When purchasing a home, few homeowners have enough money to buy the home without using a mortgage. Mortgages, which are a special type of home loan, have been used for hundreds of years, but today’s mortgages are much different from those used in the middle ages.
One of the biggest differences between modern mortgages and those of the past is that today, the person who takes out the home is actually considered the homeowner. In times past, the person who held the mortgage, which was often a member of nobility, was considered the homeowner.
Until the person had paid off their home, they not only did not own it, but had very few rights. This began to change in the twentieth century and has gradually moved towards more rights for the homeowner. However, even though today the bank is not considered the homeowner, they do have a lien on the home, so in someways, the change is more of a symbolic one.
There are many places to get a mortgage, although in today’s housing market, many lenders are being much more conservative in who they offer loans to. One of the best places to start when looking for a mortgage is your own bank.
Your banks don’t always have the lowest rate, but because you already do business with them, they are often going to be able to give you an answer much more quickly and might be willing to overlook less than perfect credit. Also, in many cases, you can find out whether you qualify for a mortgage at your own bank without having to pay an application fee.
When starting to look for a mortgage, starting with your own bank will give you a very general feel of what types of rates to expect, as well as whether you will likely be able to receive a loan from other sources. It is important, however, to not only focus on your bank as the only option, but instead it is essential to use their offer as a basis of comparison against other loan sources.
Usually, checking out the rates of a mortgage broker is the next step. A mortgage broker is an individual that has relationships with one or more lenders, but is not directly associated with them. Instead, the mortgage broker gets a cut from all mortgages they sell, which is referred to as their points.
Sometimes, mortgage brokers, especially those who are associated with more than one lender, have access to some great deals, but it is important to always remember that they only get paid if you take the loan. Since a mortgage brokers salary is commission based, there is almost always some form of bias associated with their suggestions. For example, it is not uncommon for some lenders to offer special bonuses to brokers if they sell a certain loan, so this will affect what type of loan they push.
Of course, this in no way means that all mortgage brokers are acting solely in their own best interest, but there is the risk of a conflict of interest that all prospective homeowners should be aware of.