When it comes time to buy a home, most people find they need the services of a mortgage company. After all, who has $200,000 in cash lying around? Without some kind of home loan, most people would not be able to buy a house at all.
And so the mortgage company has become a major part of American society. Major firms like Ameriquest Mortgage, National City Mortgage, GMAC Mortgage and Countrywide Mortgage have sprung up, but there are hundreds of one-branch, individual companies too, from Los Angeles to Florida, New York to Washington.
The word "mortgage" literally means, in French, "death pledge," but it's not as unpleasant as it sounds. It amounts to a loan: The lender grants you access to the property in question as though you were the free-and-clear owner, while retaining certain rights to oversee the property's well-being, including the right to repossess or sell it if you, the debtor, don't keep up your end of the obligation.
The mortgage company is the entity that takes care of all of this. Some companies specialize in debtors with bad credit; if that is your situation, you should seek out a firm that advertises its willingness to help such customers.
Your home mortgage company will help you decide what kind of mortgage is best. Some options allow you to pay back only the interest for a few years, before repaying the principal. There are 10-year mortgages and 30-year mortgages, mortgages with fixed rates and mortgages with adjustable rates. There are pros and cons to all of these options, and the mortgage company agent can assist you in determining what will best suit your needs.
The typical home mortgage loan requires you to pay a certain percentage of the principal (the amount of the loan) plus some interest, every month. Usually, there is no penalty for early payment -- that is, if you suddenly came into $100,000 and wanted to pay off the rest of your home loan, you could do so without penalty. More commonly, people will often pay $50 or $100 more than their minimum payment each month, to help reduce the size of the loan and to build up equity in the home.
In the United States, to promote home ownership, the government gives tax breaks to first-time home buyers and mortgage holders. The mortgage company can explain how all of that works, as can a tax adviser.
In some cases, it is wise to use the services of a mortgage broker. This is a business that collects your financial information and your needs, then checks with several potential lenders to see who is best suited for your situation.
Once you've chosen a mortgage company and taken out your home mortgage loan, there's a good chance you won't be with that company for the life of the loan. Most mortgage companies at some point sell the mortgages they own to larger financial institutions. This rarely affects you, the debtor, however; the terms of the loan almost always remain exactly the same, and all the changes is the address you send your payment to each month.
Often, the realtor or the owner of the property you are buying has a particular lender they normally work with. More often than not, there is not reason for you to seek out an alternative; the preferred company is already familiar with the property and the seller and will be able to suit your needs. Make sure, though, that everything is explained to you to your satisfaction. People who work for mortgage companies deal in the arcane, complex language of home mortgage loans and interest rates every day. Sometimes they forget that their customers don't!
Christopher M. Luck has an extensive background in working exclusively with the some of the top mortgage companies in america and is now offering his free mortgage advice to the public. If you are at all interested in Christopher's advice, tips, or secrets, you can visit his mortgage blog