Many people would like to own a home but they’re not able to because of financial limitations. The only cause of action they have is to look for mortgage from banks and other institutions. When you apply for a mortgage you’ll basically be dealing with an underwriter or a broker. Brokers don’t give loans but they utilize their relationships with lenders to get to the financing.
The broker will do a background check on you, including your credit ratings, verify your employment and income status, your residency over the past two years, and check how you handle your finances. Some mortgage providers do not require all the above but such loans are more expensive even though they are easy to obtain. Getting a pre-authorization from a lender can also speed up the process of getting the financing you need.
To get financing, you will need to put down a down payment. Most of them require up to 20% although it is possible to get 100% financing as long as you qualify for it.
The mortgage market is extremely competitive and that is why it is important that you shop around before you settle on one lender. You can work directly with your bank, but if they do not give you a good rate then you are free to shop around. The advantage of working with your bank is that they already have their records and it’ll make it easier for the loan-application process to go through.
It is important to remember that the underwriter or the broker will charge you a fee for their services and so you’ll need to factor this in when you’re planning your finances. The underwriter will traditionally work with his bank but brokers work with many lenders so they can give you better deals.
Most mortgages are fixed-rate mortgages while others are variable-rate loans. Fixed rate mortgages are not adjustable and are usually more costly in terms of the interest rates. Once you have the loan amount, a portion of the payment will go towards the principal amount thus decreasing the debt you owe. If the value of your home increases you’ll be building equity. Home equity loans give you the chance to apply for other loans because you can use the house as collateral allowing you to take a second mortgage. If you use the home to secure a loan, you will be able to get a lump sum which you can put towards the payment of the loan.
You can also use the home to apply for an equity line of credit which gives you access to a revolving account, allowing you to withdraw and repay the money over a specific time period.
Owning a home does not need to be a farfetched dream anymore, you can get a mortgage loan from a number of lenders, however, make sure you use the services or broker or an underwriter to negotiate best rates for you. Make sure that before you sign anything you fully understand the requirements and choose payment rates that you can comfortably afford to make so that you do not affect your credit ratings.