FAQ’s on mortgages are aimed towards making you understand the topic of mortgages more rationally and clearly.

In today’s time very few of us would be in a situation where we could be able to afford paying from our own pockets towards buying a house. Home mortgages have become the most popular and sought after approach towards attaining the goal of possessing one’s own house. With so much information floating around pertaining to mortgages it is very easy for one to get confused. The FAQ’s listed below by finance-strategy.com will help you get rid of the same doubts so that you can conjure up a clearer image of a mortgage.

1. What is a mortgage?A mortgage is a kind of a loan which you take with the purpose of buying a house or any other such form of property. The money that the lender lends you is the principal which along with the applicable rate of interest is divided into monthly installments which ought to be paid by you. The possession of the house remains with the owner only but in case of a default wherein you are unable to repay back the lent amount then the lender has the right to sell off the property with the aim of recovering back the amount that he had loaned to you against that property.
2. What is amount for which I can get a loan?Generally lenders use two different approaches towards the calculation of the loan which can be provided to you in the form of a mortgage. The lenders term the ratios used by them for these calculations as qualification ratios. These ratios are used by them to evaluate your income and your pending debts to arrive at the safe amount which you can afford to take and subsequently repay by the means of monthly installments.
3. What is the importance of a credit check?Even if you are sure that you are in possession of a good credit check then also it is a wise decision to again check back on it before you show it to a lender. This will go a long way in ensuring that you do not face any roadblocks later on when you start the process of filing for a mortgage.
4. What is the concept of a down payment?Generally it is seen that lenders by way of mortgages allow the borrower to finance 100% of the sale price of the house, but, if you decide to make no down payments then it would be required from you to pay for private mortgage insurance as well.
5. What is the difference between a pre qualification and a pre approval?A mortgage pre approval will means that you have in hand the written consent from the lender to loan you the desired amount in the form of a mortgage.On the other hand pre qualification is a process adopted by a mortgage lender before you start house hunting. This process involves the lender verifying your income, assets and your debts so as to analyze as to if you can repay back the amount which he would be providing you in the form of a mortgage.
6. What is the significance of APR?An APR or Annual percentage rate factors interest and other closing costs, points of finances applicable over the term of the loan. It is necessary for the lender to disclose the APR to you within three working days after you file your application seeking the mortgage.