How Mortgage Loan Payments Are Structured.

Most mortgage loans have 4 parts:

1. PRINCIPAL which is the repayment of the amount originally borrowed. Most loans are for 15 to 30 years.

2. INTEREST is the payment to the lender for the money that is borrowed. During the life of the loan, a homeowner will usually pay far more in interest than the amount originally borrowed. This is due to the methodology used in structuring loans which results in mainly interest being paid in the first years of the loan. In the final years of the loan the payments are mostly principal as opposed to being interest payments.

3. HOMEOWNERS INSURANCE is a monthly payment required by most lenders to insure the property against loss from fire, smoke, theft, and other hazards.

4. PROPERTY TAXES is the annual city or county taxes assessed on the property. This is divided by the number of mortgage payments made in a year.

Question About Applying For a New Mortgage

Is The Confirmed Sale Of An Existing Home Necessary Before Applying For A New Mortgage Loan?

No, a homeowner can apply for a new mortgage loan before he or she sells their existing home. However, depending on your income and debt levels, a homeowner may be required to sell the current home before they can close on a new mortgage loan.

How Much Money Is Needed To Buy A House?

The amount of needed to purchase a house depends on several factors - the cost of the house being one of the main considerations.

A homebuyer will need to have (or be able to borrow) enough money for the earnest money, down payment and closing costs when purchasing a property.

The earnest money goes into an escrow account, which will be applied to the down payment or closing costs, if the offer is accepted.

If the offer to buy the property is not accepted, the earnest money will be returned to the person who put in the offer.

The amount of money required to purchase a property will also depend on the type of mortgage and the terms of the terms of the mortgage. Most home loan lenders offer loans with various down payment options, including no down payment and low down payment mortgages.

Getting Prequalified For A Mortgage Loan Can Speed Up The House Buying Process

Having a prequalified mortgage loan can be an advantage to all concerned - you, your real estate agent (if you use one), and the home seller you are buying the property from. Preapproval means that you are preapproved to get a mortgage loan before you begin searching for a property to purchase.

In determining the level to which you can borrow up to, a mortgage lender will consider many variables such as: your income, credit history, your debt obligations. A mortgage loan lender is likely to consider special mortgage programs and variations in qualifying guidelines between different mortgage types.

The only sure way of knowing how much you can borrow is to go through the mortgage loan prequalification process.

Mortgage prequalification is not difficult, but if you are not a cash buyer,it is an essential part of the whole home buying process.

Mortgage prequalification sets the wheels in motion and is the first step in formally applying for a mortgage loan. It lets you (the home buyer) know what is and isn't possible.

A mortgage prequalification can also help a real estate agent to better meet your needs. A real estate agent can waste a lot of time searching for properties that are out of your financial reach. By knowing what your financial boundaries are, your real estate agent can concentrate on finding properties that fit within your budget. This will save your real estate time and it will save you time by not having to inspect properties that you can't possibly afford to buy.
Having a mortgage prequalification can improve your negotiating position with the seller of the property.

If the seller gets two similar offers to buy the property, he or she is likely to select the one that is from a fully prequalified buyer as opposed to one that is subject to the buyer applying for finance. The seller might even accept a lower offer from a prequalified buyer rather than take the chance the other buyer can't obtain a mortgage loan.

Be Patient And Stay Committed When Buying Or Selling Property

Every great athlete, businessperson, or great individual had to stretch and reach for his or her goals. They know that obstacles are a part of the goal achievement process and so they focus on succeeding rather than on what may be keeping them from succeeding. It means overcoming hardships and setbacks, rather than giving up at the first sign of opposition or misfortune. Buying or selling a property is no different.

To do this you have got to be willing to take some calculated risks and be prepared to fall down from time to time. As kids we made mistakes all the time, that's how we learnt. However, as adults we have a thing called "pride" and we hate making mistakes. Think of when you first learnt to ride a bike - you fell down, you got up, you fell down, you got up, and you kept getting up until you mastered it. You didn't give up. If one way didn't work you tried another way until you finally got the idea of it.

Obviously, with buying or selling property home you don’t want to be trying forever. This real estate blog will give you the helping hand you need, but you still need to be prepared to pick yourself up and move forward under your own steam.

Accept That You Will Make Mistakes When Buying Or Selling A Home

With most new or big projects you tackle, you will make mistakes. When buying or selling a home it could be that you worked with the wrong agent or broker, or maybe you didn't take the advice they gave you, or maybe you might have done a better job by taking on more of the tasks yourself?

Hindsight is a wonderful thing, because when you look back on your mistakes they’ll seem so obvious, because you’ve already made them. Accept that you will make mistakes when buying or selling a home – but the trick is to minimize them. This key is to identify potential mistakes in advance...before they happen.

By knowing potential mistakes upfront you’ll have more confidence and control over the final outcome.

So, success doesn’t necessarily go to the person who never makes a mistake. The fact is; those people tend to avoid risks at any cost. Rather, success tends to shine on those who recognize that life is basically a game of percentages. It isn't the making of mistakes that's so critical. What’s really important is fixing them when they do happen, without losing site of objectives and goals.

Can A Home Buyer Apply For A Mortgage Or Loan Before Finding A Property To Buy?

Absolutely and usually recommended! The best time to look for a mortgage loan is before starting to look for a house. This way the buyer will know how much money he or she can borrow and how much house they can afford.

Having a pre-approved mortgage can put a homebuyer in a strong position when negotiating the purchase of a property.

When applying for mortgage pre-approval consideration is giving to personal information such as income, debt and credit history.

This information is used to determine the maximum loan amount the buyer will qualify for in the pre-approval mortgage process.