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How
to Apply for a Loan
Before jumping into the application process,
it is important that you, the buyer, understands the general
timeline for a loan, the expectations from a lender, and the
preparation you should do prior to applying for a loan.
A
mortgage loan will
most likely be the largest debt you will ever incur.
Simply put, a mortgage is a loan to finance the purchase of
your home. This is based upon a note that you sign where
you pledge your home as collateral (or guarantee that in the
case of non-payment of the loan the home can be used to repay
the debt).
Most mortgage loans these days are amortized
over a period of time. Amortization is the term that
refers to a fixed payment over a period of time which enables
the borrower to reduce the debt gradually through monthly
payments of principal and interest. A fixed rate
mortgage, for example, has a set monthly payment while the
amount of interest paid slowly is reduced to $0 by the end of
the loan (even though at the beginning the borrower is
generally pay a large portion of interest).
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