A proficient mortgage broker may help you to get home loans on easy terms, but it is still necessary to be aware a little about the loan business, especially in a populous city like Chicago. Here you will find many such brokers doing brisk business, but not all of them are as capable as they ought to be. It does not of course mean that Chicago home loan brokers are not adept in their business. It simply means that not every body is as capable as is desired and so it helps if you yourself have a little knowledge about it.

Let is begin with home loan. A home loan, as the name suggests, is a loan given by a bank, mortgage company or any other financial institute for the purchase of a house. The lender is not concerned about how you use the house. He will rather see that:

The property is free of lien. If it is not free, the lender will back off.
You have the financial means to pay back the loan.

Now, what is lien? A lien is a legal claim placed on a property that makes selling, refinancing or obtaining mortgage difficult. The most common types of liens are financial and judicial. As the lenders keep the title of the property as collateral against the loan, they will naturally want to make sure that it is free of lien. Therefore, you should check public records for such liens before you make any advance on the property.

Lenders generally try to recoup their investment by selling the property if the borrower fails to make the payment. This is called foreclosure of the debt. The lenders foreclose the debt and repossess the property, but they generally do not want to do that. They would rather have their money back in the normal process. That is why they make sure that the borrower has the capacity to pay back the debt. Consequently, they may ask for some sort of income proof before they approve the loan.

However, there is also something called ‘predatory lending’. Beware of it. A predatory lending is actually an unscrupulous act carried out by some dishonest mortgage companies. They somehow entice a customer into borrowing too large an amount at a high rate of interest. The borrower pays quite a few installments and then finds it difficult to make further payment. The lender then moves in to seize the property and sell it to recoup the money. Of course, the installments already paid remains with him.

It is one of the reasons why you should be careful about choosing the mortgage company carefully. There are other forms of predatory lending also. Charging higher fees and placing the borrower in lower credit rating are some more ways. Whatever be the way, if you are aware of such pitfalls, you will automatically become careful and will not fall in them. Other than that, if you work through reputable Chicago home loan brokers, you may have fair chance of avoiding such situations.

However, for finding such brokers who deal with realty mortgage Chicago is really a big place. How do you know who is honest and who is going to lead you into predatory lending? That is why it is important to know some basics and to shop around a little. Do not trust your broker blindly unless you know him to be honest. Instead, talk to different lenders and compare the rates and other charges they are asking for. Most of all use your common sense and keep on asking questions. If the broker or even the lender is honest, he will not have any qualms about answering your questions.

There are quite a few more terms that you should be aware of. We have already talked about foreclosure. If the lender wants to terminates the right of the borrower over the property and pave the way for repossession he has to undertake a legal process and this is known as foreclosure. Generally, this takes place when the borrower fails to pay quite a few installments. Refinancing and credit score are some other concepts that you ought to be aware of. While refinancing allows you to lower your interest rate or clear your mortgage faster your credit score represents your credit worthiness. A good credit score helps you to get home loans at cheaper rate. Learn more about them to receive the loans at cheaper rates.

Author Bio: Article by John Hoots of ChicagoMortgageSpecialist.com, a website with the best Chicago mortgage lender and Chicago refinance information on the web.

Category: Finances
Keywords: Chicago mortgage refinance, Chicago refinance