What Is a Mortgage? Home Loan Basics for Beginners
- Written by NewsServices.com
Owning a home is probably many people’s dream. For most Brisbane homeowners, getting a mortgage is the stepping stone to accomplishing such a dream. If you are one of those who are contemplating home ownership but clueless on how to get started, it’s best to learn about mortgage basics.
Choosing or planning for your future home must be an exciting pursuit, but thinking about the financial terminologies and complexities associated with this might seem overwhelming and intimidating. Learning and understanding the entire mortgage process can help a lot, especially for beginners. This is particularly true if you lack knowledge about mortgages in the first place.
What’s a Mortgage Anyway?
A mortgage, also called a mortgage loan, refers to an agreement between a borrower and a mortgage lender to refinance or purchase a home without paying the full price upfront. Such an agreement gives the lender legal rights to repossess the property once the mortgage terms are not met.
The borrower agrees to pay the mortgage lender over time, often in scheduled payments. The regular payments are usually divided into principal and interest. The real estate properties serve as the collateral to secure the loan.
Mortgage vs Loan
A loan is described as any financial transaction wherein one party gets a lump sum and agrees to pay the amount loaned back. On the other hand, a mortgage is a loan mainly used to finance properties. Here, the borrower promises the lender a collateral in case the former fails to make payments.
One of the significant differences between other loans and a mortgage lies in the failure to pay..In a mortgage, the home is usually the collateral. If the borrower stops paying his mortgage, the lender can then take possession of his house. This process is called foreclosure. Contrary to what happens if you fail to make credit card payments, you don’t really have to return the items you purchase using your card. Instead, you need to pay late fees.
How Do You Qualify for a Mortgage?
To successfully qualify for a mortgage, you should meet the minimum requirements for the home loan you are applying for. Know that different mortgages have varied requirements such as initial down payments, credit score, etc.
For any mortgage, the borrower should qualify for a credit score. Borrowers also need to verify their debts and income. The lender would surely want to check and verify your savings, employment history, and other important financial details that might affect your ability to pay off the home loan.
If you’re planning to purchase a property or refinance your existing loan, you need to start right by comparing home loans. The best mortgage broker Brisbane has a proven record in mentoring and guiding clients through the loan process. With the help of a professional mortgage broker like McIntyre Finance Mortgage Broker Brisbane, Unit B/106 Robinson Rd E, Virginia QLD 4014, 1800 951 112, you will be able to determine the best financial solution.