1st Mortgage
Mortgage is the use of property as a security for taking a loan/paying off a debt. In most places mortgage is associated with loans taken on property i.e. real estate. A mortgage is seen as a wise option since one can make a purchase of a property without having to pay the full value at a time. There are various parties involved when a 1st mortgage takes place are:
Creditor: is the one who make loan available to the purchaser (debtor) for purchasing the real estate. Creditors are generally banks, insurance companies etc. They have legal right over the property that has been mortgaged with them. Creditor is also known as mortgagee or lender.
Debtor: is the one who takes a loan by mortgaging a property. Debtors can be individuals, businesses etc who purchase a property by taking a loan. A debtor is also known as the mortgagee or borrower.
There are also other parties involved such as lawyers (due to the complex nature of legal exchange of property). Financial advisors may also be involved in the process of helping the debtor find a suitable creditor.
This is a broad picture of a mortgage. 1st mortgage on the other hand is the mortgage when a creditor can make the first claim on the property in case of default on the part of the debtor. First mortgage is a huge financial milestone therefore one should have a clear picture as to the options available for down payment and financing the purchase of a property.
Some factors that need to be considered before a first mortgage are:
The greater the amount of down payment, the better it is for the mortgagee: If the down payment made is of a large amount then the monthly payments that have to be made will reduce, due to which the interest paid during the period of mortgage will also be substantially reduce. If a down payment of 20% or more is made then private mortgage insurance (PMI) can be avoided. This is a premium that has to be paid to the creditor in case the mortgage is considered very risky.
Low down payment options are available: Even if there isnt enough money to make a large down payment
Balance: It is very important to maintain a balance in ones financial life. One should prepare a budget which should help to cater to all the financial expenses.
Pre-approved Mortgage: Be sure to find a lender and have a mortgage pre-approved. Once the mortgage is approved then one can start house-hunting.
Homework: One should learn about the different mortgages available so that you can select what suits your need best. Therefore one should take the above factors into consideration before mortgaging ones property. Good financial planning is very important when you consider 1st mortgage. Hence with sound knowledge about ones finance and the financial liability it should be possible for one to handle mortgage easily and pay off the loan in easy installments.
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