Mortgages are loans placed by a borrower to buy a property that is put on lien by the lender. This allows the borrower to own a property while the property is secured against the loan as a collateral. The lender, if borrower makes the maximum payment default that has been agreed, may foreclose the property and sell it to recover the unpaid amortizations.
Mortgage loans are big responsibilities to take. That is why there is a need to ensure that a borrower is ready to take on a mortgage before taking one. A few things to look at before filling up an application to get a mortgage moving.
- Financial Status – reviewing the current financial status of the borrower if income is sufficient to support paying the amortizations and the monthly expenses that will maintain the current lifestyle. It is important that the current lifestyle be maintained so that a person has enough margin to adjust in case of unexpected events such as pregnancy or health problems that will cause expenses to increase.
- Awareness – it is important that awareness with the current loan, its terms and auxiliary fees will help the borrower plan its approach on fulfilling the loan payment properly. Without awareness of the important details of a mortgage loan will open the borrower from mismanaging the payment and a slight unexpected change in fees that is part of the agreement can create a big adjustment for the borrower financially.
- Security – getting a mortgage loan will be a responsibility that a borrower will deal with for long period. This period ranges from 10 years to 30 years which is likely dependent on the laws of a country. During the amortization years, the borrower must be secured financially to ensure that any unexpected temporary halt from a source of income will allow them to continue paying for the mortgage and at the same time pay the monthly expenses they incur. This security can be supported by establishing a security fund equivalent to 6 months of the total expenses a borrower incurs.
- Time – choosing the timing would be a factor. All the criteria mentioned above should be in place when you decide take on a mortgage.
Remembering FAST will help you prepare and know if you are ready to get a mortgage. Nothing helps achieve in managing big responsibilities better than planning.