What is a Mortgage and How Can it Help You Achieve Your Dreams?

Mortgage loans are very common in today’s society as they enable people to purchase a home that they may not be able to afford if they paid for it with cash. Getting a mortgage can be a complicated process, however, understanding the basics can help you achieve your dream of owning a home and make your path to homeownership a lot easier.

A mortgage is essentially a loan that is given by a bank or lending entity which is used to purchase a home or other real estate. The money borrowed is secured by the property and is typically paid back over a set period of time, usually thirty years, with the payments being spread over those years in a payment plan.

Typically when getting a mortgage, the borrower will need to provide proof of income, a credit report, and other information to the bank. After being approved, the buyer will need to select the terms of the loan and enter into a contract with the lender. A good credit score will increase the borrower’s chances of getting a better interest rate.

There are different types of home loans available depending on the buyer’s individual situation. The most common types of mortgages are FHA loans, conventional loans, and adjustable-rate mortgages (ARM’s). FHA loans are typically for borrowers with low- to middle-income levels, and are more likely to be approved even with a bad credit rating. Conventional loans are your standard loans, usually from banks and lending institutions, and tend to require a higher credit rating and/or a larger down payment. ARM’s are adjustable rate mortgages that have an interest rate that changes over time.

Understanding the basics of mortgages and the different types that are available to you can help the journey to owning a home go a lot smoother. When looking for a mortgage loan, it is important that you look around and research different lenders to make sure you get the best deal possible. Armed with knowledge and confidence, you will be able to find the perfect mortgage loan and make your dreams of homeownership come true.