Real Estate Information Archive

When you purchase a new home one of the documents you will sign when you go to closing is called a Deed of Trust. Many homeowners typically are unaware of exactly what it is. Below is more information on this important document.

What is a Deed of Trust?

A Deed Of Trust is the security for your loan. It is the document that is recorded in the public records.  A deed of trust contains three parties:

•The Trustor, which is the borrower

•The Trustee, which is an entity that holds "bare or legal" title

•The Beneficiary, which is the lender

The deed of trust identifies the following:

•Original loan amount

•Legal description of the property being used as security for the mortgage

•The parties

•Inception and maturity date of the loan

•Provisions of the mortgage and requirements

•Late fees

•Legal procedures

•Acceleration and alienation clauses

•Riders, if any, regarding such clauses as prepayment penalties or terms of an adjustable rate mortgage

Before you sign a Deed of Trust be sure to read all the fine print and pre-printed portions. It is a good idea to request a blank copy of the deed of trust beforehand to review. When you do go to closing be sure to make sure everything is correct before signing. Things such as the principal balance of the loan, the interest rate, and any pre-payment penalties should be reviewed for accuracy.

In today's current sagging economy, many homeowners are struggling to make the monthly mortgage payment and stay on top of their expenses. Foreclosures are in almost every neighborhood and plunging property values have made it harder to determine the amount of equity homeowners have.

However, the good news is that banks are more willing than ever to help homeowners avoid foreclosure. One of the ways you can do this is to renegotiate your mortgage. By doing this you may be able to get a lower finance rate as well as change your rate from a high fixed-rate mortgages or adjustable-rate.

In order to qualify, typically You’ll need at least 10 percent equity in your home. You can easily check the value of your home on sites such as Zillow.com and I can provide you with a free and quick estimate of your home’s worth. Today's lenders typically will require that you have a credit score of at least 720 to qualify for good rates.

Lenders are aware of the many fiscal difficulties borrowers have in making their mortgage payments when hardships arise. However, they typically won't volunteer or advertise their help. So if you are struggling to make your payments on time, it is vital that you take the initiative and contact your lender and give them a heads up on your current financial hardship before you miss payments.  Keep in mind that lenders have more incentive than ever to work with you. Plunging property values mean they’re recovering less now on foreclosures. Plus, many that received cash infusions from the U.S. Treasury are under pressure to show that they’re responding to the housing crisis.

The days of putting little money down to buy a home aren’t over.

After years of risky mortgages backed up by small down payments, most lenders aren’t underwriting mortgages without a significant sum up front and a high credit score. But a decades-old loophole can still put home buyers in a house for next to nothing. Mortgages insured by the Federal Housing Administration (FHA) allow borrowers to get approved with a down payment as small as 3.5% of the agreed selling price of the house and don’t require a high credit score.

As millions of Americans have come to realize, getting into a house for little money down has its disadvantages. Borrowers who’ve pumped little equity into their home are often more willing to walk away from it during lean times that keep them from making payments; this risk is further elevated when home values are in decline and troubled borrowers are unable to refinance or sell the home at a price that covers their losses.