What You Need to Know About Mortgages
A mortgage is a tool by which a buyer can purchase a property at an affordable method. The buyer is the borrower who uses the lenders money to pay for the price of the property. The lender is then paid back by the buyer through amortization payments. Amortization payments include the principal amount that was borrowed plus interest as payment for borrowing the money. Amortization payments may also include other financial charges that form part of the loan such as processing fees and administrative fees. Mortgages are effective ways to ensure that property purchases are more affordable.
Lenders will do a background check and see how likely you can pay back the amount borrowed. Lenders will check your employment status, income, and even your credit scoring. Aside from these, the lenders will also evaluate your past or existing loans and other debts like outstanding balances on your credit card. These are some of the things that they will pay special attention to as they will try to evaluate how qualified you are to avail of a mortgage.
If you have an existing debt, it is much better to pay it off first before getting a mortgage application. This will only place more doubt by the lender for your capacity to pay the mortgage amortizations.
Employment and income stability is very important to the lender. This is one of the things that will help you qualify for a mortgage. If the lender identifies your source of income to be unstable, like being on commission basis, or hopping from one employer to another several times within a year, most probably your lender will hold back in granting you a loan.
Not all mortgages end up as completely paid. There are borrowers, who at some point, lose their way through mortgage payments and end up to foreclosure of the property. When a borrower opts for a mortgage, the lender puts a lien over the property being purchased and allows the lender to sell the property in case of payment defaults made by the borrower. Foreclosure is a standard process being followed in mortgages and it is used to protect the lender from default.