A mortgage is a type of loanthat is utilized by an individual interested in obtaining property whose value exceeds the financial means possessed.Subsequent to the receipt of a mortgager, the individual is indebted to a mortgage lender, which is the institution that provides a mortgage loan.
Associated Mortgage Finances and Fees
In addition to the receipt of a mortgage, there exist additional fees and financial restitution that accompanies a mortgage loan.
• Interest accrued from the initial loan
• Penalties for failure to make payments on a mortgage loan
• Collateral in the form of the property being occupied by the individual in receipt of the loan; the mortgage lender holds the property as collateral in order to guarantee satisfaction of the mortgage loan
Decorum of Mortgage
Upon the property being held as collateral in a mortgage loan, the individual who has received the mortgage loan continues to occupy the property as though they are the sole owners. Although there are a number of types of mortgages, the role of the property as collateral is simply a means to guarantee payment.
Annual Percentage Rate (APR)
The most attractive mortgages are not always considered to be the cheapest upon advertised price due to the fact that hidden fees and added stipulations exist. The standard in protocol with respect to the APR mortgages allow for the individual togauge the value of a given mortgage. Although all prices, fees, and costs must be included within a mortgage advertisements, the APR rate is a factor of a mortgage about which should be expressly inquired.
Private Mortgage Insurance (PMI)
Private Mortgage Insurance is a necessity for individuals who do not possess a sufficient amount of equity to receive a mortgage loan. Oftentimes, lenders will require that borrowers obtain Personal Mortgage Insurance in order to guarantee satisfaction of the mortgage loan. Upon the expiration of Personal Mortgage Insurance, the mortgage lender can both forecloseon the property, as well as the loan itself.
Refinancing a Mortgage
Upon refinancing, a borrower can extend the length of the mortgage in exchange for receiving lowered payments; furthermore, cash advances can be gained against the refinancing effort – and as a result – many individuals use this as an opportunity to make improvements to the home.
Choosing a Mortgage
Mortgage payments are suggested to fall below 28% of the total earned income of the borrower(s). Prior to receiving approval for a mortgage, an individual’s finances will be evaluated, which includes all debt, income, alternate loans, and credit scores.
The types of mortgages vary as well, which include fixed-rate mortgages, variable mortgages, short term mortgages, or long term mortgages. The parameters and protocols surrounding both the application and approval process of a mortgage vary on an individual basis and in conjunction with the borrower’s respective state of affairs; all financial forms should be completed to the fullest extent in a meticulous fashion.
In the event that an individual experiences difficulty completing – or understanding – the requirements of a mortgage, they are encouraged to consult an attorney specializing in real estate, property, finance, and contracts.