Knowing How Mortgages Work Will Make House Hunting Easier

Knowing How Mortgages Work Will Make House Hunting Easier
by: Stefan Hyross



Most individuals do not have the money to pay for a home in cash so they
need to deal with a lender to finalize the deal. While most lenders do
try to get you the loan amount you need you should bear in mind that to
them it is just business. And while they may be friendly but at the end
of the day they are watching out for what is best for them from a profit
stand point.

Determining whether or not you will be able to repay the loan is critical
in the bank's decision since they make their profits by charging interest
on the mortgage amount. By examining your past credit history a bank can
make a decision on how likely it is that you can repay the mortgage
amount. The lending institution is attempting to make a prediction on the
future by researching the past just like a historian would but your
present situation with be taken into account.

In an attempt to learn about your past lenders examine your credit
history. Part of your credit history are items such as how many loans you
have taken out in the past and the size of those loans. They will also be
researching your repayment history on those loans. Were you behind on
payments and how many times, was the loan repaid in full and do you have
any money owing on any loans?. All of these will be added together to
arrive at your credit score. The chances of you qualifying for the loan
are mostly based on this score.

The existence of credit scores are something that most people know about
but there are other things that lenders can decide to look at it that are
not so common. As an example they can look at other financial products
you have to see how much profit a bank made from them. They can also
discover if you have had any legal judgements against you which could
adversely affect your ability to repay the loan amount.

The property you are looking to purchase is also a big part of the
equation. The appraised value of a home will be compared to other factors
and evaluated. First a lender will want to know how much you will be
putting as a down-payment since most lenders will not loan you more than
75% of its value. Buyers may be able to acquire mortgage insurance that
shields the bank in the case of default and allows them to loan at higher
percentage of a property's value. A case in point is if you live in
Ontario and want to purchase a piece of Burlington real estate but you
did not have 25% of the purchase price as a down-payment you may still
qualify for a Burlington mortgage as long as you can get mortgage
insurance through institutions such as the Canadian Mortgage and Housing
Corporation. As well the purchase price of the property will be reviewed.
If it is substantially higher than the appraised value they may decide
that the risk is too high and deny the loan.

In order to increase the success of your house hunting it is important to
understand just how lending applications work. Mortgage lenders are in it
to make money but that does not mean that they are not willing to work
with you. Everything can be negotiated and at the end of the day if you
get the mortgage you need and they can make some money it is win win for
everyone.





About The Author
Stefan Hyross writes on behalf of Diane Salman who specializes in the
Burlington real estate market. Feel free to visit the site to search for
property or for information on how to qualify for a Burlington mortgage.




Visit the author's web site at:
http://www.homesbydianesalman.com