Renovo Financial
What is Mortgage Loan ?
A loan that issecured by property or real estate is called a mortgage. In exchange for fundsreceived by the homebuyer to buy property or a home, a lender getsthe promise of that buyer to pay back the funds within a certain time frame for a certain cost. Themortgage islegally binding and securesthe note in giving thelender the right to have legal claim against the borrower’shome if the borrower defaultson the termsof the note. Basically, theborrower haspossession of the property or the home, but the lender isthe one who owns it until it is completely paid off.
Credit Score A credit score is a number that indicates how likely a borrower is to repay future debts. Credit scores speed up the mortgage approval process for many people because they identify low-risk borrowers quickly.
Each credit report includes the following data, collected from creditors and public records: Identifying information (name, address, employer, Social Security number, etc.) Debt and payment history on credit cards, student loans, consumer loans, car loans, etc. Previous collections Tax liens, judgments and bankruptcies Inquiries for new credit
This is how payment and debt information ranks in your score: Payment History: 35 percent Amounts Owed: 30 percent Length of Credit History: 15 percent New Credit: 10 percent Types of Credit Used: 10 percent
These factors are NOT considered in credit scoring systems: Income Race Religion Gender Marital status Nationality Age Receipt of public assistance
Types of Mortgages You might hear about several different types of mortgages. Again, if you want to be a stickler, we’re talking about different types of loans – not different types of mortgages (because the mortgage is simply the part that says they can foreclose if you don’t pay the loan in question).
Fixed-rate mortgages Fixed-rate mortgages are the simplest type of loan. Given a loan amount, an interest rate, and a number of years to repay the loan, your lender calculates a fixed monthly payment. You’ll make that exact same payment for the entire term of the loan (unless you pay more than is required or refinance the loan). Fixed rate mortgages typically last for 30 or 15 years, although other terms are not unheard of.
Adjustable Rate Mortgages Adjustable rate mortgages are similar, but the interest rate can change at some point. When that happens, your monthly payment also changes – for better or worse. Rates typically change after several years, and there are some limits as to how much the rate can change.
Second Mortgages Second mortgages allow you to add another mortgage and borrow more money. Your second mortgage lender is “in second position,” meaning they only get paid if there’s money left over after the first mortgage holder gets paid.
Reverse mortgages
Reverse mortgages provide income to people who have sufficient equity in their homes. Retirees sometimes use a reverse mortgage to supplement income or to get cash out of homes that they paid off long ago.
Repaying a Mortgage: What is Included? The mortgage is usually to be paid back in the form of monthly payments that consist of interest and a principle. The principal is repayment of the original amount borrowed, which reduces the balance. The interest, on the other hand, is the cost of borrowing the principal amount for the past month. A monthly mortgage payment includes taxes, insurance, interest, and the principal. Taxes are remitted to local governments as a percentage of the value of the property. These tax amounts can vary based on where the borrower lives and are usually reassessed on an annual basis. The insurance payments go toward mortgage and hazard insurance. The mortgage insurance protects the lender from loss incurred if a borrower defaults, whereas hazard insurance protects both the borrower and the lender from property losses. The funds may be held in escrow or the lender may collect the taxes and the insurance.
Contact Us Address Renovo Financial, LLC 1016 W. Jackson Blvd., Suite 316 Chicago , IL60607 USA Phone : 312.243.3288 Fax : 773-442-0600 E-mail : drosen@renovofinancial.com
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