A lien is a legal claim against a property as a result of a debt owed.
By default, a mortgage which is a loan with the house as collateral will result in the lender placing a lien on the property in question.
The most common types of liens include:
Documentation Requirements For Mortgages
Documentation requirements refer to paperwork required by lender to verify information provided by the borrower regarding income and assets.
Some of the common documentation requested by lenders for mortgages include:
- Identification card
- Social security details
- Computerized pay stubs
- Employment contracts
- Income tax statements
- Bank statements
- Loan balance statements
- Agreement of sale
- etc
While this can seem like a tedious amount of paperwork to a borrower, they are essential to a lender as they cannot take the declarations made by borrowers at face value except under special programs.
Housing Expense
The housing expense is a combination of cost items that include the monthly mortgage payment, insurance premium, and property taxes.
It is also sometimes referred to as PITI.
Where “P” is principal, “I” is interest, “T” stands for taxes, and “I” for insurance.
Escrow Account
A deposit account funded by a borrower which a lender uses to pay for tax and insurance expenses in a mortgage transaction.
This is not to be confused with the account an escrow company uses to hold the funds for a property transaction until all parties satisfy conditions of a deal.
Lenders require escrow accounts to protect themselves from their two worst fears.