First time home buyers seem to have an unending list of questions. One of the most common questions that they have is about mortgages. Some wonder about how the mortgage works while others ponder the thought of the terms of the mortgage. Mortgages seem to scare some people because of the importance that it carries.
Mortgages are no more than loans that a bank or lending center gives to a potential homeowner so they can have the money to purchase the home from the builder or previous owner. A mortgage can also be set to include an escrow account which is used to pay the taxes on the property and any insurance that the homeowner has on the property.
Different types of mortgage explained
With any loan there is an application process that the applicant has to go through in order to be able to borrow the money. The mortgage process starts off by the buyer going to a bank and applying for a home loan. They usually fill out an application and submit it to the loan officer.
The application is reviewed by the bank to determine eligibility. The bank underwriter will look at things like income, bank accounts, assets and stability in the work place. Once the loan has been approved by the underwriter the bank will go on to loan the money to the person so they can buy the home. A typical mortgage is for 30 years with a set interest rate that is agreed upon by the applicant and the bank.
A mortgage gives a person the power to buy a home that they would otherwise not be able to buy. Mortgages can be tailored in many ways to the needs and demands of the person borrowing the money. As times changes there are bound to be new ways of tailoring mortgages to the borrower.