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That is, PITI(A) is the sum of the monthly loan service (principal and interest) plus the monthly property tax payment, homeowners insurance premium, and, when applicable, mortgage insurance premium and homeowners association fee.

For mortgagors whose property tax payments and homeowners insurance premiums are escrowed as part of their monthly housing payment, PITI(A) therefore is the monthly "bottom line" of what they call their "mortgage payment." Iit is a combined payment for:

 [principal] + [interest] + [prop. taxes] + [insurance] + [association fees]

Note: Some lenders may include private mortgage insurance (PMI) in the above calculation.

PITI(A) is now often referred to as the Front End Debt to Income (DTI) Ratio.

Paying Points represent a calculated gamble on the part of the buyer. There is a specific point in the term (break-even point) of the loan where the money spent to buy down the interest rate will be equal to the money saved by making reduced loan payments.

Selling the property or refinancing prior to this break-even point will result in a net  loss for the buyer. Keeping the loan for longer than the break-even point results in a net savings for the buyer. Therefore, the longer the property is financed under a loan with purchased points, the more money will be saved.

If your intention is to sell the home quickly, buying points buying points will cost more than amortizing the loan at the higher interest rate.  The decision to buy points should be based on the intended duration of the loan.

NOTE: Another perfectly valid application for the purchasing of Points is to reduce the monthly payment for the purpose of qualifying for the loan. Loan qualification based on monthly income versus the monthly loan payment may sometimes only be achievable by reducing the monthly payment through the purchasing of points to buy down the interest rate thereby reducing the monthly loan payment.

Some examples of predatory mortgage lending are:

• Encouraging applicants to include false information.
• Asking borrowers to leave signature lines blank.
• Failing to include Good Faith Estimates, Special Information Booklet, Truth in Lending and Hud-1 Settlement statement.
• Convincing borrowers to refinance a loan several times and each time increasing monthly payments or amounts owed.
• Loaning amounts higher than the value of the home.
• Not explaining unexpected costs at the settlement.
• Balloon loans: after a series of low payments the entire loan balance is due in a large lump sum.

Another unethical practice involves inserting hidden clauses in contracts in which a borrower will unknowingly promise to pay the broker or lender to find him or her a mortgage whether or not the mortgage is closed. Though regarded as unethical by the National Association of Mortgage Brokers, this practice might be within the bounds of the law, depending on the circumstances. Often a dishonest lender will convince the consumer that he or she is signing an application and nothing else. Often the consumer will not hear again from the lender until after the time expires and then the consumer is forced to pay all costs. Potential borrowers may even be sued without having legal defense

See also ►

• Consumers Against Predatory Mortgage Brokers
• Stop Mortgage Fraud
• Press Release - Foreclosure Scams On The Rise

2. In commercial law, a principal is a person who authorizes an agent to bring about one or more legal relationships (contracts) with a third party. In real estate the principal may be the buyer or seller of real property represented by an agent or REALTOR® who creates a contract for the purchase or sale of the property to or from a third party, often called the customer.

The PMI may be payable up front, or it may be put into the loan. This type of insurance is usually only charged if the down payment is less than 20% of the sales price or appraised value (the LTV or loan to value ratio should be 80% or less). Once the principal reaches 80% of value, the PMI is no longer required. This can occur via the principal being paid down, via home value appreciation, or both.

 Canceling mortgage insurance can be a difficult process. Sometimes lenders will require that PMI be paid for a fixed period (for example, 2 or 3 years), even if the principal reaches 80% sooner than that. The cancellation request must come from the Servicer of the mortgage to the PMI company who issued the insurance. Often the Servicer will require a new appraisal to determine the Loan To Value (LTV).

The cost of mortgage insurance varies considerably based on several factors which include: loan amount, LTV, occupancy (primary, second home, investment property), documentation provided at loan origination, and most of all, credit score.

If a borrower has less than the 20% down payment needed to avoid a mortgage insurance requirement, they might be able to make use of a second mortgage (sometimes referred to as a "piggy-back loan") to make up the difference . Two popular versions of this lending technique are the so-called 80/10/10 and 80/15/5 arrangements. Both involve obtaining a primary mortgage for 80% LTV. An 80/10/10 program uses a 10% LTV second mortgage with a 10% down payment, and an 80/15/5 program uses a 15% LTV second mortgage with a 5% down payment.

Note: Piggy-back loans as described above are no longer popular with lenders as they have been linked to the mortgage loan crisis of 2008.

Other combinations of second mortgage and down payment amounts might also be available. One advantage of using these arrangements is that under United States tax law, mortgage interest payments may be deductible on the borrower's income taxes, whereas mortgage insurance premiums were not until 2007

Homeowners earning under $110,000 adjusted gross income can deduct, for the 2007 tax year, some or all of the LMI/PMI premium on mortgages closed only in 2007. Congress would need to renew this deduction to be valid for any tax years beyond 2007.

Note: the Mortgage Debt Cancellation Relief Act extends the deduction for mortgage insurance premiums through tax year 2010.

For tax purposes, a principal residence is generally defined as the home where an individual spends more than 50% of his/her time. It is also defined as “owner-occupied” housing. The term includes single-family detached housing, condos or co-ops, townhouses or any similar type of new or existing dwelling. Even some houseboats or manufactured homes may count as principal residences. Consult with your tax advisor if you have any question.

Property and real estate managers handle the financial operations of the property, ensuring that rent is collected and mortgages, taxes, insurance premiums, payroll, and maintenance bills are paid. Some property managers, called asset property managers, supervise the preparation of financial statements and periodically report to the owners on the status of other financial matters.

In Ohio, any person acting as a property manager and not directly employed by the owner of the managed properties must be licensed as a real estate sales person by the Ohio Division of Real Estate, and be affiliated with a real estate broker licensed in the State of Ohio.

1. Land
2. Improvements to Land (immovable man made things),
3. Personalty (movable man made things)

For example, a homeowner owes a 30-year mortgage loan of $250,000 against his house. A prospective buyer wants to purchase the house and keep the same mortgage. The buyer pays $50,000 cash for the equity and assumes the mortgage, becoming liable for the debt. However, the original owner remains liable as well.

In a purchase "Subject to Mortgage" since the seller (original mortgagor) remains liable in the event of default, the lender's (mortgagee's) consent is not necessarily required. This is the premise behind the "wrap around mortgage" and carries with it the risk of the lender finding out that title or interest in the property has been transferred to a third party and invoking the note's "due on sale provision."

Do not confuse  the so called "Purchase Subject to a Mortgage." with an "Assumption of Mortgage." Both are used to finance the sale of property usually when a homeowner (mortgagor) is in financial difficulty and desires to sell the property to avoid foreclosure.