Guide to Mortgage Trips
The Real Estate you own Is Your Best Investment. One of the
facts often forgotten is making extra principal payments on you
mortgage. You probably have heard the concept of making extra
principal payments to reduce interest and payoff your mortgage
much earlier. The concept may be simple, but people overlook
this all the time. A typical promissory note amounts to
incredible interest over thirty years. For example, on a thirty
year $100,000 loan at 9%, you will pay over $189,000 in interest.
If you have a cash flow on your rental properties or other
mortgages, consider using it to make extra principle payments.
By making extra principle payments, even just a few, you can
save lots on interest.
Another example, would be if you paid an extra $60/month the
loan described above, you would save $49,000 in interest and pay
off the loan much earlier. If you paid an extra $100 per month,
you would save over $75,000 in interest and pay off the balance
ten years earlier.
Save Money on Late Fees. If you one of those persons that sends
payment at the last minute and are in danger of paying your
mortgage late, send your payment express overnight mail. The
cost of doing so is will probably be much less than your late
payment. It will also not look bad on your file. An example of a
5% late penalty on a $2,000 payment is $100. Sending the payment
via Federal Express will cost you less than $20.
Tips on Holding a Mortgage in Default. Example, if you sold a
property and took back a mortgage, you have an option to your
foreclosure procedure . . . sue on the promissory note. Remember
that a mortgage is security, and you can always forego the
foreclose proceeding and sue the borrower for nonpayment on the
note. This may be desirable if the property has little equity
and the borrower has other assets to attach. However, if you
have to elect one remedy or the other; once you choose to sue on
the promissory note, you waive your right to foreclose the
property.
Bankruptcy- A borrower in default can file for bankruptcy to
stop your foreclosure proceeding. Once the bankruptcy petition
is filed, the state court foreclosure proceeding is subject to
an automatic "stay" (which means you must stop all of your
collection efforts). This might delay your foreclosure. As a
secured creditor you will have first dibs at the property over
unsecured creditors. You can have go into federal court and ask
the judge to have the stay lifted against you. However, if the
debtor files for chapter 13, he or she may be able to ask the
judge to force you to accept a payout plan. Either way you all
of your efforts will get you paid.
Consider a "Deed- If you are in a mortgage state, the borrower
can sometimes delay the proceeding for months by simply filing
in writing against the complaint, raising the number of
defenses. Sometimes on of the best way is to try to work it out
with the borrower. But make sure that you're not shortchanging
yourself. It may be less hassle and cheaper for you to waive the
back payments. That gives you the property back and that is what
the objective really is. Remember that it might take time for
the process, but in the end it will be well worth it.