The Basics of Mortgage and Types of Mortgage
The dream to own a home that has the most families is very much dependent on the approval of a loan. Without this option, to purchase a home would have been unrealistic for most buyers. Although each case is different and you have to evaluate each loan application independently. Some basic criteria must be met for approval of a loan, which include:
Credit rating: This is an important critical because through it will determine what has been your pattern of payments in relation to their debts, and the amount of money you owe and to whom. This will help to make a projection on how to pay your debts greater in the future, such as the mortgage. Ideally, your obligations are paid on time. Unfortunately, the reality is different and in many cases where people have had in the past, family or financial problems such as divorce, unemployment or illness, your payments have been affected.
The best way to work with it is to face it and accept it (there is no way to hide it), and present evidence to justify the delays in your payments. If the evidence is overwhelming and the time of filing your request promptly show you are fulfilling your commitments for a reasonable time, most mortgage banks might approve you, even when you have perfect credit.
Employment history: You must be employed or show that you have a stable fixed income to qualify for the loan. If self-employed, you should show that you have income stability and documents to support it, such documents include financial statements, bank accounts and income tax returns. Your job will be considered wages, working time you have and the type of work, if full-time permanent employees, not temporary.
Money available: 100% housing loans of the purchase value are not much common these days, but sometimes a number of new financial institutions offer 100% of the loan amount under certain mortgage programs. However, usually it is important that as a buyer, you should have money to pay for closing costs and additional costs.
The documents you need to apply for a loan are your official state personal identification where you reside, your income tax returns, (usually those of the last two years), receipts or pay stubs, and bank statements where you have the deposited money you will use to purchase.
Popular Types of Mortgage Loan Programs
Fixed-Rate Mortgage Types
This holds the utmost importance among all. Today the buyers have the options to choose from 5 years, 10 years, 15 years, 20 years, 30 years, 40 years and even 50 years fixed-rate mortgages, all of which are completely amortized.
Federal Housing Administration (FHA) Loans
This type of loan is ideal for the first-time homebuyers because of minimal amount of down payment required.
Fixed Period Mortgages
Also known as Hybrid Adjustable Rate Mortgage (ARM), such mortgages are adjustable mortgages, offering stability when it comes to fixed interest rate. After the expiry of fixed rate term, the interest rate is adjusted once a year for the entire term.
Construction Mortgages
If you are building an existing home and not buying it, you are eligible for this type of mortgage. Construction Mortgage involves a two-step process, where the first step covers the construction duration and at that time, you will be able to draw money to pay the developer and pay the applicable interest on the outstanding amount. Later on, you will go through a second closing and then the loan converts to a long term fixed rate mortgage.
Author Bio: Rashmi Karan is a writer and illustrator. Her areas of interest are the area and city specific real estate scenario of the Indian cities. Her articles about the real estate offer exhaustive information on the related topics.
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Category: Mortgage
