Maybe you’ve been saving for years or maybe you’ve only just come up with the idea — buying and owning a home is a major purchase and decision. It is important that you try to learn as much and as deeply about your choices not only with the home you’ll be purchasing but also with how you’re going to go about paying for it. When it comes to payment, the term mortgage is one of the first that comes to mind. A mortgage is a kind of loan a homebuyer applies for and borrows from a lender in order to pay for the home. This sounds simple enough and it can be with the use of a mortgage ai to help you out.
While you’re thinking of crown molding or popcorn ceilings and choosing between carpeted floor or hardwood, you should also be thinking about what it legally means to take out a mortgage. It is common knowledge that a home will cost well more than a few months’ worths of paychecks, and for someone to lend you that much money, there has to be security both on your end as the buyer of the house, and your bank or financial entity as the lender of the money. Here are a few legal aspects that you should keep in mind before Home Lending.
Mortgage Prequalification vs. Preapproval
While they might seem like synonyms, prequalification and preapproval are different. To prequalify for Home Lending, you get an estimate on how much money you might be able to borrow, what kind of rates you will be able to get based on the financial information you provide. Oftentimes this can be done with your lender or as mentioned earlier, a mortgage ai. This is an initial step to understanding where you and your lender may eventually agree on.
A preapproval on the other hand means you have submitted a mortgage application to your lender. Your lender will then verify the information you’ve provided and if you’ve been approved, they will let you know the specific amount they will be willing to lend you. With this, you will be one step closer to closing a deal as home sellers and real estate agents often see a preapproval as security and will know that you are a serious buyer.
Fear Foreclosure
Foreclosure the process which allows your lender to take back your home. Regardless of any cherished memories or how the house is full of your personal belongings, if you are unable to make your mortgage payments, your lender will have the right to take the home back from you.
This is a worrying matter for all involved. This is why it is important that the mortgage that you take out is one that fits you, your lifestyle, and your finances. This is why the prequalification and preapproval stages are important and must be considered. In addition to how much you can borrow, you must also consider how you will be paying. Home Lending typically can be done two ways: with a Fixed-Rate or an Adjustable-Rate. It is best to weigh the pros and cons of the two and think about what suits you and what your plans are for your home in the future.
Looking Out for the Lender
Don’t think that you only have to look out for yourself. Keep in mind that the law also protects the lender. Your bank or financial entity that will be lending you money also possesses a few protections granted by the law. Here are a few to keep in mind.
- Right to foreclosure
- Right to suit for sale
- Right to sue for mortgage money
- Right to sale without court intervention
- Right to spend money
- Right to the accession of the mortgaged property
- Right of possession
With all of these laid out, take your time to really comb over the legal proceedings and protections afforded you and your lender so you’re able to make the best Home Lending decisions!
