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What Is A Mortgage

The Definition Of A Mortgage A mortgage is related to money that is lent to a borrower to purchase a property that is residential or commercial.  The money is borrowed from banks, pension funds, insurance providers, trusts, or credit unions. There are also others besides commercial lenders such as private individuals who also loan money for a mortgage.  Each month, the borrower must pay back the principal installment along with interest.  The lender has a lien against the property so this acts as security to ensure repayment. Once the mortgage is paid in full, the borrower owns the property eliminating the lender’s lien. If the mortgage loan is not repaid by the borrower, the lender has the right to repossess the property. When you first take out the mortgage, the monthly payment amount is calculated.  This figure includes the base amount per month and the interest to be paid each month based on the APR. This amount will vary based on how much is borrowed and the interest percentage, the number of years to pay back the loan. Amortization schedules are determined based on the borrower’s affordability.  At the end of the loan, you’ll wind up paying less if you have a mortgage with a shorter life. The typical span is 25 years but this may change during a refinance. They can be renewed and many people do this after a period of 5 years. Each installment for the repayment of the mortgage is equal each month or each payment. The typical method is monthly but there are some who pay each week or twice monthly.  When you pay a mortgage payment each month, you’ll also pay property taxes in the installment.  This amount is paid by the lender to the town or city your property is in. You will need to make this arrangement when you are in the mortgage negotiation stage. Most mortgages require borrowers to have a twenty percent down payment with a remaining balance of 80% of the cost determined by the appraisal. Having a lower down payment is called a high-ration mortgage in which the borrower has a down payment that is lower than the conventional twenty percent. You may need pre-approval if you are buying property for the first time. The lender will determine the amount you are eligible to borrow.  Getting this will ensure payback abilities of the buyer.  The process involves doing a credit check and the collection of information about the buyer such as debt, employment, marital status and owned assets.  You’ll also need info on dependants as well.  In the pre-approval, you’ll have your mortgage interest rate included and this can be locked in, usually for sixty to ninety days. Other methods of getting a mortgage including taking over the seller mortgage payments.  The term for this is “assuming an existing mortgage”. When this occurs, you will save on closing costs such as the lawyer fees and mortgage application fees.  The benefit is that you may possibly get a lower mortgage rate than what is available currently based on the current financial market conditions. A seller may also offer financing to the buyer for buying the property for sale. This is known as a “vendor take-back mortgage” and may get you a lower interest rate.
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© Mortgage Hub, All Rights Reserved
Mortgage Hub Mortgage Information

What Is A Mortgage

The Definition Of A Mortgage A mortgage is related to money that is lent to a borrower to purchase a property that is residential or commercial.  The money is borrowed from banks, pension funds, insurance providers, trusts, or credit unions. There are also others besides commercial lenders such as private individuals who also loan money for a mortgage.  Each month, the borrower must pay back the principal installment along with interest.  The lender has a lien against the property so this acts as security to ensure repayment. Once the mortgage is paid in full, the borrower owns the property eliminating the lender’s lien. If the mortgage loan is not repaid by the borrower, the lender has the right to repossess the property. When you first take out the mortgage, the monthly payment amount is calculated.  This figure includes the base amount per month and the interest to be paid each month based on the APR. This amount will vary based on how much is borrowed and the interest percentage, the number of years to pay back the loan. Amortization schedules are determined based on the borrower’s affordability.  At the end of the loan, you’ll wind up paying less if you have a mortgage with a shorter life. The typical span is 25 years but this may change during a refinance. They can be renewed and many people do this after a period of 5 years. Each installment for the repayment of the mortgage is equal each month or each payment. The typical method is monthly but there are some who pay each week or twice monthly.  When you pay a mortgage payment each month, you’ll also pay property taxes in the installment.  This amount is paid by the lender to the town or city your property is in. You will need to make this arrangement when you are in the mortgage negotiation stage. Most mortgages require borrowers to have a twenty percent down payment with a remaining balance of 80% of the cost determined by the appraisal. Having a lower down payment is called a high-ration mortgage in which the borrower has a down payment that is lower than the conventional twenty percent. You may need pre-approval if you are buying property for the first time. The lender will determine the amount you are eligible to borrow.  Getting this will ensure payback abilities of the buyer.  The process involves doing a credit check and the collection of information about the buyer such as debt, employment, marital status and owned assets.  You’ll also need info on dependants as well.  In the pre-approval, you’ll have your mortgage interest rate included and this can be locked in, usually for sixty to ninety days. Other methods of getting a mortgage including taking over the seller mortgage payments.  The term for this is “assuming an existing mortgage”. When this occurs, you will save on closing costs such as the lawyer fees and mortgage application fees.  The benefit is that you may possibly get a lower mortgage rate than what is available currently based on the current financial market conditions. A seller may also offer financing to the buyer for buying the property for sale. This is known as a “vendor take-back mortgage” and may get you a lower interest rate.