Mortgage Market Research
Homebuying is an exciting time for the family.
Yet, homebuyers should spend some time doing Mortgage Market Research. Collect information and compare prices to make the best decision.
About Mortgage Market Research
A home buyer should do research and understand the primary conditions of a mortgage. The jargon can confuse those who do not know their meaning. Here are some of the terms of a mortgage.
Digital Mortgage: Digital mortgage technology allows homebuyers and refinancers to upload financial documents. It also allows the digital signing of documents. Borrowers can sign from the comfort of their homes or offices.
Principal: Principal is the amount of money that a lender allows a borrower to borrow when buying a home. This amount does not include insurance, commission, or closing costs.
Debt to Income Ratio: This ratio is easy to find. It is the amount you pay for debt servicing divided by your total monthly income.
Equity: Home equity is the value of your home less the current amount of your mortgage. Thus, you own the difference, free and clear.
Insurance: Private Mortgage Insurance (PMI) allows buyers to use a lower down payment. This type of insurance safeguards the lender in case of default of the borrower. Thus, the lender can afford to offer a loan with a down payment, as low as 3.5%. You can use Title Insurance for protection.
The annual interest rate: The yearly interest rate is the loan value, expressed as a percentage. It is different from a mortgage rate. APR is typically higher than the interest rate on loans.
Depreciation: we calculate loan payments based on the accumulated interest or Amortization and Acceleration on the mortgage loan. The rest of the payment relates to the principal balance. Depreciation is the process of decreasing this amount over time. Banks do so by drawing up monthly mortgages.
Closing costs: There are two types of closing costs for a mortgage. Some are one-time costs. Others are recurring items, including property taxes and home insurance expenses. The borrower must give the buyer a list of all costs of closing the transaction.
Adjustable-Rate Mortgage: This type of mortgage sets the first few years of a loan at a fixed price. After this initial period, the interest rate may change every year.
Fixed-Rate Mortgages: This type of mortgage offers a fixed rate for the entire loan term. Fixed-rate mortgages can be attractive to home buyers who are afraid of rising mortgage rates. It’s the way to keep things affordable.
Underwriting: Underwriting is the process by which the lender assesses risk.
Late charge: Most mortgage contracts include a grace period for monthly payments. After this period, the mortgager charges a late fee.
Foreclosure: Foreclosure happens when a homeowner fails to pay his or her mortgage. He or she forfeits all rights to the property, which will now belong to the lender.
Gathering Information from Lenders
Every lender wants buyers to believe that they have the best mortgage program. Many lenders will have comparable interest rates. Yet, the types of loans and the terms of these loans may vary. To find the best deal, buyers should gather information on affordable mortgage rates. Use that information to determine which lender has the loan that best suits your needs.
Get Initial Mortgage Approval
One way to simplify the process of buying a home is to apply for and get initial mortgage approval. For a digital mortgage, the borrower has to give the lender an income and expense statement. He has to supply recent tax returns and payment receipts. He also has to provide the lender with other relevant financial information. The lender will also check the borrower’s credit history. In that way, the lender can determine if the applicant is eligible for a pre-approved loan. If the buyer has a letter of approval, real estate agents will be more willing to cooperate and close the deal.
These steps are not a 100% guarantee that the buyer will receive a cheap mortgage. But it is the best way to get a mortgage that matches the individual financial situation of the buyer.
About Mortgage Market Research
SIS International provides research and strategy consulting. We conduct Focus Groups, Surveys, Consumer Online Communities Customer Loyalty Research, Segmentation, Industry Tracking, and Competitive Analysis. Other services include Consumer Research, Global Market Expansion, and Fintech Strategy Consulting.