A mortgage is essentially a loan, usually given by a bank, to provide individuals and families with funding to secure housing. Mortgages fall into the larger category of financial loans, but are specifically designed for real estate. Mortgages contain several different components, which include collateral, principal, taxes and insurance.Know More
Mortgages vary in amount and have different payment options. Most mortgages operate on 15 to 30 year time periods, and allow borrowers to make repayments typically on a monthly basis. The amount of time allotted for repayment varies depending on the size of the mortgage and the lender, and typically requires repayment of the original amount of money loaned and an additional interest fee.
Mortgages are typically established during contracts when homeowners purchase new homes. As with the new home, buyers sign a legal contract upon securing a mortgage, which acknowledges that they understand to the terms of the loan and will make repayments as indicated. This legal promise, which includes repayment of the loan and all additional fees, uses the new home as a collateral for the loan. Upon signing a contract, owners agree to repay the original loan amount, called the principal, and interest, which is calculated in a percentage, and is called the interest rate. Most lenders penalize for late payments using a system of points, and may even foreclose on a home.Learn more about Credit & Lending
A jumbo mortgage is any home loan that exceeds the current conforming financing limits set forth by Fannie Mae or Freddie Mac, according to Bankrate. The current conforming loan amount across most of the United States is $417,000 as of 2015, explains Fannie Mae.Full Answer >
Banks and mortgage lenders do offer financing for consumers who declared bankruptcy at some point in the past, according to Mortgage101.com. Typically, banks require that consumers wait four years after filing for bankruptcy.Full Answer >
Mortgage lenders use principal, interest, taxes and insurance (PITI) in a mortgage loan formula according to Investopedia, an investment education service. Additionally, financial services use credit scores, household income and property values to determine eligibility for mortgage loans.Full Answer >
To obtain a mortgage loan, locate a loan lender, complete an application and provide the lender with necessary documentation. After reviewing and accepting your application, an interest rate and final loan amount is offered.Full Answer >