Published January 18, 2013
A mortgage loan is usually a loan of money used for the purchase of any property. It is obtained by pledging any property as a security or collateral for the loan. When the debt is paid off, the interest in the property reverts back to the owner of the property. A mortgage is not in itself a debt, but is the security. For example, if you take out a mortgage on your house, it means that you are taking a loan, and putting up your house as collateral for that loan.
The term mortgage originally comes from the old French "dead pledge," which seems likely to have meant that the pledge dies when the obligation is fulfilled otherwise, the property is taken over via foreclosure.
You can get a mortgage loan on any property you own, or to actually buy any property. The common element is that, in both the cases the property is used as a security. Initially the person has to submit an application and all the required documentation along with his financial history to the lender. Only if he meets the qualifying criteria, is he granted the loan.
Mortgage rates are contingent on the type of mortgage loan you take out. There are two types of mortgage loans, the fixed rate mortgage and the adjustable rate mortgage (ARM). Fixed rate mortgage loans are locked into a set interest rate that remains the same over the entire term of the mortgage and this typically will be between 15 and 30 years. Adjustable rate mortgages, on the other hand, have interest rates that vary according to interest rates prevalent at any time during the loan term.
A mortgage lender can be found at a bank, credit union or other lending institutions. You can also investigate mortgage lenders through mortgage brokers. Mortgage brokers act as an intermediary between lending institutions and individuals. They are paid a fee to connect lenders with borrowers. They work with dozens, or even hundreds, of lenders. They are freelancers and not obliged to use any particular lender.
Start your search for an appropriate lender who would suit your needs. Analyze and make decisions to make the best possible choice. There are also options available to apply for a mortgage online. You can actually look out for all the deals available and select the one that suits you.
Mortgage calculators are usually either websites or spreadsheets that help you calculate the interest and the equitable installment payable. They are simple to use. You need to read the terms of the mortgage loans you are considering and plug them into a mortgage calculator to determine what your loan will actually cost you in terms of interest.
Mortgage contracts are complicated. When you read the terms, often a mortgage that looks good on paper turns out to cost more than one that did not look as good. You can get guidance about any of the lenders from a number of sources on the Internet.
Last Updated: January 18, 2013