Hans Hasselfors asked: Although this is a pretty straightforward question, how many individuals do you know that ever take the time to ask, and receive an answer? Not very many. More often than not, the question of a home mortgage isn’t pondered until there is a desire to purchase a home. For the purpose of this article, we’re simply going to examine the home mortgage, and the variations that exist in the mortgage market today.
A home mortgage is a loan furnished by lending institution to a buyer for the purpose of procuring residential property, are a home of which to live. It’s that simple, the definition is that simple; the actual process is anything but simple. How do you approach mortgage lenders and what information what you need to furnish?
Mortgage lenders today, thanks to all the federal regulation, default rates, and identity theft in existence require more information than ever before. The mortgage application is sometimes a 10 to 15 page application that will ask questions pertaining to your life years prior. Why does the mortgage company want history? The lender simply needs previous addresses, previous jobs, and previous education to gain greater insight and opportunity to know the borrower. It is not entirely impossible to steal someone’s identity, gain access to their current information, even from three to five years prior. What is impossible is to enter the mind of the individual and gain access to relevant work history or education history. Generally, when you complete a mortgage application there’s also a mortgage application fee charged at the time you submit the application; why do the mortgage lending institutions charge an application fee? Mortgage companies charge a fee because it cost money to process application, and only serious applicant’s warrant the time and expense.
What other information will be necessary to furnish when completing the mortgage application? Generally a personal financial statement, the proposed mortgage amount, and any legal judgments against you such as bankruptcies, tax liens, or federal student loans will be requested at the time of application submission.
Now, what have the mortgage products are available to the mortgage borrower? The most often used mortgage product is the fixed rate mortgage; the next in line would be the adjustable rate mortgage, and the newest member of mortgage products would be the interest only loan. The interest only loan is gaining in popularity at an ever increasing and phenomenal rate of growth. The fixed rate mortgage provides the borrower with a fixed interest rate for a specified number of years, generally 10, 15, or 20 years as a set monthly payment. The adjustable rate mortgage is exactly as it sounds; the interest rate for this type of mortgage is adjusted at set intervals generally no less than six months no more than 12 and the amount of the monthly payment will vary according to the adjusted interest rate. The interest only loan is quite frankly, the least consumer friendly of the three and today the most popular of the three. When you take at an interest only loan, you may payment of only interest for a specified number of months or years on a loan that has been amortized for a greater number of years, usually 20, and at the end of the interest only term, your payments will reflect interest and principal payment. It’s at this juncture that many homeowners cannot afford the interest and principal payment. That’s why this mortgage product is the least consumer friendly; it does however make the most profitable lending institution.
I believe you should now have a much clearer picture as to what a mortgage is, why you complete a mortgage application, and the basic mortgage products available. If you are considering the purchase of a home, please take a moment to visit a local lending institution, a local realtor, and the web site of the Housing and Urban Development Department. You, as a potential homeowner can never obtain too much information.
What are other resources that can be accessed to learn about the mortgage process and your available options? Get online, check out the advertised lending companies there; look at the information they ask for, the products they offer, and then do some comparison shopping. Often, you will learn as much about what you don’t want, as what you do want.
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