A mortgage loan is a type of home loan that is usually used in acquiring a house. It is a type of debt instrument which makes use of a security or collateral to ensure that the borrower would not default on paying the monthly installments until the entire loan is repaid. The lender could possess this security in case the borrower fails to pay the loan. In home mortgage loans, the security used is the house itself that is being bought with the loaned sum.
Mortgage loans are available to anyone who wants to purchase a house. Various lenders exist that caters to the different preferences of the different home buyers. Eight of the most common are : mortgage bankers, wholesale lenders, portfolio lenders, correspondent lenders, direct lenders, mortgage brokers, online lenders and sub-prime mortgage lenders. These lenders offer a wide range of services, all related to home loans.
However, it is not sufficient that a borrower should know what type of lender he or she must deal with. The lender should also know what type of borrower the individual really is. The credit record of borrowers is the main basis for the determination of the type of mortgage loan that is most suited to the borrowing individual. Borrowers with a high or strong credit record are usually the ones that are offered the best deals by lenders.
On the other hand, borrowers on the bottom side of the bad credit rating are not usually granted mortgage loans. However, if allowed, they usually may have a more difficult time in keeping up with their monthly payments because their loans have much higher periodic rates.
The idea of defaulting often makes mortgage loans not very appealing for most borrowers. But this is the quickest and easiest way for one to be able to own a house. On the other hand why think of defaulting if you are more than capable of completing your payments until the end of its term.
Again, never take things for granted. Do your due diligence in understanding what a mortgage loan is, what it entails to take up such a loan and lastly ensure that you are able to repay your monthly instalments on time and not let it lapse. Be prudent and careful in your search.
