Central Florida Mortgage Attorney
A mortgage is an incident of a promissory note. A mortgage will state the mortgagor (borrower) and the mortgagee (lender). The mortgage will say that the mortgagor is indebted to the mortgagee for a certain amount of money and the loan will be secured by a piece of property. The indebtedness is evidenced by a promissory note.
Types of Mortgages
The most common types of mortgages are:
- fixed rate mortgages
- adjustable rate mortgages
Fixed rate mortgages have a set interest rate that does not change and adjustable rate mortgages have a fluctuating interest rate. There are some other types of mortgage including:
- purchase money mortgages
- balloon mortgages
- wrap-around mortgages
- leasehold mortgages
- construction loans
Purchase Money Mortgage
A purchase money mortgage is different from a bank mortgage. A purchase money mortgage is created when the purchasing and financing of the property happen at the same time. A buyer may give the seller a purchase money mortgage if they do not have enough cash to put towards the price of the property or they are not able to secure a bank mortgage. Purchase money mortgages have special priority as against other liens.
Florida Statute 967.05 defines a balloon mortgage as a mortgage where the final payment due is more than twice the amount of the regular monthly periodic payment of the mortgage. It is called a balloon mortgage because of the size of the final payment.
An advantage to having a balloon mortgage is that the interest rates are typically very low. Some may choose a balloon mortgage if they do not plan to keep their property very long. Disadvantages to balloon mortgages are that it is difficult to calculate what the final balance will be. Also, the unpredictable changes in the real estate market can make a balloon mortgage a gamble. It is important to consult with an experience real estate attorney to find out your best options.
A wrap-around mortgage is one where the lender assumes responsibility for an already existing mortgage. For example if you have an existing mortgage on your home for $125,000.00 and need $75,000.00 for renovations, you can obtain a $200,000.00 wrap-around mortgage. The wrap-around mortgage lender will assume responsibility on the first mortgage and then you will have $75,000.00 to make your renovations. It is important to make sure that the wrap-around mortgage lender does not default on the first mortgage. It is also important to understand your interest rates and what you will owe to both of your lenders. A wrap-around mortgage instrument should state all of the arrangements and agreements of the instrument.
A leasehold mortgage is a mortgage of a tenant’s interest in property. Leasehold mortgages are unique because the lender’s security is based on an interest in land that will terminate at the end of the lease period. The holder of a leasehold mortgage will want to make sure that the security for the loan is not affected by the rights of any other parties; namely the tenant or the landlord. The holder of a leasehold mortgage should also ensure that any agreements between the landlord and tenant do not alter the mortagee’s rights. It is helpful to have an attorney when entering into a leasehold mortgage. The attorney will make sure that your rights are protected and that the instrument is drafted properly.
Construction loans can be very complicated. To state it simply, a lender will lend borrower money to complete a construction project. When the project is complete, a permanent lender will pay off the loans and will become the primary lender. The primary lender is involved throughout the project and will set certain conditions before committing any funds. A construction loan agreement is executed along with a traditional mortgage and note. Having an experienced attorney involved with your construction loan will protect your rights and is key to a successful transaction.
Contact an Orlando Mortgage Attorney
Help is Here! Our Law Firm's philosophy is that no case is too small or too complex and that every client deserves the very best representation. Our mortgage lawyers have handled thousands of cases and have the experience to help you. Please contact our mortgage attorneys for a evaluation of your case. We can be reached at our offices 7 days a week at 407 500-0000. You may also fill out the online form provided on this page or email us at RealEstate@NeJameLaw.com.