It is quite obvious that there will be number of questions and doubts with regard to mortgage loans when you are opting for the same. This is more if you are dealing in mortgages for the first time. Do not worry!! Do not feel like an alien or a fool. Read ahead for a dose of the basics in mortgages.
One should be very careful in offering your home as security for the loan. The security is the only factor that creates the trust between the mortgage borrower and the mortgage lender. The home that you offer as security should be your own home. You should have a good title on the same.
If the security is not proper, all other things will look shaky! Next is the duration of the mortgage loan. It should not exceed the amount of time for which you are going to own the home and stay in the same. The answer to this question will decide many other important things related to the mortgage loan.
The tenure of the loan will ascertain the rate of interest. Longer you stay, lower will be the rate of interest. Further, the tenure will determine whether going in for a fixed mortgage loan is more advantageous than going in for a variable or adjustable interest mortgage loan. For those who are curious, the average tenure of a mortgage loan taken by an American citizen is not more than nine years.
As soon as you are clear about the tenure of the mortgage loan, you can proceed to determine the cost of availing the mortgage loan. The mortgage borrower can always get a good faith estimate of the closing costs of the loan. This is the very first thing that every mortgage borrower must ask for from the mortgage lender.
The good faith estimate is a list of the expenses that the mortgage borrower will be required to incur when the mortgage loan is finalized. This good faith estimate consists of origination fees, discount fees, credit report fees, document preparation fees, title insurance fees and other managerial and administrative costs. Do not think that the good faith estimate is just a piece of paper. It is a filter which will help the mortgage borrower compare various deals.