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2011-12-22 22:52:35

Buyers Want the 411 on Mortgage Loans

You’ve decided to hang up the “renting” towel and buy a home.  Congratulations!  Instead of paying rent, you’ll now be responsible for a mortgage. What’s that?


Simply, it’s a loan. You’ll obtain it by your lender to purchase the real estate.  It’s a lien on the property you’re purchasing that will secure a promissory note, or a promise to repay the debt, that states the loan terms, including interest rate and number of payments until payoff.


Today’s most common mortgages are those with fixed interest rates and monthly payments and those where interest rates and/or payments are adjustable.  The fixed rate and fixed payment loans are more traditional and are the most popular.  Benefits of this type of mortgage are obviously that you’ll always know what your monthly payment will be, so your basic housing cost will continue to be unaffected by interest rate changes until you pay off the mortgage.  On the other hand, mortgages with flexible interest rates are more popular in times of rapidly rising home prices and interest rates. The benefits of many of these types of mortgages are that they will offer lower initial interest rates, which gives the buyer some affordability that they wouldn’t have in fixed-rate loans. However, later on they may experience higher interest rates and higher monthly payments.  A careful consideration of both types of mortgage loans is important in deciding which is right for you.


What should you be prepared with when applying for a mortgage?  Come prepared to your appointment with the name and social security number of each applicant. The lender will also need your current address and a phone number to reach you at.  You’ll need to have proof of your monthly income – this includes any child support or alimony that you receive.  You’ll also need to provide your lender with employment information for each applicant: how long you’ve been employed with the company, the employer’s address and phone number.


Going through this important process, you’ll need to find a lender who’s right for you.  Why is that so important? This process is more than just a one time deal that happens when you close on your home.  Your lender is someone you’ll need to know you can depend on to fund the loan as promised and on time, someone who will keep accurate records of your payments, who if you have a tax & insurance escrow account with, you know will pay those bills on time, etc.  If you’re working with a real estate agent, ask him or her for some advice about lenders’ reputations, procedures, and any unique programs or benefits offered with them. If you’re not using a real estate agent, call around to some difference lenders and interview them yourself to find out who would be the best fit for you.


Buying a home is a big step in a person’s life!  Make sure you do your research when it comes to all aspects of the process, including when it comes to choosing your mortgage and lender! You’ll need to make sure it’s a mortgage you can live with and a lender you can trust!

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