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You, the borrower, may have the desire of getting a home of your own, but lack of finance may prevent you from fulfilling your dream. This is where proper knowledge on the basics of mortgage can help you a lot. It provides a financing option that can make your dream come true. Proper information on mortgage can help you get the best deal.




What is a mortgage?

Mortgage is a legal process through which you take out a loan for the purchase of residential or commercial property from a bank or a financial institution, also known as the lender. The same residential or commercial property is kept as the security for the loan that you have taken out.
Anyways, if you take out a mortgage loan, you have to repay it. Mortgage lenders are concerned with your financial ability to repay the loan. In order to judge your creditworthiness, they take into consideration the following things -
  • Credit score
  • Your monthly gross income
  • The down payment amount
  • Assets


Repayment of the loan

In order to repay the loan, you have to make monthly mortgage payments. The monthly mortgage payments include the following:
  • The loan principal is the amount that you borrow in order to purchase a property.
  • The interest that you pay for taking the loan. The interest payment depends on the mortgage rate which fluctuates with changes in the economy.
  • Escrow payments including property taxes and insurances to prevent losses against fire, theft, and disasters.
  • PMI (Private mortgage insurance) premiums which you require to pay along with monthly instalments in case you have made a down payment of less than 20% of the sale price or home value, whichever is less.

This amount is determined on the basis of the mortgage rate of interest. The interest rate charged on your loan depends upon your credit score, discount points and down payment. Getting a lower rate is also possible if you can pay a part of the loan amount as prepaid interest or points. You may get a loan at fixed rates, variable or adjustable rates or a combination of both the rates. Have a look at fixed rate mortgages (FRMs) and adjustable rate mortgages (ARMs).


FRMs

Mortgage rate in case of FRMs is fixed. The borrower has to pay fixed monthly mortgage amount to the lender under this agreement. In other words, the mortgage payment remains same throughout the term of the loan.


ARMs

Mortgage rate in case of ARMs varies with the change in the market rate of interest. So, the monthly mortgage amount that the borrower pays to the lender also varies under this agreement. Here, the mortgage amount varies over the term of the loan.


How mortgage loan process works?

The loan application that you have submitted goes through a process of review before the lender gives his or her approval. The lender appoints a person, who is known as underwriter, to judge your creditworthiness. The mortgage underwriter verifies your loan application and gives green or red signal to the lender. After the lender approves the mortgage, he/she decides upon the date of closing. The closing involves the signing of legal documents including a mortgage note which obligates you to repay the loan on time.
At closing, the lender requires you to pay the costs of originating and processing the loan. You will also have to deposit property taxes and insurance premiums into an escrow account which ensures that these payments will be paid on time. The remaining part of the taxes and insurances are paid along with the monthly mortgage payments in order to protect the lender from tax liens and uninsured losses.
To sum up, mortgage loan helps you in fulfilling your dream of owning a home. The loan however has to be paid off within a specified time period known as the loan term that varies from 10 to 50 years. Again, while you are repaying the mortgage, the title of ownership of the property still remains with you. But if you fail to pay off the outstanding balance, the lien created in the mortgage allows the lender to take away your home. He or she gets the right to sell off the property in order to get back the loan balance. You may apply for a mortgage with a bank, a credit union or a broker, depending upon your requirements. But you should have detailed information about mortgages and you need to shop around for the best loan package, that is, which offers a reasonable rate and does not require extra charges in the form of hidden fees.


Tips for a first time home buyer

Buying a home, especially for a first time home buyer, is indeed a very challenging task. Chances are there that out of excitement to own your dream home, you may commit mistakes. Here we briefly discuss about some important things that you need to consider before taking out a mortgage loan.


Type of home

First of all, you need to fix up your mind regarding the type of home that you want to buy. It may be a traditional home, a condominium, a single-family house or a multi-family house.


Amount of mortgage loan

You need to know the approximate amount of mortgage loan that you will qualify for. This will help you a lot to make the right purchase.


Your affordability

You will have to repay the mortgage loan that you take out. Make sure that the mortgage loan that you have taken out is well within your affordability.


Costs of a mortgage

Apart from the monthly mortgage payment amount, a mortgage loan may also include various other costs such as closing costs, taxes, loan processing fees etc. You should have perfect knowledge about all the costs associated in a mortgage loan.
All these considerations will surely help you a lot to make the right mortgage purchase.
Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

iiiI am Canadian. Do you offer land loans for the State of Hawaii. And if so, what is the minimum down payment requirment and maximum loan amount you allow?

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Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Renee,

Welcome to MortgageFit Forums.

We will try to help your requirements with our strong network. It will enable us to serve you in a better way if you give us some required details.

Have you got citizenship in U.S.? There is some other information which you are required to provide so that the down payment and maximum loan amount can be determined.

We would like to know about your income, assets, credit history and your credit score.

Also you need to give some more details on the property that you intend to buy. If you face any problem in disclosing these you may leave your e-mail address or your phone no. so that you con be contacted for discussion.

We will feel happy if we can help you and your queries.

God bless you.

For MortgageFit,
Samantha

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My husband will be getting payment for half the equity in the house. I'd like to pay it by using equity in the house. His name will be removed from the deed. Then, I would like to [url=http://www.mortgagefit.com/refinance.html]refinance[/url] the principal balance to a 30 year term which would include the equity I borrowed. Does this require a whole new mortgage, is it a refinance, is it a [url=http://www.mortgagefit.com/home-equity.html]home equity loan[/url], or some combination of those (or is it not even possible to do this?) What other options are available? Thanks!

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blue's picture
blue | Joined: October 21, 2005 09:17 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi,

You may combine an existing first mortgage with a home equity loan. If the combined, refinanced loan is more than 80% of the home's value, then you need to pay PMI.

Regards,
Blue

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi,

I think refinancing will do in this case. Through refinance you can consolidate your debt by combining a home equity loan with you original mortgage and have one manageble payment.

James

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Some lenders do offer a combination financing which combines a first mortgage with home equity loan.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i'm refinancing through a broker & it's taking longer than i thought. shouldn't buying a house & refinancing one, be weighed the same? thanks

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Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi,

Welcome to MortgageFit Forums.

I can understand your situation. Sometimes borrowers do suffer due to the unprofessional attitude of some lenders.

Normally it takes two to four weeks in refinancing but it depends on a few things like -

  • Time taken for the appraisal to be completed.
  • How much time you took to provide all the required paperwork.

Usually it is the appraisal process which takes the longest time to complete. If you have provided all the necessary paperwork, then there is no reason why they are late on the matter.

Did you ask them if there is any specific reason behind this or are they reluctant on the issue?

If you are perfect from side and the problem is solely from their side, then you can check with other lenders/brokers in your area. Before do a little follow up with the present one and see if that works.

Otherwise there are plenty of them in this competitive market to help you.

God bless you.

For MortgageFit,
Samantha

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I recently have begun employment with a mortgage company. I need to find out all I can about the workings of the mortgage office so I can move to a better position like processor, loan officer, underwriter, closer. Where can I access this information online? I am a receptionist and need to learn the "lingo" for the mortgage business.

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Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Tricia,

Welcome to MortgageFit Forums.

Your post has been answered here. You can get back in this page if have any more queries.

God bless you.

For MortgageFit,
Samantha

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

what is meant by mortgage?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome pradheebha

Mortgage is a legal process by which one can get a loan which is secured by his home.

You will get to know in detail about mortgage from the very first post in this thread. Just go through Sam's post given above.

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stellamiller32's picture
stellamiller32 | Joined: August 29, 2007 02:13 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I took out a loan to purchase a lot in 2006. The lot price was $42,000. I put down $35,000. I borrow $7,000 to purchase it. It pay off now and I'm building my dream home. The problem I having now the bank report the the $7,000 loan as a mortgage. Is a lot loan the same as a mortgage?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello.

You get the loan against the property. Thts's why the the bank is calling it mortgage. But what's the problem with that? You have already paid it off. So that should not be an issue here.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

what are the things to look out for in a morgage valuation process

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi prince!

Welcome to Forums!

Mortgage Valuation Process is a basic form of survey which is required by lenders in order to determine the appropriateness of the property as security for their loan. Though the borrower will get a copy of this report it should not be relied upon as a comprehensive report on the situation of the property. Borrowers should ask for a detailed report - Home Buyers Report or Structural Survey. Always remember that the surveyor is not acting on your behalf, he is working for the lender.

Feel free to ask if you have further queries.

Sussane

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gunz.ijjistaff | Joined: April 7, 2009 02:40 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am new in this forum i recently know about this forum by my friend. I request to admin any thing i will going false. Please adjust me.

Thanks

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gunz.ijjistaff's picture
gunz.ijjistaff | Joined: April 7, 2009 02:40 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Are This Forum is really pay for our discussion, If yes

How Can I Cash out My Earned Money ?

What is The Minimum Payout , Please Help me ?

Thanks, I will hope you all of you will help me to know more about this amazing Forum. :D

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

me and my husband are wanting to purchase a new mobile home this will be our first home to buy. Is there some way we can get help with purchasing the home without a down payment or getting assistance with the down payment.

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Brandi,

You can contact your family and relatives to find out if someone can gift you money for the down payment. Apart from this, you can check out the given pages for further information:
"http://www.calhfa.ca.gov/homebuyer/programs/chdap.htm"
"http://www.fha.com/fha_programs.cfm"

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

1st - I currently have a score of 630, which has been going up because I have a credit repair company working on it… I hope to have a score of 670-700 by June, if not can I qualify for a loan of $150,00-180,00?? I have an annual income of $70,000.00, I really want to purchase a home in June /July.

2nd – If I apply for a loan and get denied will that mess up my credit?? :?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Alexis,

If you have a score of 700 or more, then you can qualify for a conventional loan. But if you have a low score, then you will have to go for a FHA loan. Applying for a loan and getting denied for it may have a small negative impact on your credit.

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gehez7741 | Joined: December 1, 2011 04:32 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

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gehez7741 | Joined: December 1, 2011 04:32 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

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