Mortgage means loan against property or loan to buy property. Creditors provide loan against collateral/ property and the ownership is transferred to them and the borrower cannot sell that property until the loan is paid off, however, the possession lies with the borrower and he/ she can use that. It is secured loan because if a borrower fails to repay the loan the creditor can sell the property to recover the money.
Type Of Mortgage
Fixed Rate Mortgage(FRM)
A fixed-rate mortgage (FRM), often referred to as a “vanilla wafer” mortgage loan, is a fully amortizing mortgage loan where the interest rate remains the same through the term of the loan, as opposed to loans where the interest rate may adjust or “float”. As a result, payment amounts and the duration of the loan are fixed and the person who is responsible for paying back the loan benefits from a consistent, single payment and the ability to plan a budget based on this fixed cost.
A variable-rate mortgage, adjustable-rate mortgage (ARM), or tracker mortgage is a loan with the interest rate on the periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets. The loan may be offered at the lender’s standard variable rate/base rate.
“Pre-qualification” occurs before the loan process actually begins, and is usually the first step after initial contact is made. In a pre-qualification, your Mortgage Lender gathers information about the income and debts of the borrower and makes a financial determination about how much house you may be able to afford. Different loan programs may lead to different values, depending on whether you are qualified for them, so be sure to get a pre-qualification for each type of program you are suited for.
This usually occurs between 1st and 5th day of the loan.
You, the buyer, now referred to as a “borrower”, complete a mortgage application with a loan officer and supply all of the required documentation for processing.
Various fees and down payments are discussed at this time and the borrower will receive a Good Faith Estimate (GFE) and a Truth-In-Lending statement (TIL) within three days which itemizes the rates and associated costs for obtaining the loan.