One of the biggest financial decisions a person will make in their lifetime is buying a home. Getting a home mortgage and purchasing a house can seem overwhelming. The mortgage process does not have to be difficult, but it does require quite a few steps and a vast amount of paperwork.
Types of Mortgages Available
Choosing a mortgage type can be somewhat confusing. Fortunately, there are many payment options to choose from when purchasing a home. The following lists some of the most common types of loans available to borrowers.
- Variable Rate Mortgages —A variable rate mortgage is a home loan in which the interest rate fluctuates over time. The change in the interest rate is based on the current official cash rates set by the Reserve Bank of Australia. This means that the monthly payment can vary from month to month. Borrowers have the option of either a standard variable home loan or a basic variable home loan.
- Fixed Rate Mortgages —A fixed rate mortgage provides the borrower with a home loan whose interest rate does not change. This is a beneficial loan for anyone who does not want to rely on Reserve Bank rates to set their monthly payment.
- All-In-One Loans —Also known as a transactional account, an all-in-one loan is an account that is set up with the lender that holds the mortgage, check, and savings accounts all in one account. All deposits are placed into this account and will reduce the mortgage balance.
- Shared Equity Loans —A shared equity mortgage, also known as an equity finance mortgage, offers the borrower a significantly lower interest rate or even no interest at all, in return for a portion of the capital appreciation of the value of the property.
How to Apply for a Mortgage
Once a mortgage decision has been made, the next step is to apply for the loan. This is a fairly simple process, once all of the necessary documentation has been obtained. Borrowers should expect to be asked for their income status, employment history, address, and other personal information.
The lender will also require a credit check, documentation of defaults on previous debts, a calculation of monthly expenses, and a detailed list of assets. Assets would include vehicles, investments, bank accounts, and savings deposits. The lender will take some time to verify all of this information, to ensure everything is accurate. The bank is checking all of this information in order to see if it is beneficial to them to make the loan.
After an application has been submitted and information verified, the lender will either approve or reject the loan request. If the mortgage is approved, borrowers will be required to satisfy the lender in the event the loan defaults, whether it is due to a loss of income, injury, or death.
Once the loan paperwork is complete, the lender will require a property assessment. Real estate appraisers and property inspectors hired by the lender will visit the property and determine if it is suitable for lending purposes. If there are any significant problems, the appraisal team may require the seller of the house to repair or make other changes before the loan process can move forward.
After all of those details have been satisfied and the loan has been approved, the lender will issue a letter of offer to the borrower. This document signifies the end of the mortgage application process and contains vital information regarding the loan, including all of the terms and conditions. For more information, visit a site like http://www.crossplainsbank.com.