If you’re planning to apply for a mortgage home loan, and this is your first time, in that case, there are a couple of important things which you need to know. A mortgage is a kind of loan which can be used for refinancing or buying a home. Also known as mortgage loans, mortgages are a very popular way of buying a new property. If you are looking for best refinancing rates, in that case, you can have a look at some of the banks and financial institutions. These days there are many, who offer mortgage loans at an affordable rate of interest.
Who qualifies for a mortgage?
In the United States, most of the people who buy a new home, opt for a mortgage. A mortgage is very useful if you are not in a condition to make the full payment for your new property out of your pocket.
In certain cases, even if you are capable of paying the full amount, it makes sense to go for a mortgage. For instance, if you are an investor, a mortgage can be a viable option to free up the funds which are stuck in other investments.
It is very important in this regard to mention that to qualify for a mortgage, you need to have a stable source of income. Besides, as far as your debt to income ratio is concerned, it should be less than 50%. Your credit score will also be looked into very closely.
Difference between a mortgage and a loan.
As far as a loan is concerned, it can be described as a financial transaction, where you receive a lump sum amount of money with a promise of paying it back.
A mortgage, on the other hand, is also a type of loan; however, it is meant for financing properties. It needs to be mentioned in this context that a mortgage is considered to be a type of loan; however, all loans are not mortgages.
In the case of a mortgage, there are two parties involved; the lender and the borrower. In certain cases, the lender from whom you had initially borrowed the money, against collateral, might hand it over to a third party, who would be in charge of collecting the repayment from you. However, the legal ownership of the property remains with you.
If you are planning to apply for a mortgage, in that case, you need to ensure that you met all the criteria. You need to have a steady and reliable source of income and at the same time, you need to maintain an impressive credit score.