What is a Mortgage?
A mortgage is a loan that is acquired with property as security and collateral in case of default in payment. A mortgage buy is the processes of acquisition of a mortgage loan. The traditional mortgage seller has been banks, you can apply for Mortgages buy at your local bank, or you can compare the interest rates with other and seek your best alternative.
Step 1
If you are busy and lack time, you can employ the services of a mortgage broker to do the mortgages buy job for you. Banks are not the only source of Mortgages; there are alternatives such as buying mortgages from government agencies, pension funds and credit institutions.
Step 2
Types of Mortgages to buy
There are two Mortgages Buy options; there is the Adjustable Rate Mortgages and the Fixed Rate Mortgages. The Adjustable Rate Mortgages, as from its name, it has a varying interest rate that changes as per the market conditions. There is a six months, one year, and two year ARM.
Step 3
The best option is the one year interest change because it gives time for stability and market comprehension. The other Mortgages buy option is the Fixed Rate Mortgages or simply FRMs. As the name suggests, this type of Mortgages usually have a fixed interest rate. This means that the interest rate and the amount of payment paid will be constant for the whole Mortgage repayment period.
Step 4
Calculating and determining the costs of a Mortgages buy
The most complex part of mortgages is calculation of costs and interests. There are very many mortgages buy options out there, but the comparison process is usually very long and tedious thanks to the many calculations involved. This is what makes customers be very reluctant in searching for other Mortgages buy options. The Annual Percentage Rate APR, a very common word, it is used in determining the costs of various Mortgages .
Step 5
Lets use an example to illustrate how APR works. There are two lenders; one is offering a 30 year FRM at 7 percent with a single point. The latter is offering a similar deal but with no points. To find APR, you determine the monthly interest that would equate to your preferred monthly payment to the preferred loan. In this case the second lender is the best if, you use APR.
Steps in Mortgages buy process
After meeting up with your lender, the first thing to do is to have an agreement for your Mortgages buy set principle. Next is to choose a mortgages buy solicitor who will do all the legal paperwork for you. Make a full mortgage buying application. To get a loan, your credit score is usually scrutinized, thus make a list of possible referee alongside your credit and bank details.
After these there is valuation of the property, and if the lender is happy with the valuation and reference, you are awarded the Mortgage loan. Always remember to do your own property survey when seeking to make a mortgages buy, this is helpful because they might down value your property.
