If you are eyeing a property but can’t afford to pay for it, taking out a mortgage is one possible solution to your problem.
So, what is a mortgage? A mortgage is a loan you take to buy land, a home, or real estate properties. Your originator will help you compute the principal and the interest to know how much you need to pay every month. The property will serve as the collateral. Collateral is the lender’s security that the money lent to you will be repaid if the time comes that you can’t.
To qualify for a mortgage, the lender will check your credit score, ability to pay, and other financial requirements to ensure that you will meet their minimum requirement.
There are different kinds of mortgages – fixed-rate and variable or adjustable-rate mortgage (ARM). Your credit score can also help dictate the interest rates that will be charged to you. The loan term depends on what kind of loan you are applying for, as well.
How do mortgages work? As a borrower, you buy the property at a fraction of the purchase price and pay the remaining balance (principal and interest) in 5-30 years, depending on the kind of loan. You need to make sure that you are paying on time as scheduled because your property will be foreclosed if you stop paying. When the lender forecloses your property, they will ask you to leave your house, sell the property and pay off the remaining balance of your mortgage debt.
As mentioned earlier, when you apply for a mortgage, the lender will ask you for proof that you can pay the loan. They will do a credit check to make sure that everything adds up. If your application is approved, you will hear from the lender how much you can borrow and at what interest rate. When you, and the lender, agree to the terms, that is the time that you can do a closing. You make the down payment, transfer the property ownership to you, and sign the other mortgage documents.
We can help you with the process from beginning to end. Contact us, and our officer will be happy to assist you.