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Mortgage System and the Mortgage Industry in the USA

The mortgage system and the mortgage industry have come to stay in the financial world. Infact mortgage business is a thriving business in the world today; it has made many rich and even owners of big houses, estate and other properties of note. But what is mortgage all about and what do you really know about it. In your country, is there anything like mortgage scheme or mortgage loans? I will lie to give you a brief run down on what the subject matter is all about.

We all know that the word mortgage is a tool used to create a lien on real estate by contract. It is seen also as a method by which individuals or businesses can purchase residential or commercial property without paying its full value at a time. One popular mortgage language you should be aware of is that the borrower is called the mortgagor, while the lender is known as the mortgagee. In legal terms, the creation of mortgage gives the legal title of the land to the mortgagee and an equitable title called the equity of redemption to the mortgagor. However, the legal title only exists as a security for a debt and does not convey any title or powers associated to the real property.

I want you to be aware that the mortgage instrument contains two parts, the mortgage (i.e pledge) and note which is the actual evidence of the debts and promise to repay. Mind you to protect the lender, a mortgage is recorded in the public records creating a lien.

I don’t know if your country has anything like mortgage system. In many United States of America states, a mortgage has been converted by statute to a device for creating a security interest in land. When the landowner fails to perform on the obligation secured by the mortgage, the mortgage holder may file a foreclosure to cause the property to be sold at auction, usually by the sheriff.

The mortgage industry in USA

The mortgage industry in the United States is a big business, infact it is a major financial sector in that country. I remember some years back, the federal government in the US created several programs or government sponsored entities used to foster mortgage lending, construction and thus encourage house ownership.

Some of the programs created then include government national mortgage association, federal national mortgage association and the federal home loan mortgage corporation

 

Comparison of mortgage in the US and other countries

The most common type of mortgage in the USA is the fixed rate mortgage, while in most European countries variable rate mortgages are more common. In the USA, home ownership rates are high. You should also note that mortgage loan financing relies more on secondary mortgage markets and less on formal government guarantees.

Mortgage Process In The United States Of America

The mortgage industry as well as the mortgage system works differently in the US as well as in other parts of the world. You should know that mortgage loans are treated as commercial paper which means that a lender can convey and assign them freely.

Trying to get a mortgage loan in the US is a bit easier if you know the steps to follow. You have to get an application. When you apply for a mortgage loan in the US, you will have to deal with an underwriter and like a I told you earlier, an underwriter is bank agent working with the bank but you may choose to work with a brokerage.

Before you apply for a mortgage loan in the US you need to have the following items in place so that your application can scale through, they include;

-verifying your employment and income status

-submission of your credit check

-list of residence over the past five years

-document of your savings, checking and any other financial statement

-a copy of your sale and purchase agreement

Most mortgage loans in the US require a significant down payment. Traditional mortgages often call for down payments of 20 percent, but larger amounts are usually required for low doc and no doc loans. It’s also possible to obtain 100 percent financing if you qualify for it.

Conclusion

I guess you may have learn a lot from my write up but if you are interested in buying real estate in the US, then remember mortgage lending market is so competitive. The overall interest rates are high and each banks and brokers differ. One of the easiest ways to obtain a mortgage loan is to work with your existing bank. If you already have a relationship with a bank in the US, the process of applying for a mortgage would be much easier for you.

 

Comments

  1. I agree with your details , great post.

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