Own a Home through Mortgage Loans

Applying for mortgage loans is easy for people with good credit rating. Banks and other lending companies are generous to provide loans given that there is good security for their money to be returned with some interests. The credit report and credit standing determine how qualified a person is for a mortgage. On the other hand, the amount of the down payment and gross monthly salary are two important components in approving a mortgage application. Although some lending institutions allow 100% financing, majority would look for down payment. As for the monthly salary, it is a determinant whether an applicant is capable of paying his monthly mortgage or not.   

Once a borrower earns equity from his home, he can already submit an application for 2nd mortgage. The second mortgage is a loan taken out from the primary loan, where the home equity from the same property will serve as collateral for 2nd loan. This is also commonly called as subordinate loan as in the case of loan default, the first loan will be paid off first before the second one. This type of loan is riskier for lenders and come with a higher interest rate than the first mortgage. Borrowers opting for 2nd mortgage are advised to read the contract carefully and ask important questions for understanding so that they won’t be caught off guard with sudden increase of interest.

Mortgage refinancing is a popular means to change the schedule of a mortgage payment to either reduce the finance charges or just alter the payment scheme. This is also done to pay off an existing mortgage loan by taking another one using the same property as security. This helps homeowners to reduce their mortgage expenses, especially if interest rates have dropped, or if equity increases.