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.

North Carolina Deed Of Trust Without Ownership

If you have any questions concerning the TILA, you can contact the Federal Trade Commission, as the TILA regulations are enforced by them.

A title company will open a standard insured loan transaction, and will research the property. Without the constraints of such rules, private investors can provide quicker loans that do not follow the same rules as is required for traditional lending. Endorsements are very similar to the riders found in a variety of other types of insurance, and they provide coverage for precise issues that are not covered in the pre-printed title insurance policy. An attorney will also be required to respond to the Temporary Restraining Order.

This clause indicates that full payment of the loan is required to be made upon liens, change of ownership or a transfer.
Finally, when it comes to a construction loan, construction control is imperative to any construction project. Once prepared, the officer will have all beneficiaries involved sign the DOD, NOB, SOT and the Non-military Affidavit with the attached notarization. All deeds of trust are insured by a reputable Title Insurance Company that is recognized nation wide, and all costs that are related to underwriting, documentation and servicing of the loan are paid by the borrower. The loan-to-value principal is what makes carrying a high yield with a trust deed investment secure. Title insurance, and the process that is associated with the creation of a title insurance policy, provides the investor with an in depth examination of the property title and everything that affects it.

The interest rate paid by the borrower is typically higher than rates paid by banks.
_ With a mortgage document foreclosure the state law will determine the foreclosure method that will take place, which can sometime involve a lengthily process. Furthermore, contracts are reviewed to make certain that borrowed funds are sufficient to complete the project. If you have any questions concerning the TILA, you can contact the Federal Trade Commission, as the TILA regulations are enforced by them. An attorney will also be required to respond to the Temporary Restraining Order. Once the title company has finished its examination of the property, the title agent will then share the results of the research with the investor, revealing the title condition.