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A Guide to Successfully Taking out a Mortgage Loan

By Richelle Jelsma Subscribe to RSS | June 1st 2012 | Views:

First-time homebuyers may find mortgage quite confusing and may end up resorting to getting an apartment or a house for rent. Although renting is not a bad idea, obtaining a mortgage is a better option since the borrower gets to own the house at the scheduled amortization. And because a mortgage loan is a long-term loan with complex terms, all the more that first-time homebuyers should not take it lightly.

Mortgage is not a loan, but a form of security interest placed on the financed property to insure the interest of the mortgage loan provider. When a property, usually a house, is purchased under a mortgage loan agreement, the mortgage loan provider remains owner of the property until the borrower pays off the loan based on well-defined terms and conditions. This means that if the borrower fails to pay as agreed upon, the loan provider can sell the property to recoup the money owed.

Mortgages are usually provided by banks and building societies. A borrower can go directly to these lenders or hire intermediary, such as a broker or a real property agent. It is recommended that first-time homebuyers hire a broker or a real estate agent for easier and more accurate processing of mortgage loan documents.

The initial requirement in applying for a mortgage loan is a proof of regular income, of course, followed by running a credit check. A proof of potential future income in addition to regular income can increase the borrower’s qualification for the loan. This is one way for mortgage loan providers to ensure that borrowers can keep up with repayments at least up to the scheduled amortization.

A mortgage loan provided by banks and building societies in prominent cities like Salt Lake City, Utah consists of a capital and interest, just like any other type of loans. What makes it different from other types of loans is the security interest. Most mortgage loan providers require a down payment of at least 10 percent of the total mortgage amount, which recently rose to 25 percent. Paying a higher down payment for the mortgage Salt Lake City UT lenders offer will reduce the monthly interest.

On the process, a borrower will have to pay for several fees aside from the capital and interest, such as Salt Lake City mortgage arrangement and final repayment fees. In case he decides to pay off the loan early, some providers will require an early repayment fee for the process. Other fees may incur within the life of the loan depending on various factors.

Read more on mortgage Salt Lake City homebuyers prefer on This website provides interesting facts about mortgage.

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