Buying a Residential Property

Learn about Mortgages


A mortgage, basically speaking, is a loan. When you set out to purchase a home, no one expects you to have, say, $500, 000 in cash. So that’s where a mortgage comes in: You borrow the extra money that you need to buy your chosen home, agreeing to pay it back in the coming years.

The huge debt a mortgage incurs can be seen as a burden. But its appeal lies in the fact that the mortgage helps you to buy an asset with the expectation that its value will increase over time, which adds to your financial portfolio, gives you a big tax break and, you know, finances a place for you to live.

Along with being expensive, a mortgage can also be complicated, so we’re breaking down the basics for you.

Mortgages in a Nutshell

Since homes are pricey, a mortgage is a lending system that allows you to pay a fraction of a home’s cost (called the down payment) upfront, while a bank or private lending institution loans you the rest of the money. You arrange to pay back that money, plus interest, over a set period of time (known as a term), which can be as long as 30 years. To make sure that you pay back the money you borrowed, you put your house up as collateral–so if you stop making payments, the bank can take the house away from you in a process called a foreclosure.

Why Researching a Mortgage Matters

Although you have a lot to gain from having a mortgage, it’s important to understand the various ins and outs. If you take out a mortgage that isn’t right for you, leading to foreclosure, you’ll not only have to move–and in general wait between three and seven years before you are allowed to purchase another home–but your credit score will also suffer, and you could be hit with a huge tax bill.

Ultimately, your choice of lender and the structure of the mortgage could save you (or cost you) thousands of dollars, so you need to understand the kind of research you need to do before taking out a mortgage. That’s where we come in.

How Do You Get a Mortgage?

The companies that supply you with the funds that you need are referred to as “lenders.” Lenders can be banks or mortgage brokers, who have access to both large banks and other loan lenders, like pension funds.

In 2012, the biggest lenders in the country included Wells Fargo, Chase and Bank of America. Many community banks or credit unions will make a loan to you initially, and then sell it to one of these larger institutions. You want to make sure that whoever you work with directly has a reputation for being reliable and efficient, because any delays or issues with closing on a sale will only cost you more money. Government loans are available through the Federal Housing Administration, but the availability of loans differs depending on where you live. If you think that you might qualify, you can view the requirements on the FHA website.



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FAQ


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When a mortgage loan originator changes companies how soon is that reflected in the NMLS consumer access website? - Quora

When a loan originator changes from one company to another, the LO completes a specific form and that form is filed with our federal regulator, the good folks that run the Nationwide Mortgage Licensing System:




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