Home Purchase Loans - First Mortgages

First Mortgage Loans - Buying a Home, Condo, or Townhome

By Sharon Secor

Direct Lending Solutions Staff Writer

For most people, the process of buying a home is one of the largest financial transactions they make in their entire lives. Because of that, the experience of buying or selling a home can among the most stressful, frustrating, and confusing events in a person’s financial life. Inexperience and a lack of real estate transaction knowledge can heighten the stress and the confusion, and can result in mistakes and regrets.

To avoid such negatives and make that first home purchase the proud event and joyous occasion it should be, make the most important investment first. And that investment is taking the time to educate yourself about real estate transactions and the associated financial processes, such as home loan application essentials, mortgage terms and conditions, and how interest rates and length of mortgage affect the overall price of the home. That investment of time will ensure that you have the financial skills you need for the careful planning that will make that home transaction a success.

Definition

The term "mortgage loan" refers to a loan secured by real estate. When you take out a mortgage loan, you borrow money from a lender and agree that real estate will be collateral for the loan. You sign a mortgage document that grants the lender a lien on the real estate. If you fail to repay the loan as agreed, the mortgage document gives the lender the right to foreclose (take) and sell your real estate to pay off the balance on the mortgage loan.

Prerequisites

Typically need a good credit history to qualify for a mortgage loan
Typically need a down payment
Need sufficient income to service mortgage payments

Conditions Are Favorable For Buyer

As we’ve all heard, home prices have been trending downwards since the deflation of the housing bubble, bringing them back down within reach of the average buyer. This is especially good news for first time homebuyers, who are now more likely to be able to successfully participate in the market. With the number of homes on the market today, the balance of power has shifted back to the buyer.

Homeownership Has Real Benefits

The benefits of homeownership extend far beyond the market value of an individual house. While investment in a home is typically a positive financial move, buying a house offers more than that. It is hard to place a monetary value on the sense of security that owning your own home can provide. As a renter, you are subject to the whims and weaknesses of your landlord. If your landlord, for example, borrows on the house and doesn’t repay it, you could abruptly be looking for another place to live when he loses it. As a homeowner, you have more control over your destiny, and that has a great deal of value in and of itself.

See Also: Choosing a Mortgage Broker