What’s your definition of a dream house? A cape cod or a ranch? A good mortgage plan can get you the dream house you have always wanted. All you have to do is make your choice.
But before you get into one, you should have full knowledge of what it is and what it entails. So, in this article, we have explained in simple terms what mortgaging is and why it is your best bet to getting your dream house.
Mortgage Loan: In Simple Words
A mortgage is a loan used to purchase a home or other piece of property.
Due to the high cost of the property, practically every home buyer requires long-term finance to acquire a home.
Mortgages usually have a fixed rate and are paid off over 15 or 30 years. Most people think of buying a house in terms of square footage or location, but knowing mortgages is crucial to getting a good deal.
In mortgaging, until the borrower repays the entire loan amount the lender maintains the asset as collateral.
How Does Mortgaging Work?
The steps involved in Mortgaging may look long but they are simple and direct. As long as you meet the criteria you are good to go. Some of the steps include:
Learn how much you are eligible to borrow
You’ll need to know how much you may borrow before applying for a mortgage. This will assist you to figure out what kind of property you can afford.
You can try out our Quik fund Mortgage calculator to get an estimate of the amount you can borrow. This is an effective way to determine what fits into your budget.
Choose the right type of loan
Another very important step is choosing the right type of loan. There are basically 5 types of mortgage loan you can choose from;
- Fixed-rate mortgage.
Fixed-rate mortgages maintain the same interest rate throughout the term of the loan, ensuring that your monthly mortgage payment remains consistent. 15-year, 20-year, and 30-year fixed loans are the most common.
- Adjustable-rate mortgage.
An adjustable-rate mortgage (ARM) is a type of mortgage loan that has a fluctuating interest rate.
An ARM’s starting interest rate is lower than a comparable fixed-rate loan’s market rate, and the rate gradually rises over time.
If the ARM is kept for a lengthy period of time, the interest rate will exceed that of a fixed-rate loan.
- Conventional mortgage.
This form of mortgage loan is not provided or guaranteed by the government. It is accessible through a private lender or is guaranteed by one.
- Government-insured mortgage.
In government-insured mortgages, the government guarantees the loan. The government does not directly issue mortgages or lend money to borrowers. A mortgage firm originates (or funds) the loan.
- Jumbo mortgage.
A jumbo loan usually referred to as a jumbo mortgage, is a type of financing that exceeds the Federal Housing Finance Agency’s lending limits (FHFA).
A jumbo loan, unlike a normal loan, cannot be acquired, insured, or securitized by Fannie Mae or Freddie Mac.
The Fixed-rate mortgage and Adjustment rate mortgage however are basically grouped based on the duration of the loan and its interest rate.
Make a loan request.
Once you have chosen the right type of loan, now you can make a loan request to buy your dream house.
Begin the loan application process.
At this stage, a mortgage application is required. When you apply for a mortgage to purchase real estate, you must submit a mortgage application to a lender.
The application is lengthy and includes details on the property being evaluated for purchase, as well as the borrower’s financial situation and employment history. The information in a mortgage application is used by lenders to determine whether or not to approve the loan.
Requirements for a mortgage loan application is
- Information about the borrower
- Financial information of the borrower
- Mortgage details
- Declaration of legal matters
- Agreement and acknowledgment
Terms You Should Know
- Down payment
A down payment is an amount of money paid by a buyer at the start of the purchasing process for a costly item or service. The down payment is only a part of the overall buying price, therefore the buyer will most likely need to borrow the rest.
- Principal
The principal refers to the amount you borrowed and must repay, while interest refers to the amount you have to pay back. Most borrowers’ total monthly payment to their mortgage company includes escrow accounts for things like homeowners insurance and taxes.
- Interest
Interest is a fee charged to a borrower for a loan taken out over a period of time.
Getting Your Dream House With Mortgaging
Now that you know what Mortgaging entails, it’s time to take that step. Try Mortgaging today. What’s a better way to spend money than on a property that would later be all yours.
At Quikfund mortgage company, we can help you have a stress-free purchase with a smooth loan application process. All you need is a 20% down payment of the home you are planning to buy and you are good to go.
We would deal with the rest. You can trust us.
