an Association you belong to or even your employer is often a good way to start.

Checklist for choosing a broker: YES or NO - A member of the MIAA - A member of a large Aggregator (eg. PLAN or AFG) - Part of a reputable company network with head office support and training - A full time finance broker - Happy to disclose fees and commissions - Is aligned to large organisations and provides their staff and members with finance - Covered adequately by Professional Indemnity insurance - Pays its Lending Consultants the same rate - independent of which lender or loan you choose.

Some questions to ask:

- How many banks and financial institutions can they offer?

- Do they have specialist software to compare loan products?

- Do they have electronic lodgement capabilities with the lenders?

- Does the broker undertake ongoing professional training?

- What is their organisation's customer charter or values?

- What privacy guidelines do they adhere to and what happens to your personal information?

About the author: Harry Pontikis is the Director of Chocolate Homeloans and has a lifetime of experience in delighting people with his honesty, integrity and professionalism. Harry leads a team of 48 experienced finance brokers who specialise in helping people realise their dreams through the purchase of their first home or investment properties. http://www.chocolatefinance.com.au

Is an Interest Only Mortgage the Right Choice for You

Author: Tim Garvey

If you're looking to purchase a home anytime in the near future, I'm sure you've at least heard of a mortgage program that is gaining popularity known as an Interest- Only Mortgage. Unlike more traditional mortgage programs that require you to repay a portion of your principal with each payment, these programs only require interest payments. The payments are, therefore, much less. Does having a lower payment make this the right choice for you?

The answer depends on what I call your financial discipline. Do you have the ability to take the amount you are not paying back on your mortgage each month and put the money to some better use? Ask yourself these questions.

1. Do you pay your credit cards in full each month or at least make substantially more than the minimum monthly payment? 2. Do you contribute from every paycheck to your 401K plan or some other tax deferred savings plan? 3. Do you have a personal financial advisor such as a CPA, investment advisor, or financial planner? 4. Do you own any other investments other than real estate?

If you can answer ""yes"" to at least two of these questions, you've probably got the financial discipline to find a better use for the monthly principal payment on your mortgage other than paying down the mortgage. Be sure to ask you mortgage professional to review all of your options with you.

About the author: Tim Garvey is a Certified Mortgage Banker by the Mortgage Banker's Association of America. Tim believes in providing mortgage information with no strings attached and can be reached via his website www.TGarvey.com