simple steps to prepare yourself for the loan application process

As a borrower, everyone likes to get the best deal and have the loan application process completed without any delay. If you can locate an efficient lender or broker then you may not come across any problem in your transaction. But you should be able to judge the services of the lender or broker. While you can avail the services of the best lender, it is also your responsibility to make the process smooth and fast from your end.

Mortgage Amortization

Mortgage amortization is essentially a loan repayment plan or schedule. It facilitates the removal of the debt burden of the borrower over a certain fixed period of time by making monthly/periodic payments. The payments made through regular, periodic installments comprise of the monthly interest (including accrued interest on the outstanding debt) and a chunk of the principal balance i.e. a portion reducing the outstanding amount of the actual debt. The amount of monthly (periodic) payments remains the same over the life of the loan.

Why is APR not the only factor to compare loans?

The Annual Percentage Rate(APR) shouldn’t be considered as the only factor to compare mortgage lenders or loans. One should take into account other factors like the interest rate, closing costs and lender fees. The APR assumes zero inflation thereby considering that the value of dollar would remain same even after 10-20 years. But this isn’t true. Besides, when lenders calculate APR, they assume that the mortgage won’t be paid off early even though the average life span of the loan ranges from 5 to 7 years for most borrowers.

What fees/costs does the APR include?

Some of the fees/closing costs that the APR includes are:
1.Points (discount and origination points)
2.Prepaid interest (from closing date to the end of the month)
3.Loan processing fee
4.Underwriting fee
5.Document preparation fee
6.Private mortgage insurance

APR(Annual Percentage Rate)

What is APR?
The APR is not the actual rate or note rate advertised by the lender. It is the effective rate which represents the cost of borrowing a mortgage loan. Lenders calculate APR taking into account the closing costs and the interest rate on a mortgage. As a borrower, you too can calculate the APR using the APR Calculator.

Check out yourself 11 steps before a mortgage

In fact, getting a home loan or mortgage isn’t always tough. What matter is how well you can manage it. There are people who have somehow qualified for a mortgage but sooner or later they have found themselves in a mess! So, first and foremost, you need to check your home loan affordability and then look out for programs on offer.

PMI (Private Mortgage Insurance)

PMI is an insurance that most lenders require of all borrowers who put less than 20% down. It’s purpose is to protect the lender against losses should the borrower default.

Private Mortgage Insurance, or PMI, is insurance required by the bank or lender providing financing if the LTV, or loan-to-value is greater than 80%. PMI is important because it protects the bank or lender in the case that a borrower with a very high LTV defaults on their mortgage. And it is said to benefit the borrower by allowing them to finance a property with very little down in one single loan.

Top 12 home buying mistakes to avoid

If you are preparing to buy a new home,  check out the top 12 home-buying mistakes that most people often commit. Being aware of such mistakes will prevent you from falling into traps just like others.

1. Not being aware of mortgage loan
There is a general perception that mortgages are meant for people with moderate and high income levels. Those with low income or poor credit avoid going for such a loan because they feel either they won’t qualify for it or won’t be able to pay the charges and interest payments associated with it.

The prerequisites for a mortgage loan application

A Mortgage Loan Application is a form used by the lender to gather the financial information about the borrower, which enables the borrower to qualify for the mortgage loan.

Mortgage loan application form requires the following information:

• Purchase price or value of property.

• Loan amount required.

• Your gross annual income.
  

  Tags: mortgage loan application form

  What is mortgage and monthly mortgage payments?

  Mortgage is a legal process through which a borrower takes a loan for the purchase of residential or commercial property. The same property is kept as the security for the debt.

  Tags: lender, monthly mortgage payments, mortgage, mortgagee, mortgagor

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