Before explaining mortgage loan and credit scores, it goes without saying to first do your research when seeking a mortgage loan. Start by asking family and friends who have gone through the same course of action. Get on the phone and speak to various banks and mortgage agents. Research online. Search for feedback from previous borrowers. Being an informed borrower tends to make you a hard cookie at the bargaining table, and keeps you protected from any shady transactions.
Qualifications for mortgage . But what’s a mortgage loan? The word “mortgage” is derived from a law French term meaning “dead pledge”. Basically, this signifies that the pledge dies (or is terminated) when it has been paid or when the property has been foreclosed. Mortgage Loans are secured loans by the use of your property as collateral. The borrower can obtain a loan straight from the bank or as a result of an agent. Securing a mortgage loan from a bank entails a far more stringent process that if you are transacting having a mortgage broker.
What is a credit rating?
The credit score designed by Fair Isaac Corporation, or FICO, is the one that most lenders use when assessing your credit risk. A score above 720 is an outstanding score which provides you with lowered rates of interest and far more loan options. A 620 to 650 score is good, and you can nevertheless acquire reduced rates of interest but fewer possibilities. Scores lower than 620 could place you on a 50-50 situation but it’s great to understand that a score of 500-520 is generally the minimum that lenders will allow tobe eligible for a loan.
Disadvantages of Mortgage Life insurance:
No payout until the stipulated time period is passed: Regardless of the situation there is no payout within the first six months of the policy. So in case any calamity strikes the insured before the stipulated time, the insured will not receive anything.
Mortgage life insurance coverage decreases with time: In case of your death, the amount of cover will depend on the term of insurance, which decreases more or less in line with the amount outstanding on your mortgage. As a result, you end up paying more for less coverage over the years. That essentially means by the end of the plan, there will be no benefits if you outlive the policy.
Excludes any Pre-existing medical condition: Any pre-existing medical conditions (terminal or otherwise) before the investment are excluded in the policy.
Therefore, such conditions cannot be claimed if the situation arises.
Fixed monthly premiums Although insurance cover reduces with time the monthly premiums still remain fixed throughout the life of the policy.
Mortgage insurance may never be considered as popular as universal, whole or term life policies. However, there are some situations where you may want to consider purchasing a mortgage life insurance policy. By purchasing mortgage life insurance, you ensure your home remains a safe haven for your family and they can enjoy many more happier years to come in safety and comfort, simply because you were able to safeguard it for them, through a mortgage insurance policy.
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