What Is A Mortgage? Loan Basics For Beginners

Studies show that 85% of first-time buyers purchase a mortgage to finance their home.
Have you ever purchased a home? What questions do you have about mortgages? Do you know what loans you will qualify for?
Having a better understanding of mortgages and loans can help you in the buying process for a home in the future.
Keep reading to learn more about what a mortgage is and how to get a loan:

What Is a Mortgage?

Mortgages are typically used in real estate deals as a claim against a property. People and businesses will use mortgages to avoid paying the entire purchase price at the time of sale. Over a set time span, the loan will be paid back to the lender with added interest. Once the loan is completely paid, you own the property. If you fail to repay the entire amount of the loan, the bank or lender will take possession of the property. The lenders used to solely be banks but there are many new companies offering lending options for mortgages. The terms of the loan payments and interest rates can vary depending on how much of a down payment you make on the property.

How Do I Get a Mortgage Home Loan?

Qualify. This is an important word to note because most mortgage loans require a certain qualification in order to give the loan. 
Conventional loans typically require a particular credit score to qualify for the loan. Other loans, like a jumbo loan, typically are used for people with high income that can put down a large down payment and have excellent credit scores.
The rate of the loan is important to the total amount that you will pay long-term. You can choose between a fixed-rate loan that stays at the same rate or an adjustable-rate loan that will fluctuate with the market. 

Types of Mortgage Loans When Buying a Home 

There are several different types of mortgage loans that all accomplish the same goal in a different way. Some are fixed rates, while others are conventional. Depending on your situation, loan possibilities could vary. Fixed-rate loans are the common 30-year option that you hear of when people are discussing mortgages. There are also government-insured loans that offer a variety of qualification measures to help you secure the loan. Conventional loans are not insured by the government. The faster you pay off the loan, the less interest you will have to pay overall. There are options to pay in a 10 or 20-year term if you desired. Some people will refinance to a shorter-term after a few years of paying at a lower amount.

Get Started Today!

Now that you have read more about what a mortgage is and all about how to get a loan, you can get started today! Contact us to discuss what you are looking to buy and we can help find the loans that you qualify for. We are happy to answer any questions you have about the process.