Prospective homeowners should explore their options prior to signing on the dotted line of a mortgage agreement. Probably the most critical thing to know and understand when acquiring a home loan is to know what the various terms mean. This can be accomplished easily by asking a lot of questions and asking your realtor to explain everything to you. Plus, some online browsing can turn up the answers to most of the questions that you might have.
It is important to look at the different types of home loans that are available and to understand the differences among them. From a fixed rate to an adjustable rate to an interest only to a balloon mortgage, the choices are many and the differences among them are very large. If you do not understand what a particular type of loan means in terms of monthly payments as well as the duration of the payments, then you should not be signing on the dotted line.
Potential buyers should also understand the various terms or words that are employed when dealing with real estate. Some of these include points, closing fees, recording fee, escrow account, and origination fee.
If the loan that you are getting is a first time loan, then it is the primary loan and the primary lienholder. This means that the lender of this specific loan holds the first claim against the property for repayment of the loan holders debt.
Home loans can be obtained at banks, savings and loans, credit unions, and financial lenders. Each lender assesses their own schedule of fees, offers their own range of interest rates, and their own selection of loan packages.
In order to qualify for a home loan, potential borrowers will need to go through a pre-qualification screening. During this stage, each borrower is expected to bring a number of financial documents to verify their information. Once they pass that stage, they will continue with the application process. Additional paperwork is completed and processed.
In order to receive approval for a home loan, the potential borrower needs to provide the following pieces of information: terms of employment, income level, level of debt, age of the applicants, and the type of home that is the intended object of purchase. Plus, the current interest rate and the size of the down payment can all influence whether or not the potential borrower is approved for the loan. The appraised value of the home will also come into play as well.
When buying a home, it is important not to bite off more than you can chew. If a homeowner fails to pay on his home loan, the lender can repossess the home and the homeowner is left with nothing, except maybe bad credit.
Zulika van Heerden is an expert on mortgage financing and provides free information on her site for homeowners. To read more tips and techniques like the ones in this article go to: http://www.globalproperty.co.za