If you are buying a house, the first thing you need to figure out is how much of a down payment you can afford to make. This may seem like the sort of advice your father would give you, but rest assured there are a few reasons why knowing what you can put down and where you’ll get the money can make all the difference when shopping for a house and a mortgage to finance your new purchase.
Before you pick up your local newspaper and browse the real estate section looking for a new house, call up your banker, your accountant, or your spouse and find out how much you’ve got in savings and liquid assets to make the down payment and pay the closing costs on your mortgage.
First you must consider the source of your down payment, because this affects how much of the down payment your lender will actually attribute to you the applicant for the purpose of qualifying you for loan programs and determining your rates and payments. If the money is from your savings and securities / investment portfolio, be sure you can prove it. If you have employer retirement tax deferred accounts, 401(K) 403(b) accounts etc. and would like to use those as a source to finance the down payment, the lender will likely have several special conditions and limitations on the treatment of those funds. If you are receiving the down payment in part or in total as a gift, your lender will have another set of rules which will affect your payments. How you pay for closing costs will also have some affect on your final rates and payments; the more you take from a third party like the seller, the more risk the bank assumes.
A rule of thumb about size: the bigger the better when it comes to your mortgage down payment, at least from the perspective of programs, rates and payments. The more you put down out of your own savings, the lower your payments and the broader your selection of loan programs. An added benefit is that more money down means that any blemishes on your credit report or a low score count for less and less the more you pay upfront, and you also reduce your income requirement by improving your debt to income ratio. By knowing how much you can put down, you will know in advance how much house you can be qualified to purchase by your mortgage lender, get that mortgage pre-qualification letter, and know what to put in your purchase offer with your realtor, lawyer and seller when it’s time to make an offer. By finding out what you can afford to put down, you can get a head start on knowing your overall homebuying budget, financing options, and also have time to take care of the documentary requirements, seasoning and time-sensitive pre-requisites associated with closing your deal, saving you weeks if not months of wasted time sorting out these matters after you’ve found the house of your dreams.
So find out what you can put down and where you can get it from, contact a mortgage broker to find out what you can afford and what you can do with your down payment and documentation to get the best rates, payments and terms, and then take a pre-approval letter from the broker with you to start shopping for homes with a full knowledge of what you’ll be asking for and writing on the contract.
Getting Money From A Reverse Mortgage
Getting Money From A Reverse Mortgage
A reverse mortgage allows homeowners over the age of 62 to cash in on the equity of their home.The homeowner can use these funds in anyway they want.Some have used the money for extended term care or home improvements.Homeowners usually run into very little difficulty in securing these funds.The funds are practically free because with the exception of the fees, more than likely, the mortgages will not be paid back over the course of the homeowner’s life.
There are several payment options to choose when receiving funds from a reverse mortgage. In most cases you can choose one or more of them based on your needs.
* Getting your money in a lump sum: Most often the money from a reverse mortgage is paid in a lump sum. You will receive one payment which equals the value of your home.
* Getting a specific amount paid over the course of a number of years: With this option the homeowner will receive payments over a specific course of time, 10 years for example. This could be a great help in managing funds over a period of time.
* Getting a specific amount paid to the homeowner every month until they die or permanently move out of their home: Receiving monthly payments gives the homeowner a sense of security in knowing that their money will not run out before they die.
* Getting a line of credit. Funds can be provided as a line of credit and be paid back to the lender. A specific amount could be taken out to make repairs or to pay a bill as the funds are needed.
Getting the right type of terms for your needs is totally up to you.Give thought to what your needs are, how much funding is required and how soon you will need the funds. Some homeowners have gotten a lump sum and transferred it into a savings account until needed. The funds are yours and you can do whatever you want to with it with no restrictions.
A reverse mortgage allows homeowners over the age of 62 to cash in on the equity of their home.The homeowner can use these funds in anyway they want.Some have used the money for extended term care or home improvements.Homeowners usually run into very little difficulty in securing these funds.The funds are practically free because with the exception of the fees, more than likely, the mortgages will not be paid back over the course of the homeowner’s life.
There are several payment options to choose when receiving funds from a reverse mortgage. In most cases you can choose one or more of them based on your needs.
* Getting your money in a lump sum: Most often the money from a reverse mortgage is paid in a lump sum. You will receive one payment which equals the value of your home.
* Getting a specific amount paid over the course of a number of years: With this option the homeowner will receive payments over a specific course of time, 10 years for example. This could be a great help in managing funds over a period of time.
* Getting a specific amount paid to the homeowner every month until they die or permanently move out of their home: Receiving monthly payments gives the homeowner a sense of security in knowing that their money will not run out before they die.
* Getting a line of credit. Funds can be provided as a line of credit and be paid back to the lender. A specific amount could be taken out to make repairs or to pay a bill as the funds are needed.
Getting the right type of terms for your needs is totally up to you.Give thought to what your needs are, how much funding is required and how soon you will need the funds. Some homeowners have gotten a lump sum and transferred it into a savings account until needed. The funds are yours and you can do whatever you want to with it with no restrictions.
What is a Commercial Mortgage?
A commercial mortgage is similar in principle to a residential mortgage except it is used to purchase a property or to raise capital for commercial purposes rather than domestic purposes. As with residential mortgages, the lender retains rights to the property until the loan is repaid in full.
What would you use a commercial mortgage for?
The types of property that people might purchase using a commercial mortgage could be anything from hotels, restaurants, shops and takeaways to office buildings, factories, warehouses and farms. Sometimes people might buy the business and property at the same time if the two are intrinsically linked, such as a hotel or restaurant. When properties are purchased to be used as business premises, the mortgage is known as a commercial owner-occupier mortgage. Alternatively, a commercial mortgage could be used for refinancing. People might want to unlock capital from their existing business property to expand or improve their premises or facilities, or to raise cash for any other business purpose. There are many other uses for a commercial mortgage, such as buy-to-let mortgages, where people purchase a property (perhaps residential) as an investment and let it out, or commercial development mortgages, where people purchase a property to develop it and sell it on for a profit.
Why purchase premises rather than rent?
Taking on a commercial mortgage is a major leap for your business and must be carefully considered before entering into the commitment. However, it can be an excellent investment and owning the business premises that you occupy can bring many advantages to your business: In most circumstances the proceeds of the loan are not considered to be taxable income and the interest payments are tax deductible. You’ll have a clear repayment plan, with terms and rates tailored to suit your needs. (See below for more details on this.) This means that you can manage your cash flow more easily. Mortgage repayments can be cheaper than rent. Any property purchase is an investment. Your asset could appreciate a great deal in value, thereby increasing your capital. You have the potential to make money by subletting. For example, you might have space in your property that you don’t currently need, and could make money on it by letting it out to another business until you need it to expand your own business.
Why use a commercial mortgage to raise capital?
If you already own business property and need cash for your business for any reason, unlocking the capital in your property by refinancing or remortgaging is an effective solution. Think of it as a loan that could be used for any business purpose – not just expanding or improving your premises. There are many benefits in doing this: Commercial mortgages can be easier to obtain than business loans, especially for small businesses, as the property provides security to the lender. Unlike many business loans, which tend to have a short repayment term, commercial mortgages cover a long period – anything from 15 to 25 years, depending on the lender and the financial circumstances of your business. In most circumstances the proceeds of the loan are not considered to be taxable income and the interest payments are tax deductible.
There are two ways in which you might use a commercial mortgage to raise capital for your business:
1. Refinance your current commercial mortgage to include the loan amount that you wish to borrow.
2. Release the equity that has accumulated in your current property, i.e. the current value of the property minus any outstanding mortgages or debts tied to it.
What are the costs and repayment options for commercial mortgages?
Repayment plans tend to be similar to residential mortgages. The main options are either fixed rate or variable rate repayment mortgages or interest only/endowment mortgages. Unlike residential mortgages, however, the interest rates for commercial mortgages tend to be higher as business lending is perceived as more of a risk. The rates will vary depending on the circumstances of your business, but generally speaking, the higher the risk, the higher the interest rate. For the same reason repayment terms also tend to be shorter than residential mortgages – typically 15-20 years. It’s likely that you’ll also need to raise a deposit, as most lenders won’t provide 100% loan-to-value mortgages – i.e. they won’t provide a mortgage for the full purchase amount and will expect a down payment from you as a form of security (typically 20-30% of the purchase price, although some lenders accept as little as 5%, but with a higher interest rate for repayment). Other expenses to consider are the setup costs involved in arranging a commercial mortgage, such as legal charges, surveys and broker fees. In terms of responsibility for repaying the mortgage, this depends on the type of business. If you’re a sole trader the responsibility will lie with you and you may also be personally liable should you default on the repayments – meaning that you could lose personal assets as well as the commercial property that is mortgaged. If you’re in a partnership, the responsibility and liability apply to all partners. If it’s a limited company, the responsibility and liability belong to the business, although personal security may be required to approve the mortgage depending on the profitability of the business.
How do you obtain a commercial mortgage?
When applying for a commercial mortgage, you’ll need to do your homework and build a strong business case to demonstrate your company’s ability to repay the mortgage. Be prepared to undergo a thorough examination of your finances, including: business history of your company: financial statements, profit and loss accounts, balance sheets, past and current cash flow, all certified by an accountant future projections for your company: long-term business plan, intended use of the property, earnings potential, projected cash flow personal finances: the financial histories of yourself and all other key stakeholders in the business, such as credit worthiness and past earnings All of these factors will determine the lender’s perceived degree of risk in lending you the money, which will in turn determine the term and interest rate of the loan that they are willing to give you. The obvious first step to many people applying for a commercial mortgage is to approach their bank or business lender, with whom they already have an established relationship. However, for this very reason it’s unlikely that you’ll receive a competitive deal. The best way to get a commercial mortgage is to use the services of a specialist independent mortgage broker, who can help you get a good package to suit your needs whatever your circumstances. Even if your credit isn’t great, it doesn’t mean that you won’t qualify for a commercial mortgage. Having a broker to represent you will really strengthen your case. They have access to a wide range of lenders and understand their criteria for lending, as well as your specific needs. They can therefore undertake a targeted search, increasing your chances of finding a suitable loan. In fact, the broker may even be able to obtain several different options from various interested lenders, which provides the scope to negotiate a fantastic deal for you. Money isn’t all that you’ll save. Imagine if you tried to apply to several lenders yourself – think of the time taken to complete all the applications, and the time wasted in applying to unsuitable lenders. The independent advice and specialist knowledge that a broker provides are invaluable.
What would you use a commercial mortgage for?
The types of property that people might purchase using a commercial mortgage could be anything from hotels, restaurants, shops and takeaways to office buildings, factories, warehouses and farms. Sometimes people might buy the business and property at the same time if the two are intrinsically linked, such as a hotel or restaurant. When properties are purchased to be used as business premises, the mortgage is known as a commercial owner-occupier mortgage. Alternatively, a commercial mortgage could be used for refinancing. People might want to unlock capital from their existing business property to expand or improve their premises or facilities, or to raise cash for any other business purpose. There are many other uses for a commercial mortgage, such as buy-to-let mortgages, where people purchase a property (perhaps residential) as an investment and let it out, or commercial development mortgages, where people purchase a property to develop it and sell it on for a profit.
Why purchase premises rather than rent?
Taking on a commercial mortgage is a major leap for your business and must be carefully considered before entering into the commitment. However, it can be an excellent investment and owning the business premises that you occupy can bring many advantages to your business: In most circumstances the proceeds of the loan are not considered to be taxable income and the interest payments are tax deductible. You’ll have a clear repayment plan, with terms and rates tailored to suit your needs. (See below for more details on this.) This means that you can manage your cash flow more easily. Mortgage repayments can be cheaper than rent. Any property purchase is an investment. Your asset could appreciate a great deal in value, thereby increasing your capital. You have the potential to make money by subletting. For example, you might have space in your property that you don’t currently need, and could make money on it by letting it out to another business until you need it to expand your own business.
Why use a commercial mortgage to raise capital?
If you already own business property and need cash for your business for any reason, unlocking the capital in your property by refinancing or remortgaging is an effective solution. Think of it as a loan that could be used for any business purpose – not just expanding or improving your premises. There are many benefits in doing this: Commercial mortgages can be easier to obtain than business loans, especially for small businesses, as the property provides security to the lender. Unlike many business loans, which tend to have a short repayment term, commercial mortgages cover a long period – anything from 15 to 25 years, depending on the lender and the financial circumstances of your business. In most circumstances the proceeds of the loan are not considered to be taxable income and the interest payments are tax deductible.
There are two ways in which you might use a commercial mortgage to raise capital for your business:
1. Refinance your current commercial mortgage to include the loan amount that you wish to borrow.
2. Release the equity that has accumulated in your current property, i.e. the current value of the property minus any outstanding mortgages or debts tied to it.
What are the costs and repayment options for commercial mortgages?
Repayment plans tend to be similar to residential mortgages. The main options are either fixed rate or variable rate repayment mortgages or interest only/endowment mortgages. Unlike residential mortgages, however, the interest rates for commercial mortgages tend to be higher as business lending is perceived as more of a risk. The rates will vary depending on the circumstances of your business, but generally speaking, the higher the risk, the higher the interest rate. For the same reason repayment terms also tend to be shorter than residential mortgages – typically 15-20 years. It’s likely that you’ll also need to raise a deposit, as most lenders won’t provide 100% loan-to-value mortgages – i.e. they won’t provide a mortgage for the full purchase amount and will expect a down payment from you as a form of security (typically 20-30% of the purchase price, although some lenders accept as little as 5%, but with a higher interest rate for repayment). Other expenses to consider are the setup costs involved in arranging a commercial mortgage, such as legal charges, surveys and broker fees. In terms of responsibility for repaying the mortgage, this depends on the type of business. If you’re a sole trader the responsibility will lie with you and you may also be personally liable should you default on the repayments – meaning that you could lose personal assets as well as the commercial property that is mortgaged. If you’re in a partnership, the responsibility and liability apply to all partners. If it’s a limited company, the responsibility and liability belong to the business, although personal security may be required to approve the mortgage depending on the profitability of the business.
How do you obtain a commercial mortgage?
When applying for a commercial mortgage, you’ll need to do your homework and build a strong business case to demonstrate your company’s ability to repay the mortgage. Be prepared to undergo a thorough examination of your finances, including: business history of your company: financial statements, profit and loss accounts, balance sheets, past and current cash flow, all certified by an accountant future projections for your company: long-term business plan, intended use of the property, earnings potential, projected cash flow personal finances: the financial histories of yourself and all other key stakeholders in the business, such as credit worthiness and past earnings All of these factors will determine the lender’s perceived degree of risk in lending you the money, which will in turn determine the term and interest rate of the loan that they are willing to give you. The obvious first step to many people applying for a commercial mortgage is to approach their bank or business lender, with whom they already have an established relationship. However, for this very reason it’s unlikely that you’ll receive a competitive deal. The best way to get a commercial mortgage is to use the services of a specialist independent mortgage broker, who can help you get a good package to suit your needs whatever your circumstances. Even if your credit isn’t great, it doesn’t mean that you won’t qualify for a commercial mortgage. Having a broker to represent you will really strengthen your case. They have access to a wide range of lenders and understand their criteria for lending, as well as your specific needs. They can therefore undertake a targeted search, increasing your chances of finding a suitable loan. In fact, the broker may even be able to obtain several different options from various interested lenders, which provides the scope to negotiate a fantastic deal for you. Money isn’t all that you’ll save. Imagine if you tried to apply to several lenders yourself – think of the time taken to complete all the applications, and the time wasted in applying to unsuitable lenders. The independent advice and specialist knowledge that a broker provides are invaluable.
Discover The FOUR Essential Questions You Must Ask While Shopping For A Mortgage
How can you be sure you’ve got the right mortgage broker as you shop around? First: make sure you are working with an experienced, professional loan officer. The largest financial transaction of your life is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way. But how can you tell? Here are 4 simple questions your lender ABSOLUTELY must be able to answer correctly. If they don’t have the answers…RUN…DON’T WALK… RUN…TO A LENDER THAT DOES!
1. What are mortgage interest rates based on?
(The only correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.)
2. What is the next Economic Report or event that could cause interest rate movement?
(A professional lender will have this at their fingertips. For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate, visit www.pdxloan.com/economicreport/ and join the weekly distribution list for MMG Weekly – this is a copy of a weekly newsletter on current Economic Reports.)
3. When Bernanke and the Fed “change rates”, what does this mean… and what impact does this have on mortgage interest rates?
(The answer may surprise you. When the Fed makes a move, they can change a rate called the “Fed Funds Rate” or “Discount Rate”. These are both very shortterm rates that impact credit cards, Home Equity credit lines, auto loans and the like. On the day of the Fed move, Mortgage rates most often will actually move in the opposite direction as the Fed change. This is due to the dynamics within the fi nancial markets in response to infl ation. For more information and explanation visit Google or research online further).
4. Do you have access to live, real time, mortgage bond quotes?
(If a lender cannot explain how Mortgage Bonds and interest rates are moving in real time and warn you in advance of a costly intra-dayprice change, you are talking with someone who is still reading yesterday’s newspaper, and probably not a professional with whom to entrust your home mortgage financing. Would you work with a stockbroker who is only able to grab yesterday’s paper to tell you how a stock traded yesterday, but had no idea what the movement looks like at the present time and what market conditions could cause changes in the near future? No way!)
Be smart... Ask questions… Get answers!
1. What are mortgage interest rates based on?
(The only correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.)
2. What is the next Economic Report or event that could cause interest rate movement?
(A professional lender will have this at their fingertips. For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate, visit www.pdxloan.com/economicreport/ and join the weekly distribution list for MMG Weekly – this is a copy of a weekly newsletter on current Economic Reports.)
3. When Bernanke and the Fed “change rates”, what does this mean… and what impact does this have on mortgage interest rates?
(The answer may surprise you. When the Fed makes a move, they can change a rate called the “Fed Funds Rate” or “Discount Rate”. These are both very shortterm rates that impact credit cards, Home Equity credit lines, auto loans and the like. On the day of the Fed move, Mortgage rates most often will actually move in the opposite direction as the Fed change. This is due to the dynamics within the fi nancial markets in response to infl ation. For more information and explanation visit Google or research online further).
4. Do you have access to live, real time, mortgage bond quotes?
(If a lender cannot explain how Mortgage Bonds and interest rates are moving in real time and warn you in advance of a costly intra-dayprice change, you are talking with someone who is still reading yesterday’s newspaper, and probably not a professional with whom to entrust your home mortgage financing. Would you work with a stockbroker who is only able to grab yesterday’s paper to tell you how a stock traded yesterday, but had no idea what the movement looks like at the present time and what market conditions could cause changes in the near future? No way!)
Be smart... Ask questions… Get answers!
How to Get Started or Re-started in Your Mortgage Business
How to Get Started or Re-started in Your Mortgage Business
Whether you're new to the mortgage business or been sitting on the sidelines for a while, this is a great time to get involved and jump-start your mortgage business.
The U.S. housing market is still encouragingly active...thirty year interest rates although fluctuating are still below 7.00%...home equity interest rates have risen enough to force many folks to refinance and eliminate the higher rate line of credit...and, over 21 trillion dollars in adjustable-rate mortgages are ripe for conversion in the months ahead, to other mortgage products.
Here's what you need to do:
1. Make a list. Yes...you need to make a list of everyone you know. You've heard this before...the moneys in the list...and it's absolutely true. Make sure that you have their address, phone number, and email address if possible, plus and any other information you may have about them.
2. Send a personal letter to each of them. Tell them that you are now in the mortgage business and you are ready to help them any way that you can. Automate your list on your computer to make this function as easy as possible.
3. Follow-up a few days later with a phone call. Re-introduce yourself and your business. Ask if they have any questions about credit and/or mortgages. Ask questions that help you fill-in the blanks and take lots of notes. Offer your private number (cell phone number) in case they have any questions.
4. Send a hand written "Thank You" note expressing your gratitude for the time they spent with you and the information they provided. Very few people use "Thank You" cards today...you'll be remembered for using them.
5. Send holiday cards, birthday cards, postcards, articles and informative industry information each and every month there after. You'll eventually be accepted as an expert and trusted advisor, because of the valuable information that you continue to provide.
6. Never stop building your list. Set a personal goal of adding new contacts each day and then follow the same steps for each addition to your list.
This is the beginning of your database and your new mortgage business. Maintain your list, up-date it, and continually add to it. Handled correctly your database will result in mortgage referrals every month. The larger your database, the more referrals you'll receive.
By effectively using your database, maintaining an exceptional service level, and keeping your name in the forefront of your contacts mind...you have a great chance of generating business right away.
Whether you're new to the mortgage business or been sitting on the sidelines for a while, this is a great time to get involved and jump-start your mortgage business.
The U.S. housing market is still encouragingly active...thirty year interest rates although fluctuating are still below 7.00%...home equity interest rates have risen enough to force many folks to refinance and eliminate the higher rate line of credit...and, over 21 trillion dollars in adjustable-rate mortgages are ripe for conversion in the months ahead, to other mortgage products.
Here's what you need to do:
1. Make a list. Yes...you need to make a list of everyone you know. You've heard this before...the moneys in the list...and it's absolutely true. Make sure that you have their address, phone number, and email address if possible, plus and any other information you may have about them.
2. Send a personal letter to each of them. Tell them that you are now in the mortgage business and you are ready to help them any way that you can. Automate your list on your computer to make this function as easy as possible.
3. Follow-up a few days later with a phone call. Re-introduce yourself and your business. Ask if they have any questions about credit and/or mortgages. Ask questions that help you fill-in the blanks and take lots of notes. Offer your private number (cell phone number) in case they have any questions.
4. Send a hand written "Thank You" note expressing your gratitude for the time they spent with you and the information they provided. Very few people use "Thank You" cards today...you'll be remembered for using them.
5. Send holiday cards, birthday cards, postcards, articles and informative industry information each and every month there after. You'll eventually be accepted as an expert and trusted advisor, because of the valuable information that you continue to provide.
6. Never stop building your list. Set a personal goal of adding new contacts each day and then follow the same steps for each addition to your list.
This is the beginning of your database and your new mortgage business. Maintain your list, up-date it, and continually add to it. Handled correctly your database will result in mortgage referrals every month. The larger your database, the more referrals you'll receive.
By effectively using your database, maintaining an exceptional service level, and keeping your name in the forefront of your contacts mind...you have a great chance of generating business right away.
Panama Mortgage Investor Program
Introduction - Panama is a wonderful place for real estate investors. Panama is the number one retirement haven in the world. Panama is the number one tax haven in the world. Panama has the world’s second largest duty free-zone, Hong Kong being the world’s largest duty free zone. Panama is a city of about 9 square miles and has 135 real estate projects under construction in and around the city and another 50 or so projects not yet started. Now comes the Panama Canal expansion which will involve lots or workers and expenditures well into the billions of dollars. Panama real estate is in the early years of a boom cycle with steeply rising prices.
Why Mortgages? – Because it is a secure way to realize a generous return on your investment. With real estate appreciation going the way it has been in the last two years your investment outlook is encouraging to say the least.
How does it work? – We legally represent you the lender as your law firm in Panama. You use an offshore (outside of Panama) Corporation and bank account in a tax haven country to avoid any Panama taxation issues on the interest income generated from the loan payments as well as avoiding any taxation in the jurisdiction the corporation and bank are located. If the loan payments are sent to a bank offshore to Panama there would be no Panama taxation. A bearer share corporation in a tax haven out of Panama can be used to cover the transaction with anonymity or one could receive the funds into a personal bank account if they were not interested in anonymity. Only prime properties purchased at below market rates would be considered. The LTV would never exceed 75% and would be calculated against two appraisals from recognized appraisers. The borrower would be acquiring the real estate so these would be purchase money instruments, not refinancing, not construction, not land loans and not against commercial property, just residential property. The borrower would be using an anonymous Panama Bearer Share Corporation to acquire the real estate. The underwriting of the loan would be strictly against the property only. There would be no credit reports and no financial information on the borrowers to protect their privacy. The bearer share corporation that is buying the real estate would pledge the stock certificates of the corporation to the lender which essentially gives the lender the control over the real estate contractually in the event of a default. This would avoid normal foreclosure procedures. The contract between borrower and lender would stipulate that in the event three consecutive payments were not made, you the lender would have control of the property and would be able to sell it. The exact terms are negotiable. The borrower would not have a rental agreement. You can control how many consecutive payments would need to be missed but the borrower has to agree to the terms as well so they must be acceptable to both sides. We can arrange for a company to service the loan or you can do so yourself, there really isn’t very much to do. In the event of a missed payment or default we can represent you as your law firm and inquire of the borrower, proceed to recover your investment, etc. We could arrange for annual inspections, etc. We can use several strategies to effectively maintain your privacy and anonymity as a lender.
Details – Of course the rate of return is going to be an important consideration. You could figure on a rate of at least 1 ½ % over the 5 year CD rate in a substantial Panama Bank. The rate is generally going to be fixed but a variable could be negotiated, depends on the borrower. The term of the loan can be 5 to 15 years. A 5 year interest only loan is popular. There are sixty payments, 59 payments are interest only on the entire principal and the 60th payment is a balloon payment for the principal. This means at the end of the five years the borrower must pay off the note, refinance, sell or roll the mortgage over if you are willing. On the other hand you could do a 15 year fully amortized mortgage. Prepayment penalties can be negotiated. If the properties are owner occupied or not will vary on a case by case basis. Borrowers will provide adequate property insurance made out in favor of the corporation owning the property. The borrowers often live in several countries and move around throughout the year. Generally the borrowers will not be Panama citizens, thus the borrowers will not be appearing in any Panama credit reports. Panamanians can get 90% financing from conventional lenders with terms extending out to 25 years depending on how old they are. Non-Panamanians have a hard time financing real estate in Panama especially if they are older and retired. Lenders will often ask them to post life insurance and require very large down payments like up to 40%. Owner financing in Panama is something rarely ever encountered. Property values will be at least $200,000 so the loan amount would be $150,000 as a minimum. It is difficult to find prime properties for less than this amount. We have no maximum value. Penthouses in the newer projects run in excess of one million dollars and are often 7,000 sq. ft. in size occupying a whole floor. Many single family homes are over 7,000 sq. ft. If we are dealing with a loan amount in excess of one million dollars one could generally expect a slightly higher interest rate.
Why Mortgages? – Because it is a secure way to realize a generous return on your investment. With real estate appreciation going the way it has been in the last two years your investment outlook is encouraging to say the least.
How does it work? – We legally represent you the lender as your law firm in Panama. You use an offshore (outside of Panama) Corporation and bank account in a tax haven country to avoid any Panama taxation issues on the interest income generated from the loan payments as well as avoiding any taxation in the jurisdiction the corporation and bank are located. If the loan payments are sent to a bank offshore to Panama there would be no Panama taxation. A bearer share corporation in a tax haven out of Panama can be used to cover the transaction with anonymity or one could receive the funds into a personal bank account if they were not interested in anonymity. Only prime properties purchased at below market rates would be considered. The LTV would never exceed 75% and would be calculated against two appraisals from recognized appraisers. The borrower would be acquiring the real estate so these would be purchase money instruments, not refinancing, not construction, not land loans and not against commercial property, just residential property. The borrower would be using an anonymous Panama Bearer Share Corporation to acquire the real estate. The underwriting of the loan would be strictly against the property only. There would be no credit reports and no financial information on the borrowers to protect their privacy. The bearer share corporation that is buying the real estate would pledge the stock certificates of the corporation to the lender which essentially gives the lender the control over the real estate contractually in the event of a default. This would avoid normal foreclosure procedures. The contract between borrower and lender would stipulate that in the event three consecutive payments were not made, you the lender would have control of the property and would be able to sell it. The exact terms are negotiable. The borrower would not have a rental agreement. You can control how many consecutive payments would need to be missed but the borrower has to agree to the terms as well so they must be acceptable to both sides. We can arrange for a company to service the loan or you can do so yourself, there really isn’t very much to do. In the event of a missed payment or default we can represent you as your law firm and inquire of the borrower, proceed to recover your investment, etc. We could arrange for annual inspections, etc. We can use several strategies to effectively maintain your privacy and anonymity as a lender.
Details – Of course the rate of return is going to be an important consideration. You could figure on a rate of at least 1 ½ % over the 5 year CD rate in a substantial Panama Bank. The rate is generally going to be fixed but a variable could be negotiated, depends on the borrower. The term of the loan can be 5 to 15 years. A 5 year interest only loan is popular. There are sixty payments, 59 payments are interest only on the entire principal and the 60th payment is a balloon payment for the principal. This means at the end of the five years the borrower must pay off the note, refinance, sell or roll the mortgage over if you are willing. On the other hand you could do a 15 year fully amortized mortgage. Prepayment penalties can be negotiated. If the properties are owner occupied or not will vary on a case by case basis. Borrowers will provide adequate property insurance made out in favor of the corporation owning the property. The borrowers often live in several countries and move around throughout the year. Generally the borrowers will not be Panama citizens, thus the borrowers will not be appearing in any Panama credit reports. Panamanians can get 90% financing from conventional lenders with terms extending out to 25 years depending on how old they are. Non-Panamanians have a hard time financing real estate in Panama especially if they are older and retired. Lenders will often ask them to post life insurance and require very large down payments like up to 40%. Owner financing in Panama is something rarely ever encountered. Property values will be at least $200,000 so the loan amount would be $150,000 as a minimum. It is difficult to find prime properties for less than this amount. We have no maximum value. Penthouses in the newer projects run in excess of one million dollars and are often 7,000 sq. ft. in size occupying a whole floor. Many single family homes are over 7,000 sq. ft. If we are dealing with a loan amount in excess of one million dollars one could generally expect a slightly higher interest rate.
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