What is a mortgage?

It is a loan that is attached to real estate property of home and land. But there are several types of mortgages out there, which can be hard to weigh through. The most popular is a 30-year loan. This is a fixed rate and payment stays the same. But having your payment of your home (principal and interest) tied to your home insurance and property taxes it is escrowed out overtime. The one thing is that the county taxes usually goes up, insurance usually does the same, and actually house payment will start to make a dent on your balance of your home as time goes on.

Some people have many questions about how this all works. But where do I start to find the right mortgage? Asking you questions such as can I afford a mortgage with all the factors that it involves? Your lifestyle can be a factor. If you plan on staying in your community for a particular time period, or do you think that you will be moving in the next 7 years? 5 years? Or 2 years? Other factors could be: "Do you have a goal to payoff your home in 15 years or 40 years?" "If I payoff the loan, will there be a prepayment penalty if I pay it off too soon?"

It is better to find the right fit then have the payment too huge. Bill Zortman, Realtor from Sioux Falls says, "Don't sign for so much that you become house poor-and sleepless at night."

Do you have something saved away just in case of a medical illness, job loss, or perhaps, death of a child or spouse? What happens if your roof has a tree fall on top of it, the furnace goes out, or a water main busts? Having this thought through is the best plan of attack!

Also, weighing all options, you can see one size does not fit all! Mortgage brokerage companies can look for a loan that works best for your situation. For example, they work with many lenders, not just ONE! They continue to look for options that are on your wish list, and you feel like a person instead of a number. They take the time to visit with you and find out what price range you are looking for.

When qualifying for a loan there are certain requirements that go into play: Income, employment, assets, liabilities, and credit history. Credit history is the way you pay your bills either on time or had many past dues. It shows judgments, bankruptcies, and when you bought your last automobile. Employment history is you worked at XYZ Corporation from 2002 to 2008 for example. Did you work in the same field? How many times did you move from one job to another? Did you change fields? Liabilities could be all the credit cards you have. Do you have many lines of credit that you could rack up? This is a warning to creditors that you could just take them and spend like a shopping spree. "Risk" may come to mind in a creditors mind! Stocks, bonds, annuities, cds, and savings are assets. The assets could really help you in the credit process. This would be a positive for you just as long as for example you had maintained a good balance, and didn't have a bad checking account.

The above items give your originator or loan officer a full financial picture of how you have treated your financing. Also, a loan officer appreciates your honesty of keeping you in the loop if for example you lost a job during the loan process or quit a job to go to a lower paying job. These things believe it or not could stop you from going through with the loan.

But once this process is all done, and you sign on the dotted line at your closing. You will have a home to call your own, and a mortgage to pay. Just make your payments on time, and if you do have problems with your mortgage payments, call your lender as soon as you know that you are in trouble. They may be able to help you!

Learn more about this author, Karen Loos.
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