Skip to main content

About Mortgage

https://www.compareclosing.com/blog/about-mortgage-loan/



About Mortgage


 A Mortgage is a loan where your property or real estate is used by the lender or bank as collateral. Once the lender or bank lends you a mortgage, you make a promise to repay the home loan you have borrowed with the interest rate agreed at the time of origination. The title of the property is in the borrower’s name however the lender has a 1st lien on the title till the loan is paid off. If the borrower fails to make timely payments, the lender can foreclose on the house to recover the remaining loan amount. The lender owns the house until the loan is paid off.

How Does A Mortgage Work?

Mortgage loans are usually taken by individuals who do not have enough cash funds in hand to purchase a property. Based on the property value and a few other parameters Banks or Lenders will decide how much of the loan can be approved (Maximum up to 97.5%) and the rest will have to be the down payment made by the borrower. However, there are government loan programs as low as $100 Down Payment for 1st time home buyers. Based on personal savings and monthly income a borrower can decide which loan program they want to use for buying the property.
The major factors covering mortgages is the interest rate offered, the closing costs included by the lenders to process the loan and tenure selected to repay the loan. Interest rate is provided based on the borrower’s financial profile particularly the credit score. The better the score the better the interest rate the borrower can get. Interest is also based on the market as the interest rates may fluctuate multiple times in a day.  If the borrower purchases a property on a high-interest rate due to market fluctuation, he/she can always opt for a lower one when the market is better through a process known as refinancing.
Closing costs are also one of the major parameters in a mortgage. It is a charge by the lender on top of the mortgage loan to actually process the loan. This varies from lender to lender. Usually closing costs are added back into the loan amount; however, the borrower has an option to pay this upfront if he/she wants to. Closing costs consist of different charges like title charges, origination fees, lender charges, escrows, etc.
The borrower gets an option to select the tenure. Tenure is the time period taken to repay the loan which is agreed between the borrower and lender. Usually, the borrower gets the option to select between 5-30 years to repay the loan. The lower the tenure, the higher would be the monthly payments. Mostly borrowers select 30 years and then get the mortgage loan refinanced after a few years if he/she needs to change the tenure.

Why Is Mortgage Important?




Also, we know that being a proud owner of a home is everyone’s dream. With the help of a mortgage, anyone could make this dream come true. Mortgages help individuals purchase the property when they do not have enough capital to buy the home up front. Financial capability from the borrower provided towards the loan also helps an individual get a better mortgage loan with a low-interest rate and closing cost. Click here to know how much loan amount you can get qualified for. Property owned is the most valuable asset an individual can have. As the housing market tends to inflate every year, this type of investment is safer than any other financial investment with potentially high returns depending on the market value. Banks use the home as collateral. Failure to make the payments allows the banks/lenders legally to foreclose the property in order to cover their losses.
Call Us On (800)-756-0809 or Select from the Below Options to Get a Free Quote.



 Buy A New Home

Home Equity Loan
Labels:
838 E 27th St, Houston, TX 77009, USA

Comments

Post a Comment

Popular posts from this blog

What is an Appraisal Contingency? — Best Guide for Homebuyers

  About Appraisal Contingency If a home is appraised for less than the purchase price included in the contract then there is a provision that is included in the purchase contract allowing homebuyers to back out of their contract this is termed as an  appraisal contingency  clause. Buyers who use financing to buy a house or are  buying homes  in areas where prices are volatile commonly use Appraisal contingencies. How do Appraisal Contingencies work? Purchase offers have appraisal contingencies inserted into them to notify the seller that the buyer intends to have the property appraised as part of their purchase for the financing process. If th e  property doesn’t appraise for the amount the buyer offered to pay then this contingency allows them the option of backing out of the contract without losing their earnest money deposit or facing other penalties. During an appraisal, a licensed professional is hired by the homebuyer to examine the property and evalu...
Post a Comment
Read more

Public Feedback Requested By CFPB

  The Home Mortgage Disclosure Act underwent certain changes and to evaluate whether it is meeting the stated goals of detecting discrimination in mortgage lending the  Consumer Financial Protection Bureau  is seeking comments. The CFPB requests for assessment of the mortgage disclosure law and checks if it meets the objectives of the  Dodd-Frank Act . To abolish discrimination in mortgage lending in 1975 the Congress enacted . The bureau said the request comes after an August report found that mortgage lenders as compared to white applicants were charging higher interest rates and denying credit to Black and Hispanic applicants. The   bureau said that with this evaluation the CFPB will be able to maintain a fair, competitive, and non-discriminatory mortgage market. They added that the assessment is an opportunity for the Bureau to get an idea if the earlier HMDA rulemakings have improved upon the data collected, thereby reducing loans on financial institutions,...
Post a Comment
Read more

What is Fannie Mae and Freddie Mac?

Understanding  Fannie Mae  And  Freddie Mac What is Fannie Mae and Freddie Mac? Fannie Mae or FNMA  is a nickname for Federal National Mortgage Association. It was established in 1938. It is a Government-sponsored Enterprise (GSE). In 1968, Fannie Mae ceased to exist as a government entity and became quasi-governmental, federally charted corporation to buy mortgages other than those insured by the Federal Housing Administration, otherwise known as FHA. Freddie Mac or FHLMC  is a nickname for Federal Home Loan Mortgage Corporation. Freddie Mac is also a government-sponsored enterprise (GSE) which was brought into existence in the year 1970 by the Congress. It provides competition to Fannie Mae and provides funds availability in the secondary mortgage market. What is Fannie Mae's and Freddie Mac's Role? Fannie Mae’s purpose is to create a secondary market for the purchase and sale of mortgages.  The secondary mortgage market ...
Post a Comment
Read more

How to Use Home Equity for Remodeling Projects

Important Guide How to Use Home Equity Everyone has to live somewhere and, everyone has to invest their money in someplace. So what happens when where you live, meets up with where your money is invested? Today we are going to discuss on  how to use home equity  for remodeling projects and things to know before using it for remodeling. For most homeowners, it is a choice between paying cash or borrowing against the equity that they have build up in their home. HELOC Or HEL? Interest rates  are still significantly low, and we are not sure how long they are going to stay that way. And home values are still rising at least on average. So taking out a home equity line of credit (HELOC) or a Home equity loan (HEL) may seem like a sensible financial move. Not always the case We have explained the difference between the HELOC and HEL in our blog post “ About Home Equity Loan  /  Home Equity Line Of Credit .” It depends on the individual’s n...
Post a Comment
Read more