Mortgages are loans which help individuals pay for things, such as homes, by making payments over a period of time. There are two important documents in the mortgage transaction, including:
Promissory notes are legal contracts. Promissory notes typically provide that one party promises to repay a specified amount of money to the lender, typically a bank, in a certain time frame. It also requires the borrower to pay the amount back even if they sell the property.
A deed of trust acts as a lien on a home or property. In the event that a loan is not repaid as agreed in the contract, a lender may require a borrower to repay the loan by selling the property.
A deed of trust provides assurance for the lender that they will be repaid for their loan.
What is a Mortgage Lender?
Mortgage lenders, or mortgagees, provide loans to borrowers in order to purchase homes or properties. In many cases, mortgage lenders are banks or mortgage companies. There are certain individuals who may be eligible to borrow from a government-sponsored lender, which may include:
- The Federal Housing Administration (FHA);
- The United States Department of Housing and Development (HUD); or
- The United States Department of Veterans Affairs (VA).
Once a mortgagor has satisfied their loan, or paid off the property or home, the title to the property or home transfers to that mortgagor. There may also be other parties to a mortgage, including a mortgage broker and/or a real estate agent.
Mortgage brokers assist individual borrowers find the best loan for their property or home. Real estate agents help borrowers find property or homes to purchase.
Real estate agents may also work with mortgage lenders or brokers to help the borrower finance their purchase. Because there are numerous parties to a mortgage, disputes may arise.
In home sales transactions, mortgage lenders provide the financial resources for borrowers in a mortgage loan arrangement. The lender is usually a bank or a mortgage company which offers a variety of different loan products, depending on the needs of the borrower.
A mortgage lender is subject to various laws which are designed to protect the rights of borrowers. For example, mortgage lenders are not permitted to discriminate against buyers based upon their gender, race, or other characteristics and they are prohibited from engaging in fraud when negotiating loan terms.
What Do Mortgage Lenders do?
A mortgage lender performs a variety of different tasks associated with mortgage loan documents and home purchases, including:
- Providing finances for the mortgage loan;
- Providing a borrower with multiple available loan options and terms;
- Researching market prices to determine loan product rates; and
- Advising potential buyers on loan repayment options.
In many cases, a mortgage lender will present a mortgage loan repayment plan for a borrower. This plan will then be finalized into a contract, which may or may not be subject to future adjustment.
In certain cases, a sale may not require a mortgage lender, such as in cases where the seller is financing the purchase as well.
What is Mortgage Refinance?
When an individual refinances their mortgage, they are essentially replacing their existing mortgage with a new mortgage. Individuals may refinance for numerous reasons, such as obtaining a lower monthly payment or reducing their interest rate.
In certain situations, refinancing can have many benefits, such as shortening the term of the loan, getting rid of mortgage insurance fees, or switching from an adjustable rate mortgage to a fixed rate mortgage.When an individual is preparing to refinance their mortgage, they can contact their current mortgage company in order to determine what requirements they have for refinancing.
There are some lenders who require the borrower to have their mortgage for a certain amount of time before they are permitted to refinance. An individual may choose to refinance with their existing lender or they may be able to negotiate with a different lender in order to find terms which are best suited for them.
Numerous homeowners and mortgage borrowers are utilizing refinancing as a means of making their home loan payments more affordable. A mortgage refinance typically involves an adjustment or reworking of the existing mortgage terms to reflect the changes in a borrower’s situation, such as losing a job or obtaining a new job.
In certain cases, this may include negotiations with a current mortgage lender. In other cases, mortgage refinancing may involve taking out a second mortgage to assist with the first mortgage loan.
Generally, mortgage refinancing typically occurs in the middle of the time frame of the mortgage payment plan, which is after the first payments have been made and it is becoming necessary to make adjustments.
Is Mortgage Refinancing Always Available?
No, mortgage refinancing may not be available in every case. The availability of mortgage refinancing depends on several factors, including:
- The terms of agreement between the original mortgage lender and the borrower;
- State laws and guidelines;
- The credit history and credit score of the borrower; and
- Whether or not there is a second mortgage or third mortgage that is being taken out.
In addition, simply because refinancing is available does not mean that it is recommended. Refinancing an existing loan may burden an individual with further obligations, such as extending the time that they will be repaying their mortgage debt.
Refinancing may be helpful in the short-term, but it can also come with risks in the long-run.
What Are Some Legal Disputes Involved with Mortgage Refinancing?
There are legal disputes which may arise related to mortgage refinancing. One of the most common legal disputes that arises related to property refinancing is the failure of the borrower to make payments.
Many individuals seek mortgage refinancing because they are having trouble making their current mortgage payment. In these cases, refinancing can complicate the situation and lead the individual to be burdened with more debt.
Another legal dispute which may arise occurs when the primary and the second or third mortgage lenders are competing for the payments the borrower is making. This may create a confusing situation which will require the assistance of an attorney to resolve.
In many cases, first, or primary, mortgages have priority over second or third lenders when collecting debt. Mortgage refinancing may also lead to the complete failure to make payments.
This may result in the commencement of foreclosure proceedings. Foreclosure proceedings may result in the borrower being forced to forfeit ownership of their home and their home may also be subject to sale.
Depending on the property laws of a state, there are numerous ways foreclosure may be avoided.
Do I Need a Lawyer for Help with Mortgage Refinancing?
It is essential to have the assistance of a mortgage lawyer if you have any issues, questions, or concerns regarding mortgage refinancing. There are advantages and disadvantages to obtaining refinancing for a mortgage.
It is helpful to have the assistance of an attorney if you need help with your mortgage refinancing. Your attorney will be able to provide advice during the negotiations phases and explain your contract rights.
In addition, it is important to hire a lawyer if you need to file a lawsuit or if you are involved in any other type of legal proceeding. Your lawyer will represent you during any negotiation meetings or formal court hearings.