Mortgage Process in Oradell
Once your offer has been accepted and the Purchase and Sale Agreement is executed, you will need to apply and be approved for a mortgage. A mortgage is a transfer of an interest in real estate as security for the repayment of a loan. A typical mortgage transaction involves a home purchaser borrowing money from a lender and entering into a written agreement with the lender, so that the real estate is collateral for the loan. A borrower obtains a mortgage loan through a process of application and commitment. The borrower initiates the process by submitting an application to the lender. The lender conducts a risk evaluation to determine whether a mortgage loan will be granted. In the risk analysis, the lender evaluates both the borrower's financial position and the value of the real estate. If the lender determines the risk to be acceptable, the lender will issue a loan commitment detailing the loan amount, repayment terms, interest rate, and other pertinent conditions.
After you have obtained a mortgage commitment, review it carefully. Make sure the rate and terms are correct before you sign the commitment and return it to the lender. There may be certain conditions that must be satisfied prior to closing. Be sure to provide your attorney with a copy of your commitment and conditions. When the borrower accepts the commitment, a binding contract for a mortgage loan is created. Residential mortgage loans usually bear interest at a fixed annual percentage rate over a period of fifteen or thirty years.
The interest rate is determined by the prevailing market conditions at the time the loan is made. A lender may increase its yield beyond the stated interest rate by requiring the borrower to pay "points" at the time the loan is made. One point equals one percent of the loan amount. It may also be beneficial for the borrower to pay points in order to reduce the interest rate over the term of the loan.
For more information or to set up an initial consultation, call today or fill out an online contact form.
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