What Is A Mortgage?
A mortgage also known as a lien against a property or claim of a property is a legal agreement between creditors or banks and debtors. In this agreement, the bank or creditor gives the money to the debtors and takes the title of the property. The title is then returned to the borrower after paying off all money borrowed plus interest and any charges applied.
The title gives the bank or creditor the right to take the property in case the debtor fails to pay the money back.
Benefits of using mortgages?
With a mortgage, you can make a big purchase without paying everything at once. That is, you can put down a little bit of money and use the mortgage to cover the rest. This system gives many people a chance to own homes and other properties without exhausting their financial resources.
For home buyers, the mortgage will be considered as a lien against the home. The borrower will pay the pre-determined payment every month until the whole property is fully paid off.
Should the debtor fail to make payments? The lender will take the house and forecloses it to get their money.
Types of mortgages
There are many types of mortgages and can have a short or longer life span. The most popular ones are the 30 years fixed-rate mortgages and the 15 years fixed-rate mortgages. The benefit of having a fixed rate is to have a consistent payment for the duration of the mortgage. That is, your payment will stay the same no matter the market directions.
Final Words
If you are buying a house, you must do your homework. There are a ton of lenders out there and all of them will not be good for you. Get more as many quotes as possible and compare them.
Then select one that works well with your needs. Also, consider the long term issues. Know how your financial route will look like in the next 5 years at least. This will help you know what kind of house you need for your family.
Not sure if you are ready to buy a house? Follow this link find out why you may not be ready to buy a house yet.
Did you decide to buy a house? Follow this link to learn about mistakes you should not make when you are buying a house.
