Real Estate Financing and Mortgage Concepts
The loan documents
A mortgage pledge involves two documents: the note (the promise to pay) and the mortgage deed (the lien on the land). The borrower is the mortgagor; the lender is the mortgagee. Lenders price risk with loan-to-value ratio, credit score, debt-to-income ratio, and reserves. Below 20% down on a conventional loan usually triggers private mortgage insurance. PITI - principal, interest, taxes, insurance - is the number to quote, and escrow accounts collect taxes and insurance monthly.
Programs and disclosures
Compare conventional, FHA (lower down payment, mortgage insurance for much of the loan's life), VA (eligible veterans, funding fee, no monthly mortgage insurance), USDA rural, and Vermont Housing Finance Agency products for first-time and moderate-income buyers. Federal disclosure rules under TILA/RESPA (Loan Estimate and Closing Disclosure) set timing; RESPA Section 8 prohibits kickbacks and unearned fees for settlement service referrals, including paying an unlicensed person for a lead.
Default and foreclosure
Vermont is unusual: foreclosure is judicial, and the court may enter a strict foreclosure decree giving the mortgagor a redemption period, after which title passes to the mortgagee without a public sale. Where redemption is unlikely, the court orders a sale. Junior lienholders must be joined or their interests may survive.
Traps
Quoting a payment that omits taxes and insurance; treating a prequalification as a commitment; assuming a buyer can take over the seller's loan when the note has a due-on-sale clause; confusing the APR with the note rate.
Rule of thumb
Payment shock, not interest rate, is what sinks buyers - compute PITI plus association dues and show it in writing.