The House Team Of Mortgage Intellingence asked:


All across Canada we’re seeing the recreational property market continue to go through the cedarshingled roof. Industry experts predict another year in which buyers seeking a property may outnumber the recreational properties available. The boomers are in their peak income years and have benefited from an unprecedented climb in the valuations on their primary homes. And across the country, they’re scouring every lake, ocean beach and ski slope – looking for the perfect getaway.

When cottages first became the vogue around the turn of the last century, those getaways were generally charmingly rustic structures designed to give their owners a taste of a simpler way of life for the summer season. But today, recreational property markets are reporting a stunning increase in teardowns and renovations – as rustic simplicity gives way to luxury accommodations. Today’s recreational property mix covers the gamut from luxury waterfront homes, resort-style condominiums, ski chalets and timeshare properties. Many of the traditional-style cottages are still standing, of course… and they sell for top dollar

on the rare occasions that they actually come on the market.

But more and more average Canadians have cabin fever: they’re looking for a recreational property both as an investment and an enhancement to their own lifestyles. And for many, the goal is achievable: we’ve seen historically low mortgage rates over the last few years – and greater affordability for ordinary Canadians. But financing a recreational property is more challenging than funding a principal residence. Traditional lending institutions typically find second homes a much less desirable investment. Purchasers are often advised to take out an equity loan or a second mortgage on their principal residence in order to buy the recreation property.

But the lending landscape has been changing in the past few years. We are beginning to see that some lenders have developed flexible new mortgage products and policies that are specifically designed for the recreational property market. The upshot is that Canadians who are longing for that cottage or condo may now be able to bypass conventional lending criteria – opening the door to ownership much sooner than they imagined. Recreational property mortgages are available for owner-occupied second properties, including winterized and nonwinterized, with as little as 15 per cent down for purchasers with good credit. And in some cases, 10 per cent down could get you into the recreational property market if you qualify. Typically, the vacation property needs to be located in a known vacation area, have approved plumbing, and year round access.

And do your homework. In today’s heated recreational property market, some purchasers have an edge in the marketplace because they are cash buyers. To level the playing field, buyers who are financing their purchase may want to consider talking to a professional to determine approximately how much they qualify for before launching their search.

For some, recreational property is an attractive investment, with rentals providing an extra income stream. But the allure is usually more emotional: a cottage or condo often becomes a symbolic centre for family life, where families come together at all ages and stages in their lives to share common activities and traditions.

If you’re dreaming of your own beach sunset or the perfect ski slope at your door, begin with a conversation with a mortgage professional. Your own getaway could be closer than you think!

1st American Mortgage asked:


There has been a lot of talk about adjustable rate mortgages these days. Are they to blame for the housing crunch and the problems that people are facing? Not necessarily. There are still adjustable rate mortgages out there that can be the best options for hopeful Denver home owners. These can be goodDenver mortgage products.

How Does An Adjustable Rate Colorado Mortgage Work?

If you want to understand a Colorado mortgage with an adjustable rate, it is a mortgage which has an interest rate will change at a certain point, depending on other key interest rates rules connected to home lending. During the loan, the adjustable rate Denver mortgages will move up and down and effect the interest paid on the loan.

There will be a period in which the interest rate on a Colorado mortgage product is fixed. After that, the adjustable rate loan (also known as an Adjustable Rate Mortgage, or ARM) will change depending on the current rate (and the terms of the Colorado mortgage deal as well as current market conditions). The fixed rate the loan starts with is usually much lower than a person would have gotten if they had qualified for a fixed-rate loan. So, for a certain amount of time, the rate will be fixed and the payments will be consistent, predictable and very low, but after that period, in sometimes two to five years, the interest rate and mortgage payment will change at set periods of the loan.

Are There Any Adjustable Rate Denver Mortgage Worries?

Of course, there is a risk that goes along with an adjustable rate Denver mortgage, but this is what allows lenders to give borrowers a lower rate at the beginning of the term. This is what makes them different than fixed-rate Colorado mortgages, which may have a higher initial rate.

The risk with the loan comes because what the interest rate will eventually become is unknown at the outset of the loan. So then the mortgage payment becomes equally unpredictable. If you have an adjustable rate Colorado mortgage that goes into its adjustment period, you will see your mortgage payment fluctuate. But there is a ceiling to how much the rate can change and how often the rate can be adjusted.

In order to avoid the risks of an adjustable rate Denver mortgage, the best thing to do is refinance your loan before the end of the fixed-rate period of your loan. Now there is a risk since there is no way to predict when and if and how your loans will adjust. When you refinance your Colorado mortgage, there is a chance your fixed rate will move up.

Positive Aspects of Adjustable Rate Colorado MortgagesThere are some periods in life in which the adjustable rate Denver mortgage could be beneficial to you and your finances. It all depends on your particular situation at the time. Here are some scenarios in which an ARM might work:

• If you plan on selling your home soon

• If you won’t stay in your house for the length of the loan

• If you need to a influx of additional cash-flow

• If you have a low credit score, which won’t allow you to get the best fixed rate. However, you can use the fixed-rate period of the ARM to improve your credit and refinance for a good fixed rate.

• If you have another way out of a mortgage before the rate goes up.

• When you still have good terms and a ceiling on the interest rate.

There are good lenders out there who will be able to work with you in handling your ARM. There are Denver mortgage lenders who have built up a good reputation working with customers to deliver them good mortgage products that won’t be a financial burden.

If you want to discover the advantages of ARM products by working with a Colorado mortgage lender , you need to find someone who has an established business, rather than someone who has not been around a long time and may have more questionable Denver mortgages for sale.

This article is written by J.B. of 1st American Mortgage and Loan, LLC, a Colorado mortgage lender who offers access to information on obtaining a Colorado mortgage loan as well as other information on loans inColorado online mortgage quotes, and rates through his website TrueMortgageQuote.com http://www.truemortgagequote.com).

Aaron Crawford asked:


Acceleration – This refers to a lender’s right to request immediate payment of the balance of the loan when the borrower defaults or by using a stipulation from a Due on Sale Clause

ARM / Adjustable Rate Mortgage – A mortgage that has an interest rate that is periodically adjusted. This adjustment is based off of criteria from an agreed upon index and is also called a variable rate mortgage.

Amortization – Mortgage split into periodic, equally sized payments so that at the end of the agreed upon mortgage period the balance is paid.

APR / Annual Percentage Rate – Expression of the yearly rate of the mortgage measured by mortgage’s full cost including all expenses and fees.

Appraisal – A documented official estimation of a property’s value.

Assessment – Tax on a property that serves a specific purpose, like sewers for example.

Assumption – The agreement between a buyer and a seller in which the buyer is taking over payments from the seller on the seller’s existing mortgage.

Balloon Mortgage – This is a loan whose amortization schedule exceeds the length of the mortgage. A final (often large) balloon payment is paid at the end of this end of this extended period of time.

Bridge Loan – A secondary trust used for collateral by the homebuyer’s present property, which permits proceeds to be utilized to close on a new property purchase before the existing one is sold.

Buy Down – A buy down occurs when a lender allows a mortgage rate to be lowered by buyer subsidization.

Caps – Safeguards that set limits on the amount of interest rate or payment change on a monthly basis for ARM’s

Change Frequency – The increment of the number of months that a rate may change in an ARM

Closing – The closing is the final meeting that occurs involving the property buyer, the seller, and the lender during which all legally binding papers are signed and the property purchase deal is “closed” and property ownership is transferred.

Closing Costs – The expenses and fees incurred either by a home buyer or seller at a closing for a variety of tasks, charges, insurances, etc.

Conversion Clause – ARM provision for having the mortgage’s rate be converted to a fixed-rate at some point during the life of the loan.

Credit Report – Official documentation noting the status and history of a potential buyer/borrower.

Default – In a nutshell, not making a payment on time; legally failing to provide required payment to lender by specified deadline.

Down Payment – The money paid during a property purchase that fills the gap between sale price and moneys borrowed.

Equity – The amount left over when comparing money owed on a property to the property’s current value.

Escrow – An escrow account is held by the lending institution in which the borrower pays money for insurance or tax reasons. Escrow describes the deposits that are held when a loan is pending closing.

Escrow Payment – The part of a borrowers monthly mortgage payment that the lender holds to pay for insurance, lease, or tax purposes.

Fannie Mae – Federal National Mortgage Association; a government backed organization that buys and sells residential mortgages.

Freddie Mac – Federal Home Loan Mortgage Corporation; a government backed organization that acquires mortgages from various depositary institutions and HUD-approved lenders.

FHA Loan – A loan that the Federal Housing Administration insures, open to any home buyer that meets certain requirements.

Fixed Installment – The regular monthly payment that is due on a mortgage.

Fixed Rate Mortgage – A mortgage loan whose interest rate will not change for the entire duration of the loan.

Foreclosure – Process by which a mortgage lender legally repossesses and forces the sale of a mortgaged property as a result of the borrow defaulting.

GPM / Graduated Payment Mortgage – Flexible mortgage payment plan in which the borrower’s monthly payments increase for a specific timeframe.

GEM / Growing Equity Mortgage – Mortgage in which the borrower’s payments increase over a set period of time; this larger amount is then applied to the mortgage’s principal in most cases.

Hazard Insurance – Insurance used for protection against various forms of property damage and/or loss.

HUD-1 Statement – This is a document provided by your lender/broker that includes a detailed listing of the moneys needed at closing, including points, escrow, commissions, and other fees.

Impound / Reserves – The amount of the buyer’s monthly payment kept by the lender to pay for various insurances or taxes.

Index – The publicly available market interest rate used by lenders to determine the difference between ARM rates and current interest rates and to set loan sale rates on fixed rate mortgages.

Interest – Monetary fee charged by a lender to a buyer for borrowing money.

Interest Rate Ceiling – The agreed largest possible interest rate for an adjustable rate mortgage.

Interest Rate Floor – The agreed lowest possible interest rate for an adjustable rate mortgage.

Interim Financing – A short-term or temporary loan made while property construction is being completed.

Jumbo Loan – A mortgage that exceeds the limits set by Fannie Mae and Freddie Mac.

Liabilities – The debt owed by a buyer.

Lien – A claim made on a piece of property for exacting payment of a financial obligation.

Lock – Mortgage lender’s written guarantee that the quoted rate is good for a set period of days from the time of issuing.

Margin – The total that a mortgage lender adds to the index on an ARM to set the adjusted rate.

Market Value – The price that a buyer and seller would agree upon for sale of a property.

Maturity – The date that a loan’s principal is scheduled to be paid in full.

Mortgage – Document pledging a property to a loan provider as security for a debt’s payment.

Mortgage Broker – One who receives compensation for the work of bringing a buyer to a lender for the purpose of completing a loan arrangement.

Mortgage Insurance – Money paid on a regular basis for the purpose of insuring a mortgage on a property whose buyer has less than 20% equity.

Note – A document specifying that a borrower is to repay a loan at a specific interest rate over a specific period of time.

One Year Adjustable Rate Mortgage / One Year ARM – Loan in which the interest rate changes on a yearly basis.

Origination Fee – Fee charged by a lender for the work involved in preparing a loan.

Owner Financing – Property sale in which the seller provides at least some part of the buyer’s financing.

Payment Change Date – Date when a new payment amount begins on an ARM or GPM.

PITI – Principal, Interest, Taxes, and Insurance

Points / Loan Discount Points – Interest money paid at closings for the purpose lowering the cost of monthly loan payments. One Point is equal to one percent of the loan’s total amount.

Power Of Attorney – The legal authorization of one person being able to act in behalf of another.

Preapproval – The process of evaluation a potential buyer goes through to decide how much money a loan can be given to them for.

Prepayment – Mortgage stipulation permitting the borrower to make additional payments before the maturation date.

Prepayment Penalty – Fee charged by a lender to a borrower when the borrower repays the a loan earlier than an agreed upon date.

Principal – On a loan, the total amount that remains unpaid by the borrower. On a monthly payment, the amount that goes towards the final pay
ing of the loan.

PMI / Private Mortgage Insurance – Insurance that a buyer must pay for; required when a borrower does not provide a 20% down payment on purchase of a new property.

Rate Lock – Commitment given by a lending institution to a buyer that guarantees a certain interest rate is valid for closing for a specified period of time.

Real Estate Agent – A person that is licensed to negotiate the sale of property.

Recission – The cancellation of an agreement or contract; the law giving a homeowner 3 business days to cancel a loan arrangement. “Right of Recission”

Refinancing – The obtainment of a new replacement mortgage on a property that is already mortgaged.

Satisfaction of Mortgage – Document issued to a borrower on the occasion of their repayment of said loan.

Second Mortgage – The acquirement of an additional, subordinate mortgage on a property that is already mortgaged.

Servicing – All the work involved to keep a mortgage in good standing such as paying various tax, insurance, and other costs.

Shared Appreciation mortgage – A mortgage in which the buyer receives a property for less than current market value; in exchange, the seller is granted a portion of future property appreciation values.

Simple Interest – Interest calculated only on the balance owed.

Step Rate Mortgage – A loan in which the interest rate increases based on a set schedule until a set point, after which the rate remains constant.

Title – The document declaring a property’s ownership.

Title Insurance – Insurance policy that insures a potential home buyer or lender against errors in a title search.

Title Search – A legal examination of records to determine who is the rightful owner of a property.

Truth in Lending – Federal law that requires the lenders to disclose the APR to a buyer after applying for a loan.

Underwriting – The decision made by a lender on whether or not to provide a loan to a borrower based on their qualifications.