Mortgage Loan Guide
A lot of people, when taking out real estate loans, do not know the difference between a mortgage banker and a mortgage broker. To the general public, all mortgage companies seem to be the same, and they all give out loans. People have to understand though that these mortgage companies differ from one another in many ways, but they are generally classified into two types – one that gives out the actual real estate loans and one that acts as a mediating party between buyers and sellers.
A mortgage banker, sometimes called a direct lender, does the first description mentioned. Mortgage bankers are the ones who will give out actual real estate loans. When you go to a mortgage banker, he will ask you to show documents to prove your financial capacity, evaluate and assess your credit standing, and give out the loan when your application is approved. An advantage of going directly to a mortgage banker is that you save the fees that are charged by brokers. One disadvantage of going directly to this person though is that he can give you information on certain mortgage packages that his company is offering. You have to spend a lot of time and effort researching and comparing different direct lenders.
A mortgage broker, on the other hand, serves as the middleman between buyers and sellers. When it comes to securing real estate loans, a broker is very helpful since he represents a lot of companies. He will guide you and help you find the right direct lender. Before even doing so, he will check your financial capacity and match this to a lender who can give you an approved mortgage. One disadvantage of choosing to work with a broker is that the fees are usually higher.
Taking your business through a broker or directly to a mortgage banker is a personal choice. If you do not have the time to compare the different real estate loans offered by direct lenders, then you may opt to go with a broker. But if you are sure that you want to work with a particular direct lender, then you should just do so.
When you are making a choice whether to work with a mortgage banker or a mortgage broker, keep a few of these things in mind. First, find out how long the company has been operating in the mortgage business. The length of time will show that it has enough financial stability and people will have confidence in its ability to do business. Second, you should see if the company is a big or a small one. Chances are big companies will have different departments that you have to deal with, though you can be assured that they will handle your mortgage in a professional manner. Third, check the company’s expertise in investments. It is here that you will see how good the company is when it comes to managing cash flow, since investments are banked on good business practices.
What exactly are interest only mortgage loans and when can people avail of these kinds of loans? In a nutshell, interest only mortgage loans are home loans that give borrowers the chance to pay only the interest of the loan during a given period of time. This type of loan is suitable for those who are anticipating a rise in income in the future. It is also useful for people who want to save up a certain amount of cash while paying for a house at the same time. Interest only mortgage loans give borrowers the chance to either pay only the interest during the agreed upon period of time or pay off part of the principal along with it. Those who take out this kind of loan have the option to save up the money that is meant for the payment of the principal of the loan.
When a person takes out an interest only mortgage loan, he is often told the terms that are available to him and how much he is expected to pay once the grace period for the principal payment is up. This can be a double edged sword if the person is not ready for the sudden rise in payments when the interest only period is up. While you can take advantage of the fact that you can save up money during the interest only period, you should also be preparing for the impending rise in monthly payments when this period is up. This is why interest only mortgage loans are not an ideal home loan for all people. People who opt for this kind of a home loan should be responsible enough to know the consequences of such a loan. While it may be a good loan to use to save up a huge amount of money while paying for a house, it is also a possible trap for those who are not sure of their future finances.
Interest only mortgage loans are good for people who have a keen eye on investments and who know that they can make ample returns on the money they are pouring into investments. This kind of a mortgage scheme is ideal for those who invest in certain businesses or stocks and who can foresee an ample amount of money coming in the future. People who are planning to make a big purchase at the beginning of their mortgage period will also find this kind of mortgage loan beneficial. Purchases like furniture, vehicles, and all that can be made along with the purchase of a house when you use interest only mortgage loans.
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