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Mortgage and Loan Strategies

Acquiring a mortgage, vehicle loan, payday loan, or personal loan is a relatively easy process. The following consumer guide provides tips on how to apply, what you need to provide in order to apply, and even some tips for getting the best deals.

A new loan equates to a new monthly expense that must be paid on time each month for a number of years. In order to make this transition as painless as possible to your finances, it is essential to get the best deal, which may mean different things for different consumers.

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Some individuals may prefer set terms and rates while others may prefer flexibility in their loans. Likewise, some borrowers may prefer to have loans with short terms, while others may prefer to have longer terms attached to their loans. Each of the above referenced loans is discussed in the following sections.

Mortgages

A mortgage is a loan that individuals acquire to finance the purchase of a home. The home is used as security or collateral for the loan. In the event that the mortgage is not repaid, the lender can repossess the home. Many types of mortgages with varying terms, interest rates, and fees are available.

What Types of Mortgages Are There?

The most common types of mortgages include the following:

  • Fixed rate mortgage: the mortgage payment, interest percentage, and due date are set and never fluctuate. The amount of the monthly payment remains the same. The amount of each payment applied to the principal gradually increases as the amount applied to the interest gradually decreases.
  • Adjustable rate mortgage: the interest rate for this type of mortgage fluctuates according to a predetermined schedule selected when the loan was acquired. An adjustable rate mortgage is also known as an ARM.
  • Balloon mortgage: fixed payments are scheduled for a predetermined number of years before one large, or balloon, payment is made to pay the loan off in full.
  • Interest only mortgage: only the interest on the loan is due for the first term of the loan. After a set number of years, the loan transforms into a fixed rate loan. The monthly payment will increase since it now includes a portion that goes towards the principal of the loan.
  • Reverse mortgage: homeowners receive money using the equity of the home as collateral. The loan is not repaid until the home is sold.

How Do I Get a Mortgage?

To acquire a mortgage, you first need to select a lender. Next, you will submit documentation to the lender for pre-qualification when you go in to discuss your acquisition of a mortgage with their company. The necessary documents are listed below. Be sure to bring in all of the documents at this time in order to avoid any unnecessary delays.

This is known as the pre-qualification stage. If everything is in order and your credit rating is good, the process will take about a week to ten days. If you apply for a mortgage with a bank or agency that has an established relationship with you, the process usually takes the shorter amount of time.

Once you have received approval, you will complete the official application. The mortgage lender or bank personnel will assist you with the completion of the application. It is important to ask any final questions that you might have concerning the mortgage at this juncture.

Once the application has been processed, you will be notified. Next, you will arrange an appointment during which you can receive the funds in the form of a certified bank check. Some lending agencies and banks will also offer the option to have the funds deposited directly into your bank account. However, a certified bank check is usually more acceptable as a form of payment.

Where Can I Get a Mortgage?

Mortgages can be obtained from banks, online lending agencies, and financial lenders. Most newspapers provide information on the current loans that the financial institutions are offering. Additionally, consumers can research loans and mortgages online, visiting the branch offices, or by telephoning the various agencies and banks.

What Do I Need to Apply for a Mortgage?

Applicants and co-applicants must both bring any of the following documentation to their initial meeting with the lender. Additionally, it is essential that you remember to bring the proper payment with you at this time. Application fees vary across lenders and banks.

  • Documentation for employment history for the last one or two years including the employer’s name, address, and phone number
  • Pay stubs for the previous four weeks
  • W-2 forms for the previous two years
  • Documentation for any additional monthly income, such as commissions or bonuses
  • List of all major monthly expenses, including vehicle loans, installment loans, credit card debt, or child support and alimony payments

If any of the following pertains to you, this documentation must also be provided:

  • Copies of child support checks received or issued
  • Copies of alimony checks received or issued
  • Copies of pension checks received
  • Copies of retirement monies
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