Home Mortgage Florida
Before applying for a Mortgage Loan Home in Florida, is
good to know some facts about Mortgage Loan, so you can buy your
home avoiding misleading situations. Let's start!
What is Mortgage?
A mortgage is a device
used to create a lien on real estate by contract. The mortgage
is an instrument that the borrower (called the mortgagor) uses to
pledge real property to the lender (called the mortgagee) as security
for a debt, also called hypothecation.
The mortgage instrument contains two parts:
- the mortgage, which is the pledge
- the note, which is the actual evidence of the
debt and promise to repay (sometimes called a promissory note).
To protect the lender, a mortgage is recorded
in the public records creating a lien (when there are multiple liens,
order of recording determines priority).
History of Mortgage Loan
At common law, a mortgage was a conveyance that on its face was
absolute and conveyed a fee simple estate, but which was in fact
conditional, and would be of no effect if certain conditions were
met --- usually, but not necessarily, the payment of a debt by the
original landowner. Hence the word "mortgage," Law French
for "dead pledge;" that is, it was absolute in form and
in theory required no further steps to be taken by the creditor.
In many U. S. states, however, a mortgage has been converted by
statute to a device for creating a security interest in land. When
the landowner fails to perform on the obligation secured by the
mortgage, the mortgage holder must file a foreclosure to cause the
property to be sold at auction, usually by the sheriff. Since mortgage
debt is often the largest debt owed by the debtor, banks and other
mortgage lenders run title searches of the real property to make
certain that the lien of the mortgage is prior to anyone else's
Mortgage Finance Industry
Mortgage lending is a major category of the business of finance
in the United States of America. Mortgages are commercial paper
and can be conveyed and assigned freely to other holders. In the
USA the Home Owners Loan Corporation, the Federal Housing Administration
administer the programmes colloquially known as "Ginnie Mae"
and "Freddie Mac" (aka the GSE's—the government
sponsored enterprises) to foster mortgage lending and thus to encourage
home ownership and construction.
Pre-qualification For a Mortgage Loan Home
Pre-qualification means that a loan officer has taken some information
from the borrower, but not verified any of it. With a pre-qualification,
the borrower typically has not stated their social security number,
so it is not possible to check credit. A borrower will give their
employment, income and asset information and the amount of current
monthly debt. In addition a borrower is asked about their general
credit worthiness. Based on this quick work up the borrower will
be told that they pre-qualify for a certain loan amount. For example,
if the borrower makes $15/h or $2600/month this is then calculated
to an industry-standard 36% debt to income. So if a borrower makes
$2600/month they would be pre-qualified at a total debt of $936
(this includes any monthly payments, including car & credit
card min. amount; along with the proposed housing payment of principal,
interest, taxes and insurance)
Mortgage Loan Types
There are many types of mortgage loans. The two basic types of
amortized loans are the fixed rate mortgage (FRM) and adjustable
rate mortgage (ARM).
In a FRM, the interest rate, and hence monthly payment, remains
fixed for the life (or term) of the loan. In the US, the term is
usually for 10, 15, 20, or 30 years. In the UK the fixed term can
be as short as five years, after which the loan reverts to a variable
In an ARM, the interest rate will periodically (annually or even
monthly) adjust up or down to some market index. Adjustable rates
transfer part of the interest rate risk from the lender to the borrower,
and thus are widely used where unpredictable interest rates make
fixed rate loans difficult to obtain. Since the risk is transferred,
lenders will usually make the initial interest rate of the ARM's
note anywhere from 0.5% to 2% lower than the average 30-year fixed
A partial amortization or balloon loan is similar to a FRM, but
the balance is due at some point short of the full term.
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