Principal – the amount that goes towards the equity;
Interest – the rate you are charged to obtain the loan;
Insurance – if your down payment is less than 20% of the purchase price;
Taxes – calculated based on the property’s value.
The purchased house acts as collateral in exchange for the borrowed funds.
Fixed-rate Mortgages – The interest rate on a fixed-rate mortgage remains constant throughout the term of your loan, which means your payments will always be the same. You lock into a specific interest rate, which will not change until the term is up. The amount you pay towards interest will be large at first, but will gradually decrease as you make payments. This option is generally favorable if the current rates are low.
Variable-rate Mortgages – The interest rate on an adjustable-rate mortgage will fluctuate, which means the interest portion paid on your monthly payments will change. The interest rate you are charged is tied to the lender’s prime mortgage rate, if the prime rate goes up does your rate and vice versa
Once the lender chooses to note the mortgage as being in default, a Notice of Default will be filed. If the lender does not get a response from you, and still doesn’t receive the missed payment, the foreclosure process can begin as early as three months after the first missed payment. A lawsuit is filed, and notice is given about the lender’s intent to sell the home. After about six months following the first missed payment, the lender can sell the home and notify you of your obligation to vacate the property.
3. Employment History;
4. Credit history; and
5. Value of the Property you wish to purchase.
One of the first things a lender will consider is how much of your total income you’ll be spending on housing. This helps the lender decide whether you can comfortably afford a house. A lender will then look at your debts, which generally include monthly house payments as well as payments on all loans, credit cards, child support, etc. A history of steady employment, usually within the same job for several years, helps you qualify. But a short history in your current job shouldn’t prevent you from getting a mortgage, as long as there have been no gaps in income over the past two years. Good credit is also very important in qualifying for a mortgage. The lender will also want to know that the house is worth the price you plan to pay.
There are several things you can do to boost your credit fairly quickly. Following are five steps you can use to help attain a speedy credit score boost:
1) Pay down credit cards. The number one way to increase your credit score is to pay down your credit cards so they’re below 70% of your limits. Revolving credit like credit cards seems to have a more significant impact on credit scores than car loans, lines of credit, and so on.
2) Limit the use of credit cards. Racking up a large amount and then paying it off in monthly instalments can hurt your credit score. If there is a balance at the end of the month, this affects your score – credit formulas don’t take into account the fact that you may have paid the balance off the next month.
3) Check credit limits. If your lender is slower at reporting monthly transactions, this can have a significant impact on how other lenders view your file. Ensure everything’s up to date as old bills that have been paid can come back to haunt you. Some financial institutions don’t even report your maximum limits. As such, the credit bureau is left to only use the balance that’s on hand. The problem is, if you consistently charge the same amount each month – say $1,000 to $1,500 – it may appear to the credit-scoring agencies that you’re regularly maxing out your cards. The best bet is to pay your balances down or off before your statement periods close.
4) Keep old cards. Older credit is better credit. If you stop using older credit cards, the issuers may stop updating your accounts. As such, the cards can lose their weight in the credit formula and, therefore, may not be as valuable – even though you have had the cards for a long time. Use these cards periodically and then pay them off.
5) Don’t let mistakes build up. Always dispute any mistakes or situations that may harm your score. If, for instance, a cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau aware of the situation.