Buying a house is a cherished dream for most people. However, with fluctuating real estate prices and economic shifts, it is hard to make the investment out of savings alone. That’s exactly where mortgage comes in. What’s a mortgage? Can you apply for one? Find more details below.
Understand the basics
A mortgage, as the name suggests, is a loan for buying home/land/property. The same property serves as the collateral for the loan. Mortgage loans can run for about 15 to 30 years, depending on the arrangement with the concerned lender. Keeping up with repayments is important, because the lender can repossess the house via foreclosure. The number of foreclosure in every state is astonishing, which is why it is important the terms of lender before you apply for mortgage.
Factors that matter for approval
It is extremely pertinent that you compare the mortgage loan lenders and their terms. Just because a lender is approving your loan doesn’t always mean it’s the right thing do. Eventually, you need to decide if you can repay the loan. First and foremost, understand your credit score, and if anything can be done to improve the same. Repaying small dues and bills will have a positive effect in general. Secondly, evaluate your income and existing installments. For example, if you have a student loan or a car loan, the installment amount you can probably pay for mortgage will come down.
Finally, consider the paperwork needed and other charges involved. Apart from a processing fee, you may need mortgage insurance, especially when the down payment is less than 20%. Additionally, applicable taxes must be paid, and you may also need to hire a third-party service for house inspection. Do your homework, check the lending terms and be aware of all possible expenses before applying for a mortgage.