Mortgage 101
Frequently Asked Questions
Mortgage financing – what is it and how does it work?
A mortgage is simply a loan where lenders like banks gets hold of the title of real estate property until the loan made by the borrower is paid in full. In the event that the borrower failed to pay up, these lenders can sell the properties which were used as a guarantee to get the amount of the money that was owed by the borrower for they have the right to take the property.
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Why is it important to get preapproved for a mortgage loan?
Getting preapproved is one of the most fundamental preparatory steps when trying to qualify for mortgage financing. A loan preapproval is more conclusive than a basic prequalification (not to be confused with preapproval) because the lender will examine everything from your credit report to your income and assets. A prequalification is more of a guesstimate of what you may be able to qualify for and is not based on the facts of your financial history. Don't overlook this process or you will risk having to start over at square one.
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You can take the full advantage of the tax benefits of homeownership by putting down as little as possible. Property taxes and mortgage interest are both deductible from state and federal income taxes. The money not spent on the down payment can be used for unexpected home improvements. There are some real estate experts that will say that it is more economical making larger down payment for Las Vegas homes because the amount that needs to be financed is reduced giving borrowers potential savings of thousand dollars or even hundreds of thousand dollars.
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Why is down payment required by the lenders?
A down payment is required by the lenders because it gives them protection should a borrower fail to satisfy the terms of the loan or to pay back the loan, especially if it is in the early years when more is owed on it.