The mortgage is a real estate security which does not lead to the dispossession of the well by its owner.
The advantage of taking a mortgage lies in its definition.
Definition of a mortgage:
– Safety concept:
Guarantee given to the creditor against the risk of the insolvency of his debtor. Thus, collateral is useful in limiting or eliminating this risk by offering the creditor a guarantee additional.
– Real security:
It’s about one thing. Unlike personal guarantees for which a third party will guarantee the payment by the principal debtor.
– Property security:
It relates to one or more buildings. Given the individualization of private property and the existence of the land advertisement, it is an important security for the creditor. This is the reason which it is also appreciated by banks and becomes a credit instrument. The debtor use the resources of their own heritage to gain confidence.
How to get a mortgage
The first question arising regarding a mortgage is: how much can I afford to pay? Getting a pre-approved mortgage is a good point starting point, or you can use one of the many calculators available on the Internet to help you determine the amount you can spend on a property. The mortgage calculator on a website of the banking or insurance company can help you define a
affordable price range within which you can start shopping.
The next question is: Is my credit report good enough to approve my mortgage? Your lender will look at one thing before approving your mortgage – your credit rating, that is, your bill payment and reimbursement file on time loans. There are credit reporting agencies that keep records of missed payments and overdraft credit accounts. If you have ever had credit card or have applied for an account with a major utility company, your payment history is likely to be in the case of one or one or several of these agencies.
If you have a good track record, that is, you always paid your bills on time and made the minimum payment due on your credit cards, your credit rating will be good. If your roadmap is not
not perfect, it doesn’t mean that your funding request will not be approved. If your late payments go way back in your past or when you were a student but you have made your payments on time, you may have no trouble getting funding. A lender can help you assess your situation and provide you with advice on how to improve your credit standing in order to better prepare you on how to get a mortgage and buy your first home.
Paying off the mortgage earlier
Too often, buyers of a first house grant more of importance to the rate than to the solution mortgage in itself. Although the rate of interest is a factor not to be overlooked, the different types of mortgages, their payment structure, their term and their flexibility will affect much more important about what it cost of owning.
- Fixed rate mortgage
The fixed rate mortgage offers you the security of setting the interest rate up to term of your mortgage. The amount of payments is always the same, what which facilitates budgeting. This is its main advantage. The rate of interest remaining the same throughout the term of the mortgage, you know exactly how much you pay each month on principal and interest.
- Variable rate mortgage
With the variable rate mortgage, the amount of your payments stays the same, even if interest rates fluctuate. When rates fall, greater share of your payment is allocated return of capital and less interest, which allows you to pay off your mortgage early. When they go up, it’s the opposite: less of your installment is used to reduce the principal and a greater goes to the reimbursement of interest, which extends amortization.
Many experts believe that variable rate mortgages are the ones that offer the best savings potential to long-term interest charges.
Choose your own mortgage payment schedule
Customize your amortization period based on what you can pay. If you pay off your mortgage early, you save on interest charges, while an amortization period longer reduces the amount of your monthly payment and gives you a more leeway in cash management.
For most people, depreciation 25 years old is a good place to start consider since more amortization long increases interest charges during the term of the loan. To be eligible for depreciation longer, you must pay a deposit at least 20% of the purchase price of the property. The maximum period amortization is 30 years.
What is mortgage loan insurance
Mortgage loan insurance is one of the keys to pay off your mortgage more early. Mortgage loan insurance protects that bank. It does not protect the borrower or his interests in the property. Mortgage loan insurance is not the type of insurance that supports payments mortgage if the borrower cannot pay or dies. So what is mortgage insurance?
- It is an insurance contract that indemnifies a mortgage lender (a bank) in the event of a loss attributable to the default of a loan mortgage.
Most banks can lend up to 80% of the purchase price of a property residential or its appraised value, whichever is less, without be necessary to have the mortgage insured against default by a mortgage insurance company.
- This type of mortgage loan an ordinary mortgage.
If the outstanding mortgage capital results in a higher borrowing ratio at 80%, the mortgage must be insured by an insurer mortgage. Mortgage default occurs when the borrower has not done everything it is required to do under the mortgage agreement. The most common reason for failure is the non-payment of mortgage payments.
- Mortgage loan insurance allows customers to buy a mortgage property with a down payment of less than 20%.
Provided that they meet the bank’s borrowing criteria and mortgage insurer’s pricing standards. The bank can also require mortgage insurance on an ordinary mortgage with exceptional risks, what whatever the borrowing ratio.