Originally, The Term Mortgage Was Used

• Private Mortgage Insurance – Referred to as PMI, reimburses the mortgage lender in case the home buyer isn’t able to afford their payments..Originally, the term mortgage was used to refer to any type of simple transaction or trade that took place where the purchaser used either physical property (such as a boat) or a plot of land as a form of payment. Payments are made on a regular basis (usually monthly). Typically this ratio needs to be at least one. The unpaid interest is just calculated back into the loan. Lenders look at several factors to determine if you may qualify for a loan. • Assets – A lender typically needs to know if you currently have enough money or to pay off your loan. Nowadays, when you hear the word mortgage, all you can probably think of is paperwork, foreclosures, and debt. This is your income to debt ratio.Types of Home LoansThere are really only about 5 or 6 different types of loans:• Fixed Rate – If rates go up, your rate stays the same, but know that rates can also go down (and are known to do so from time to time). • Amortized – The most common type of loan. • Debt Ratio – One of the biggest determining factors.• Credit score – Having a bad credit score doesn’t always mean you won’t be able to get a loan, but having a good score does help. • Interest – The cost to borrow the money, month after month. A typical monthly payment is broken down into four parts:• Principal – The total amount of the loan left to pay. • Piggyback Loans – A second loan that typically covers about 80% of the first loan. • Negative Amortized – This is when the amount paid (or “amortized”) isn’t enough to cover the amount of interest due. • Adjustable Rate – Means that your interest rate is controlled by the lender. • Property – Back to the original meaning of a mortgage, the home itself must be worth enough to act as collateral for your purchase. Usually have a fixed increase amount (lender may only increase the rate by so much each year).Factors that Determine your QualificationThe goal of getting a home loan is to get pre-approved.Down Payments, Up Payments, Left Payments, Right PaymentsWhat exactly is all your money going to each month? With the increasing cost of housing in recent years, many home loans don’t require you to put very much down, and even more are starting to offer loans with no down payments at all. • Taxes and Insurance – The cost of any damage to the home and what the local government charges. If you do have a low credit score, there are plenty of mortgage options that are designed for people with low credit. It’s true that mortgages have gotten more complicated over the years, but getting a home loan is a lot less scary once you understand.