Buying a house these days are nearly impossible without getting a mortgage. For the majority of Americans, getting a mortgage on a home is about as natural as breathing. Ideally one would want to buy a house in cash but not all of us are swimming in money. Mortgages are simply defined as loans will collaterals. A home mortgage basically means that the house you bought is put up as collateral for the money you borrowed from your lender. Should you default from making regular payments, your lender would exercise their rights to repossess the house from you.

The procedures and processes of mortgages can be quite confusing especially if you do not have a background in real estate. The terms and technical jargons especially those involving acronyms like APR, ARM and HELOC do have a way of making you feel slightly apprehensive about approaching the issue of getting a mortgage on your house. So why don’t you read on and arm yourself with the basic knowledge on getting a mortgage?

If you are buying a house for your own personal use and you intend on living there for a long time, applying for a mortgage can be relatively easy. A stable financial background with good credit ratings, low debt-to-income ratio and no history of bankruptcy or foreclosure will let your lender’s guards down. Before you fill out an application form, you have to make sure that all relevant supporting financial documents must be prepared to make the process smoother. Records of your finances and your identification documents must be in order. Once you’ve filled out the form, your lender will run a credit check on you to see if you qualify for the loan. Some lenders will even call your employer to verify your income statements.

Getting your finances checked out by your lenders can be quite bothersome and irritating but it is a necessity especially now that the government has tightened the rules and regulations of home mortgages. But if you do not have any financial skeletons hidden in your files, you basically do not have anything to worry about.

Applying for a mortgage for your personal home is easy; at least easier than applying for multiple mortgages. If you are thinking of investing on a few properties, you will probably be thinking on the best ways to fund your investment. Generally, a multiple mortgage is when you are applying for mortgages for more than one property simultaneously. Let’s say you wish to buy three different properties for investment purposes, your lender will be less lenient and more alert on your mortgage applications. This is because once they calculate your debt-to-income ratio you will probably slide down into the high-risk debtor category. They will investigate as deep as they can to make sure that you are actually able to make the monthly payments.

Your lenders are definitely going to be stricter and delve deeper into your financial records. Granted, you will probably be renting out or selling the houses later but in the mean time, you will still have to bear all the costs including making monthly due payments to your creditors. They will also demand a higher down payment for each and every property as high as 25%. So unless you are very well funded for your investments, you might want to rethink applying for a mortgage for more than one property at one given time.

So what are mortgages if not a way for you to be able to afford buying your own house? You will be the one deciding on how much you can afford to spend on your house every month. Unless you have enough funds to pay for your house in cash, getting a mortgage will be the logical step to take.

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Category: Finances
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