Real Estate Curve

Everything To Know About Real Estate

Jan-30-2008

Are Mortgages liens?

In the housing world usually most houses have mortgages. A Mortgage or A Deed of Trust with a Note is a lien against that property. However legitimate mortgages are not a problem. They technically are clouds, but they are so common that it’s just expected for them to exist. And they are easy to remove; they just need to be paid off before property ownership transfer.Actually in many states any other lien except for government liens will be wiped out when buying Tax Liens and later foreclosing on them or when buying Tax Deeds. Make sure you check with the county officials and the statutes for your state. But if your state is one of them, then you can easily go and pretty much disregard mortgages. They just mean that the property is more likely to be redeemed because the entity holding the mortgage will not let the property go for taxes and rather redeem it themselves. But in that case you get your money back PLUS a great interest rate (usually).

When buying properties directly from the owner, you will need to find out the pay-off amount so you can determine if this property is worth your efforts. This is easily obtained by having the seller sign a simple form authorizing you or the title company to talk to the lender to get the figure, and then basically as part of the closing process you pay, or the title company pays, it off (and of course that amount is subtracted from what the seller gets for the property).

Posted under Financing
  1. Steve Said,

    Further More

    Mortgage Glossary: Lien
    Any claim against a property that must be paid when the property is sold.

    A mortgage is considered a lien, but it can also be put in place for things like unpaid taxes or subcontractor bills.

    If the amount due is not paid, the lien holder can sometimes force the property to be sold in order to pay the debt.

  2. Tom Said,

    Here is something interesting about a other type of lien…This is what I found

    If you put a lien on someone’s house what happens if the house goes into foreclosure?

    Answer

    Liens get paid off in the order the lien is recorded, except for Government liens. For example: house sells for $100,000.00 at a foreclosure auction.

    There is a $80,000.00 first mortgage, $5,000.00 in back taxes, $3,000.00 in nusance abatement fees and a $35,000.00 second mortgage and a $6,000.00 third mortgage.

    The $5,000.00 in back taxes gets paid. The $3,000.00 in nusance abatement fees gets paid. The first mortage holder gets $80,000.00. The second mortage holder gets $12,000.00 of their $35,000.00 second mortgage. And the third mortgage holder gets nothing.

    The third mortgage holder would have to have bid enough to cover all the prior liens in order to protect their position. In this example at least $123,000.00. Then the property would be theirs to sell and try to get more than $123,000.00 to get some of their $6,000.00 back or if they could sell it and net $129,000.00 after costs they would break even.

    The second mortage holder would have to bid enough to cover all the prior liens in order to protect their postion. In this example at least $88,000.00. Anything above the $88,000.00 that the winning bidder paid they get to keep up to the $35,000.00 owed them. The second mortgage holder would have to then try to sell the house for a net of $123,000.00 in order to break even

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