What Is A Home Mortgage?
- By Kristi Ambrose
- Published 10/29/2008
By definition a home mortgage is a loan rendered by a lending institution to a purchaser for the intention of procuring residential property, or in simpler terms a house in which you want to live. It really is that simple. How do you get access to lenders and what data do you need to render the loan? Well in order to get a loan you must first fill out an extensive application, this application usually ranges anywhere from 10 to 15 pages long and they will ask questions about your previous history. Obviously like with most other federal, and credit processes, they need to know past residential addresses, jobs, and even education history so that they can gain insight on you. This is all pretty understanding, I mean they are going to loan you a large amount of money!
In most all cases when filling out an application for the mortgage, there will also be a fee included when you submit the application. Mortgage companies do this for a reason, a reason which most other facilities also do for a certain reason; only serious applicants would bother to pay the fee. If they offered this for free can you imagine how many people would apply, apply that really have no substantial reason to apply? Again, completely understanding on the firms end. So, what other information will be necessary when completing the application? In most cases a financial statement will need to be procured, mortgage amount, legalities against you such as bankruptcy, tax liens, student loans, etc.
One of the most common mortgage types are a fixed rate mortgage; next in line would be adjustable rate, and the most current type the interest only loan. The fixed rate option supplies the borrower with a fixed interest rate for a fixed amount of years usually 10, 15 or 20 years and this type usually has a monthly payment system. Now with the adjustable option its pretty self-explanatory, 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. And lastly, the interest only loan is the least consumer friendly of the three types and yet it's the most popular of the three.
When you acquire the interest only loan, you make payments of only interest for a designated amount of months or years on a loan that has been extinguished for a larger amount of years, and at the end of the term your initial payments will then reflect interest and principal payment. This option as said above is the least consumer friendly because many homeowners cannot afford the interest and principal payment, however, it does make the most profitable lending foundation.
Hopefully now you have a much more simplified understand of what a mortgage is along with what basic variations are available. However, if you are considering something like this it's a really good idea to visit a lending facility online or in your neighborhood for more information regarding this matter! Remember, as a future homeowner, you really can't ever have enough information, or be informed enough! Good luck on your home purchase!
Spread The Word
- del.icio.us it
- Digg this
- Yahoo! this!
- Google Bookmarks
- Live Favorites