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    Mortgage Overview

    Buying a home is often the largest purchase of your life, and it all begins with obtaining a mortgage.  What exactly is a mortgage, how do you get one, and how do they work?  These are all common questions, and we have the answers.

    What is a Mortgage?

    A mortgage is a loan used to purchase a home.  It is also a legal document that you sign when you buy, or refinance, a home.  It provides your lender with the right to claim the property if the terms of the mortgage are not met.  A copy of your mortgage is filed with your county or parish as a lien against the home until the loan is paid off. 

    How Do Mortgages Work?

    Mortgages are loans originated by an independent mortgage lender, a mortgage brokerage, a bank, or a credit union and are used to finance the purchase of a home or to borrow money against the value of a home you already own.  The home serves as the lender’s security for the mortgage, which is called collateral. You will repay this loan over a predetermined period of time called the term, with interest, as agreed to in the recorded mortgage document. 

    How Do You Get a Mortgage?

    Acquiring a mortgage begins with the application process. The primary factor considered when evaluating a buyer for a mortgage is their ability to repay the loan. Your ability to repay is determined by your credit score, income, current debt, size of your down payment, and more. Once you apply for your loan with a trusted loan officer at an institution that originates mortgages, like Standard Mortgage, the loan officer will work on your pre-approval.  Once you are pre-approved, you can begin shopping for a home.  After you find a house and have an accepted offer within your price range, your loan officer will lead you through the remaining steps necessary to close on your property.  

    What is a Mortgage Pre-Approval?

    A mortgage pre-approval is a process in which your chosen lender reviews your employment, income, credit and debt information to determine both your ability to become pre-approved, as well as how much you will be able to borrow. Once you have your pre-approval in hand, you are ready to go shopping!

    What are the Different Types of Mortgages?

    There are many different mortgage products and your expert loan officer can help you choose the right mortgage to meet your financial needs. Loan products may differ in term, whether or not the interest rate is fixed or adjustable, and certain income or down payment requirements. Some loan products are backed by the government there are some programs that can provide financial assistance to help with down payments and/or closing costs. 

    How Long Do You Have to Pay Back Your Mortgage?

    The term of your mortgage depends on the loan product that you choose. Your loan officer will help you determine which loan product is best for you.  There are short-term options, which have a 10 or 15- year term as well as long-term options that extend to 30-years.  If you opt for a longer term, your monthly payment will be less, however, you will pay more interest over the life of the loan.

    What Are You Paying in Each Mortgage Payment?

    Typically, your monthly mortgage payment is made up of the following elements:

    • A portion for principal to reduce the remaining balance of your mortgage.
    • A portion for interest, which is the fee you pay to your lender for borrowing the money.
    • A portion for property taxes, which your lender will collect and hold in escrow funds to pay taxes assessed by your parish/county when they come due.
    • A portion for insurance, which your lender will also collect and hold in escrow funds to pay your homeowners insurance each year. Insurance may also include flood insurance and private mortgage insurance, if applicable.

    Why are Mortgage Interest Rates Important?

    The interest rate on your mortgage loan represents the cost of borrowing money at the time your loan is originated. Each month when you remit your payment to your lender, a portion of the sum goes to interest. The lower your rate, the less expensive your mortgage is over the life of the loan.  

    What Happens if Mortgage Rates Go Down After I Obtain My Mortgage?

    Depending on your interest rate and your specific loan product, if rates drop, it may be an excellent opportunity to refinance your mortgage.  Refinancing your mortgage can lower your interest rate, reduce your payments, lower the term of your mortgage, or allow you to take cash from the equity in your home.

     

    Mortgage rate options

    Every homebuyer has unique needs. Standard Mortgage strives to meet them with quality service and individual attention. We pride ourselves in giving you the mortgage information, loan options, and convenient assistance you’re looking for, including what to expect when you apply for a mortgage loan. With a variety of loan programs and an established network of lenders behind us, we help you find the loan that best suits your needs and at a competitive rate.

     

    Adjustable Rate Mortgages (ARM)

    An adjustable rate mortgage (ARM) is based on a predetermined index and margin, which can go up or down at specified intervals based on the index.

    Conventional Loans

    A conventional loan must meet nationally standardized guidelines, such as income, credit, and property requirements. Loans are subject to amount limits set by Fannie Mae and Freddie Mac.

    Federal Housing Administration (FHA)

    The Federal Housing Administration — commonly referred to as HUD — issues loans that provide affordable mortgages to the average homebuyer.

    Fixed Rate Mortgages

    A fixed-rate mortgage is the most common type of mortgage program. Your monthly payments for interest and principal never change.

    JUMBO

    A jumbo loan, or non-conforming mortgage, is for homebuyers who expect to borrow more than $424,100 for single-family residences.

    USDA Rural Development

    A USDA Rural Development loan helps rural home buyers purchase a home with no down payment, low fixed rates, simple credit requirements, and the guarantee of the federal government.

    Veterans Administration (VA)

    Veterans Administration loans help veterans — including active duty service personnel and certain categories of spouses — finance the purchase of their homes with favorable loan terms.

    Buying a home can seem like the most complicated financial process in the world, especially if you've never done it before.  

    Standard Mortgage is here to help you navigate the daunting, complicated process that lies ahead. In this eBook, we’ll walk you through the eight steps you’ll have to take before you hold the keys to your new home.

    DOWNLOAD THE KIT

    Home Mortgage Buyer's Guide