Chapter 14 - Frequently Asked Questions

Since you are new to mortgage investing, you may have questions in regards to what it is, what it can do for you, and if mortgage investing is really worth it in the long run. While all of your questions may not be answered, the following is a short list of the most frequently asked questions that pertain to mortgage investing, and should provide you with a good idea of what you can expect.


What is the Mortgage Investment Yield?
The standard yield is 11 14% per annum. However, it is not uncommon for some mortgages to have higher yields.


How long is a Mortgage Investment Term?
You have complete control over the term of the loan. While some loans can have a 15 year term, many have a three year term or less. Ultimately, the choice is yours.


Is a Mortgage Investment Safe?
Yes! In fact, of all the investments you can make, mortgage loans are rated as one of the safest. For this reason, home interest rates are far lower in comparison to credit card rates. Private money loans are generally based on the real estate value itself, to the degree of the individual borrowers credit.


Is a Mortgage Investment Liquid?
A mortgage investment is not as liquid as a stock or bond. That being said, it is recommended that you only invest money you will not need returned to you quickly.


How much money is required to make a Mortgage Investment?
To give you a general idea, most mortgages range from ,000 - ,000. However, you are in complete control over your investment, because you are the only one who owns your mortgage. The closing should occur at your attorneys office, or at a Title Company. Make sure you obtain title insurance and an independent property appraisal, as well as other significant documents that are required. Your check should be given directly to your attorney or the Title Company.


Is a Mortgage Investment more Trouble than its Worth?
No. With a mortgage investment you have control over when you receive your checks, which allows you to obtain your money as quickly as possible. Furthermore, if it is your wish to not be in direct contact with the borrower, simply set up your mortgage investment plan with a third party, such as a collection firm or your bank, and they will collect the payments and contact the borrower on your behalf.


What about IRAs and other Retirement Programs?
A mortgage investment is a great investment for your Pension Plan or self-directed IRA (Individual Retirement Account). The reason is because if you use your Pension Plan or IRA, your income is tax deferred and can increase faster, as you will not have to pay taxes so you will have more money for gaining interest.


Are their Precautions I should take?
First and foremost, you need to familiarize yourself with the meaning of Loan to Value (LTV). Remember, all things being equal, the greater the Loan to Value, the more risky the loan. LTV is the percentage of the loan to the property value. Therefore, a ,000 loan to a property worth 0,000 has a 70% LTV.
Most lenders are in agreement that on certain types of loans, you would require a lower Loan to Value. Loans that involve the least amount of risk are those to

? Homeowners living in their own home
? Second homes
? Rental properties
? Commercial properties
? Vacant Land

While most lenders will only lend 50% or less of the actual value of vacant land, it is also true that many lenders will not lend to corporations or trusts. Thus, it is highly recommended that if you do decide to lend to either of the above mentioned entities, you require a larger money down payment and/or a lower Loan to Value. In addition, it is highly recommended that you always insist the Borrower takes personal responsibility on the promissory note.

Days After Payoff Return Deed Of Trust

Another reason is the borrower destroyed the property value by removing or demolishing the building(s), or by failing to keep the property in top condition.

75 paying approximately a 0. Confirmation of the zoning letter issued by the city/county that confirms the zoning for the property. In short, the borrower will file a petition for bankruptcy. If it happens that an error is made, or a lien has been overlooked and such aspects affect the trust deed holder, then the holder can take legal action against the company that issued the title insurance policy. If the investor has the first deed of trust, then there will be no other lien before theirs. The interest payments are considered negotiable, but generally they occur as monthly payments.

Introduction Today there are a number of ways in which investors can invest their money.
Just because short term loans are primarily funded based on real estate equity, you should discover what the borrower has already pre-approved for their take out loan. If in the event the investor held a second deed of trust, and the initial trust deed holder began a foreclosure action, the investor would receive notification. Thus, it is highly recommended that if you do decide to lend to either of the above mentioned entities, you require a larger money down payment and/or a lower Loan to Value. A closing statement will be sent to you, which describes how and to whom the documents and funds were distributed.

By following these guidelines, you will lower the risk you take when making a trust deed investment, and will be less likely to experience a pitfall.
A power of attorney can be implemented to allow another individual to act on behalf of the absent party and sign for them. Therefore, it is imperative that you carefully read and re-read all the closing documents. Trustor V Borrower 3. To make things easier, investors should keep all loan escrow documents/papers in a single folder, and to ensure the protection of the original deed of trust and note, secure these documents in a place safe from theft, fire or other potential hazards that could lead to their loss. When it comes to bankruptcy, the investor will require the assistance of an attorney to appear in court, in order to request that relief be granted from the automatic stay. If you have any questions concerning the TILA, you can contact the Federal Trade Commission, as the TILA regulations are enforced by them.