Why Does The Mortgage Company Want History

Category: Finance, Mortgages.

Although this is a pretty straightforward question, how many individuals do you know that ever take the time to ask, and receive an answer? More often than not, the question of a home mortgage isn t pondered until there is a desire to purchase a home.

Not very many. For the purpose of this article, we re simply going to examine the home mortgage, and the variations that exist in the mortgage market today. It s that simple, the definition is that simple. A home mortgage is a loan furnished by lending institution to a buyer for the purpose of procuring residential property, are a home of which to live. The actual process is anything but simple. Mortgage lenders today, thanks to all the federal regulation, and identity theft, default rates in existence require more information than ever before.

How do you approach mortgage lenders and what information what you need to furnish? The mortgage application is sometimes a 10 to 15 page application that will ask questions pertaining to your life years prior. The lender simply needs previous addresses, and previous education, previous jobs to gain greater insight and opportunity to know the borrower. Why does the mortgage company want history? It is not entirely impossible to steal someone s identity, gain access to their current information, even from three to five years prior. Generally, when you complete a mortgage application there s also a mortgage application fee charged at the time you submit the application.

What is impossible is to enter the mind of the individual and gain access to relevant work history or education history. Why do the mortgage lending institutions charge an application fee? What other information will be necessary to furnish when completing the mortgage application? Mortgage companies charge a fee because it cost money to process application, and only serious applicant s warrant the time and expense. Generally a personal financial statement, the proposed mortgage amount, and any legal judgments against you such as bankruptcies, or federal student, tax liens loans will be requested at the time of application submission. The most often used mortgage product is the fixed rate mortgage. Now, what have the mortgage products are available to the mortgage borrower?

The next in line would be the adjustable rate mortgage, and the newest member of mortgage products would be the interest only loan. The fixed rate mortgage provides the borrower with a fixed interest rate for a specified number of years, generally 10, 15, or 20 years as a set monthly payment. The interest only loan is gaining in popularity at an ever increasing and phenomenal rate of growth. The adjustable rate mortgage is exactly as it sounds. The interest only loan is quite frankly, the least consumer friendly of the three and today the most popular of the three. The interest rate for this type of mortgage is adjusted at set intervals generally no less than six months no more than 12 and the amount of the monthly payment will vary according to the adjusted interest rate.

When you take at an interest only loan, you may payment of only interest for a specified number of months or years on a loan that has been amortized for a greater number of years, and at the, usually 20 end of the interest only term, your payments will reflect interest and principal payment. That s why this mortgage product is the least consumer friendly. It s at this juncture that many homeowners cannot afford the interest and principal payment. It does however make the most profitable lending institution. If you are considering the purchase of a home, please take a moment to visit a local lending institution, and the web, a local realtor site of the Housing and Urban Development Department. I believe you should now have a much clearer picture as to what a mortgage is, why you complete a mortgage application, and the basic mortgage products available. You, as a potential homeowner can never obtain too much information.

Get online, check out the advertised lending companies there. What are other resources that can be accessed to learn about the mortgage process and your available options? Look at the information they ask for, the products they offer, and then do some comparison shopping. Often, you will learn as much about what you don t want, as what you do want.

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