What exactly is a mortgage loan? Basically a mortgage is the borrowing of money secured by a real estate property. There are many companies ie: banks, brokers, savings and loan, and credit unions that offer mortgage loans. Private individuals may also be able to offer this type of loan.
Contrary to what some people believe, lenders dread the thought of foreclosure (the process of seizing a home from someone who isn’t making their payments). Lenders lose revenue and face costs (plus the hassle) of getting the property resold. In short, I want everyone to recognize reputable lenders are in the money-lending business not in the home-ownership business. Reputable lenders don’t want you to take on a monthly payment beyond what you can afford.
You and your lender will analyze your finances. Lenders will ask you to submit an application detailing your income, assets and debts. They will educate you on financing options and figure out how much you can borrow and the type of mortgage loan that will work best for you.
Once the application is submitted an underwriter makes sure all information checks out, and then determines how much the institution is willing to lend you. Underwriting usually takes a few days but with today’s computerized underwriting some applications can be approved the same day.
Six steps to financing a home:
1. Select a mortgage specialist
2. Make a loan application and get approved for a specific amount
3. Determine what you want to pay and select a loan option
4. Submit to the lender an accepted purchase agreement
5. Get an appraisal and title commitment
6. Obtain funding for title transfer
Every home buyer should remember lenders determine what you can borrow BUT ONLY YOU can decide what you can afford. Understanding the three basic parts of a mortgage loan—down payment, interest rate and terms—will help you choose the best mortgage loan for YOU!
Leading The Way Home,