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Mortgage Application 101

If you’re expecting to purchase a new house any time soon, be sure you are knowledgeable on the basics of mortgage application.

Most people are not prepared to pay cash for the full cost of a house, so a lot of times, home mortgage loans are the best options for them. Typically, you will need at least 10 to 20 percent of the home purchase price for a down payment, and can finance the rest.

Not only are mortgage loan programs flexible in allowing a family to adjust to monthly expenses, but many lenders offer reasonable rates to let their clients be prepared enough to purchase their house.

One of the first things you need to know about mortgage application is that you will be using your house, the one you will be purchasing, as collateral for your loan.

Collateral serves as leverage that gives your lender, bank, or any other financial institution security in case you become unable to pay for your loan.

What will a lender look for when you are hoping to get approved for your mortgage application? Among others, your lending institution will assess the value of the property to be purchased; in this case, your house.

Whether it is an old house or new house, you can mortgage a certain percentage of the value of your house, and this depends on many variables, including the home’s value, your income and credit score.

Next, ask yourself if you have a good credit history? Credit scores or credit ratings refer to existing accounts that are active under your name, credit card bills and what balances are to be paid, other loans that you have acquired before, debts, and the like.

When your bank or lender checks your credit history, it helps them determine if you are eligible for receiving a large loan, such as home mortgage, and if you are able to make payments consistently and on time.

Here on Surf Rate, you can find out what you are likely to pay on a monthly basis using our mortgage payment calculator. If you have already done research on the average mortgage rates offered by many lenders, then you can enter that value into the mortgage payment calculator, indicate the length or the term of the loan in years, and see what your monthly payments will be.

Comparing these values with that of other companies can help you readily determine which financial institutions offer the best mortgage rate as opposed to others.

If you still want to have an open mind about where to get the best mortgage rate, search lenders’ sites for the best loan product to fit your needs. It pays to be informed about the loan process and what kind of paperwork or other requirements are required by your lending firm.

Before you agree or sign anything, have a clear plan in mind, and ensure yourself that you will be able to pay your dues in a timely manner. Always remember that since your house is put up as collateral, should you default on your payments, the bank or lending institution has the right to take than property from you.