COMMON TERM YOU MUST HAVE IN MIND WHEN SEEKING REAL ESTATE MORTGAGE FINANCING:
- Fixed Rate Mortgage – This is where interest never changes to the loan term.
- Adjustable Rate Mortgage (ARM) – Here, interest can change in different ways.
- Loan Amortization – Installment plan
THE MORTGASGE AGREEMENT
Lenders lay out their terms in detailed legal language in the mortgage agreement. When you the borrower, signs the agreement, you’re promising to pay the loan.
Four Basic Areas are covered in the Agreement:
The amount you borrow is called is called the PRINCIPAL. Usually, home buyers borrow the difference between the down payment and sale price.
THE COST OF THE LOAN
The mortgage agreement will specify the
a. Interest rate
b. The total amount you will pay
A few factors go into how a loan is repaid
Length of time: Is it fifteen, twenty, or thirty year loan?
Frequency of Payment: You repay the loan in installments. Are you making payment once a month or twice a month?
FAILURE TO REPAY
If you fail to keep your end of the bargain and default on your loan the lender may force you to repay the full amount immediately or the lender may sell your home. Laws vary from state to state, but in general you’re considered to have defaulted on a loan if you:
a. Are often over thirty days late with payments
b. Don’t maintain your house, causing the property value to drop
Lenders don’t want to force you out of your house or be stuck trying to get back their money by selling (foreclose on) your house.
Financing your home is a method of paying your for home with a lender’s money. Because of the amount of money involves in buying a home, only a very few people can afford to buy and pay cash for the whole amount. For the greater percentage of us who cannot afford to pay complete cash, and still want our own home, we have to go into financing. Unfortunately, financing cost money, because you do not have a complete cash to buy, lenders, or banks will pay for us, thereby creating an arrangement on how we can pay them back, but they charge us more than they loaned us in form of interest. As we all know that Lenders or banks are in the business of making money.
PLEASE CONTACT ACTION A1 REAL ESTATE FOR AN INITIAL CONSULTATION
MAKE YOUR DREAMS A REALITY (661) 670-1400
Lenders or banks believe they are taking risk by loaning the money. And the bigger the risk the higher the interest they are going to charge. That is one of the reasons they have different programs and terms.
This financing is done in different programs. And these programs are created by the lenders to help buyers own their own home.
This is where agents working with you can help you to select a suitable one for you based on your situation. This is also where an agent who knows different government programs available to a buyer can help.
Our agents are properly trained to guide you with step by step to get favorable financing terms for your homes if you already don’t have a lender or even if you have a lender. We do encourage you to get a preapproval first. Pre-approval will enable you to get an estimate of how much loan you can get and how much house you can afford.