Find answers to your questions on mortgages

The federal government has several programs, or government sponsored institutions to help lending and to encourage home ownership. These programs are the Government National Mortgage Association (Ginnie Mae), the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

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There are multiple factors but lenders generally calculate the amount based on how much you can afford per month rather than based on your salary. The lenders may also consider things such as any income from a second job, bonuses, tax credits etc. So keeping a track of your credit history and monthly income is helpful.

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A mortgage broker is a middleman who specializes in finding the best possible loans and interest for you. These brokers, naturally, charge a fee for their services which sometimes isn’t feasible and an added burden coupled with the loan.

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Mortgages contain something called closing costs in which the loan-taker is supposed to pay appraisal fees, title insurance fees, attorney’s fees, pre-paid taxes, and insurance. The average closing costs is generally about 2-5% of the loan.

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Mortgage points are fees paid directly to the lender for a reduced interest rate. This can lower your monthly payments as you are “buying down the rate”. A point is equal to 1% of your mortgage amount. This basically means that you are paying the lender some interest up front in exchange for a lower interest rate for your loan.

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There are two different kinds of mortgages – Fixed rate where the interest charged remains the same for a set number of years and Variable rate where the interest you pay is subject to change.

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To get a mortgage it’s important to have bank statements of the past two months and investment accounts. Tax returns, paystubs, driver’s license and Social security card are also required. If you have a divorce decree or bankruptcy papers your lender may ask for the same.

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A mortgage is essentially a loan that’s taken out to buy a house or an apartment. It’s secured against the property you’ve bought to protect the lender which in most cases is a bank or a financial institution. This simply means that if you don’t keep up with your monthly payments on the loan, the property could be repossessed.

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