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What is a Home Mortgage Loan?

A home mortgage refers to the loan that you get when you are trying to buy a home. The most common home mortgage is done through a bank or lender. The way it works is you, the buyer, and the seller agree on an amount of money that will go towards the final purchase of the home, this ensures that no one else can come in and make an offer on the house, this amount of money is called a down payment and is subtracted from the total cost of the home. This down payment is either put into an escrow account, given to your banker, or given to the mortgage company so you can move into and live in your home while you make payments on the remaining amount of the home. The remaining amount is then figured in with the current interest rates, finance charges, taxes, insurance costs, and any other additional charges that may be relevant for the type of loan you are getting; this final amount is called your mortgage. In order for you to officially own your home and any property that your home sits on, you must finish paying off this final amount, if you donít there are consequences you can face, fortunately you do not have to pay this final amount in one lump sum, most mortgages are spread over a number of years, so you have plenty of time to pay off your home.

Sometimes, if a buyer cannot qualify for a lender home mortgage, the seller will offer to carry the loan for the buyer. The way this works is, you and the seller agree on a final price for the home, you then give the seller an agreed upon percentage of that final price, which is the down payment. You then make the payments on the remaining amount to the seller, who more often than not is turning around and sending those payments to the bank that they have their mortgage with. There are however a few things to keep in mind when entering this kind of home mortgage; whatever agreement you and the seller reach you want to make sure that it is something that the both of you feel confidante in, that there are no foresights that have been over looked that would cause bad feelings between the two of you later on down the road; you will want to talk to a lawyer about your options, you will want to go over your home mortgage contract with a fine tooth comb that way you know you completely understand every aspect of the contract and are not surprised by hidden clauses or penalties. You will also want to get your home mortgage contract notarized, that way it is seen as legal and binding contract. Remember, purchasing a home using a seller financed home mortgage can mean a long relationship with the seller of your home, so make sure that it is something that you can commit to and are willing to deal with.

People buy and sell homes everyday using home mortgages, both through a bank or lending company and through seller financed home mortgages. Knowing that you have a full understanding of how home mortgages work is an important part of making sure that you are truly getting the best deal on your home. Many times people enter into home mortgage contracts without knowing all the details and they often find themselves in trouble a few years later, because they didnít completely understand the consequences of not fulfilling all aspects of their contract.

Types of Home Mortgage Loans
Adjustable Rate Home Mortgage Loans
Adjustable Rate Hybrid Home Mortgage Loans
Balloon Home Mortgage Payment
Bridge Home Mortgage Loan
Fixed Rate Home Mortgage Loans
FHA Home Mortgage Loans
VA Home Mortgage Loans
Apply for a Home Mortgage Loan

Glossary of Mortgage Loan Terms


 

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