You need to take out a mortgage loan when you don’t have the required cash in your hand to buy a home. You can obtain a mortgage loan by keeping the same property as the security for the borrowed amount. It means that the lender can sell the property and recover the amount if you fail to pay back the loan on time.

Mortgage – Qualifying criteria

There are certain factors that the borrowers have to satisfy in order to qualify for a mortgage loan. Whenever you apply for a home loan, the lenders judge you by 3 C’s of credit, which are, the capacity to repay, credit history, capital or down payment and the collateral or the property against which you’re taking out the loan.

Mortgage – Required documents

You need to provide certain documents to your lender while applying for a mortgage loan. The documents are listed below.

• Proof of your income
• Your address proof
• Your Social Security Number
• Recent statements of stocks, deposit amounts and bonds
• Your W-2 forms for the past 2 years
• Your paystubs for the past 2 years

Along with producing these documents, you also need to pay an application fee for the loan processing costs.

Mortgage – Types of interest rates

There are primarily 2 types of mortgage rates, namely, FRM and ARM. In an FRM (Fixed Rate Mortgage), the rate of interest remains fixed throughout the term of the loan; whereas, in an ARM (Adjustable Rate Mortgage), the interest rate remains fixed for a time after which it starts fluctuating depending on the chosen index (interest rate measurement).

It is advisable that you calculate your affordability while taking out a mortgage. Your home loan payments comprise of the principal amount, the interest, along with escrow payments. So, take into account these factors and calculate your affordability to make sure that your financial condition will permit to make the monthly mortgage payments right on time.