Applying for Mortgages: A Few Basics You Need to Know

Applying for Mortgages: A Few Basics You Need to Know

Applying for mortgage can be one among the most important financial decisions for most people. A mortgage can highly affect your financial position because it involves a generous amount that you are required to pay for a particular time duration.

The mortgage lender gives the borrower an amount equal to around 80% of the security’s value. The borrower needs to pay the loan amount over a period with the required interest. If the borrower fails to pay his repayment, the lender can take the property by following a legal process called foreclosure.

Before applying for mortgage, it is very important to be familiar with each type of fixed rate mortgages and adjustable rate mortgages. A fixed rate mortgage is a loan that has fixed interest rate until it is completely paid off. Fixed rate mortgages are the most common mortgages in the market.

A mortgage lender will always check your employment and credit history that will help them in determining your capability to pay your mortgage. Alike other credits, applying for a mortgage requires a review of your credit reports from the three major credit reporting bureaus – TransUnion, Equifax, and Experian. The information on these reporting bureaus should be accurate and any wrong information on any of these should be immediately rectified as they can affect your credit score.