REAL ESTATE MORTGAGE LOANS.
Real estate is defined as property consisting of land and buildings; also inclusive of the natural surroundings, that is, crops trees and water bodies. This may also include the business of building and selling of homes or buildings and also renting out the buildings.
The hugest challenge many people planning to invest in real estate business is their financial capability of achieving their goal which is, completing their desired homes in the best and most competent way. A home is the most expensive necessity people purchase and it requires legal intervention. We will get to discuss what one needs to qualify for a mortgage, what rights one has and what type of mortgages are best for potential home and real estate owners.
One of the most basic things in purchasing or building a home is figuring out how you will afford it. A mortgage loan is an agreement where one borrows money to build a house. It is a pledge and failure to repay the loan one is forced to give up the house. Several factors should be considered when opting to pledge for a mortgage loan: the most suitable mortgage loan to acquire, getting to know the mortgage rates available in your area and finally determining if you qualify for the loan (Bridges, 1997).
Types of mortgage loans:
- The fixed interest mortgage, this is a mortgage loan that has a constant interest rate throughout the loan term; however they are considered to take less years to pay a period of 10, 15 to 30 years which is the most common period.
- Adjustable rate mortgage, this is a mortgage loan with a dynamic interest rate that changes every year.
- Interest only loan, as the name suggest this is a type of loan whereby one is only required to pay the interest, it takes a longer period of time and during the first year, the interest rate is fixed and later on rises significantly.
Acquiring mortgage
Based on the information about the various types of loans, one is now required to know if they qualify for the loan or not. Matters such as, if one can afford the loan and be able to repay it and whether one can become prequalified are issues people need to look into. The main qualification for a mortgage loan are the ability to repay it, the best way to determine if you qualify to get the loan is basing the amount on the amount of income you earn per month since the mortgage is paid monthly. When qualifying for a mortgage, the lender company will first check your credit score and the higher the score the more the chances of qualifying. The credit score reflects on outstanding debts and one’s history of payment of debts; if the number of outstanding debts is high, the lower the score. Once you have established the size of your loan the company provides you with a prequalified letter that shows that you are likely to be approved. The final stage is a pre-approved letter that indicates the lender’s affirmation to give you a loan.
Investors and mortgage
Potential land property owners and real estate investors have rights that guide and protect them as they are shopping for a loan. They have they have the right to shop for the best loan and compare the charges on interest. The right to know the total cost of the loan inclusive of the interest, principle and other fees and also the right to know what you are required to have so as to qualify for a loan. Getting to know one’s rights is very essential to prevent future problems and misunderstandings.
Several scams such as, credit misrepresentation and lying about one’s income are some of the fraudulent current trends in the world today. Having full information on the rights, qualifications and the types of mortgages assist real estate and home potential owners in acquiring mortgages; and enabling them achieve their desired homes best way possible.
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