Mortgage loan

A mortgage loan is a loan secured by real property through the use of a note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan. However, the word mortgage alone, in everyday usage, is most often used to mean mortgage loan.

A home buyer or builder can obtain financing (a loan) either to purchase or secure against the property from a financial institution, such as a bank, either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably.

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Facts About Mortgage Loan Offers And Pre-Approval

Although many of the ‘pre-approval’ letters you get through the post are worthless, there are types of pre-approval from lenders that can help you greatly when buying a house. If you can get pre-approval on your mortgage loan, then you will find it much easier to get the house you want quickly. If you want to know more about pre-approval for mortgage loans, then here are some facts to help you out.

Apply before you buy

Although many people used to look at homes before applying for a mortgage loan, nowadays it is critical that you apply for the mortgage loan first. This will allow you to know exactly how much you can afford to spend on a house, and so find the property you want much more quickly and easily.

Pre-approval and pre-qualification

Although you might have a great credit rating and a good job and know you will be accepted for a mortgage, it is much better to apply and get pre-approval than to simply be pre-qualified. Pre-qualified simply means you are eligible to apply for a mortgage loan, but does not guarantee the amount that you will receive. However, getting a pre-approval letter will tell you exactly how much you will be allowed to borrow. As long as your circumstances do not change, this amount is guaranteed.

Getting pre-approval

To get pre-approval, you simply need to find the right lender for your needs and then speak to them about pre-approval. They will perform the necessary checks and give you a pre-approval letter, after which you can start searching for your dream home.

Looking at the right homes

If you have pre-approval, then you know exactly how much you can afford to spend on a property, and so can narrow your search down to homes within this price bracket. This will help you to find a property to match your needs much more quickly, and so make buying easier.

More negotiating power

If you have pre-approval on your mortgage loan, then you will be seen in the same way as a cash buyer. You already have the funds in place, so the seller is more likely to accept an offer immediately, even if it is below the price estimate. This is because they can be more certain that their house is sold, and so take it off the market pending the close of sale.

Quicker sale closing

One of the lengthiest parts of house buying and selling is the closing of the sale. If you have agreed to buy a house but do not have a mortgage in place, then it can take time to arrange the funds, and you might even find that you cannot get the funds you need. However, if you have pre-approval the funds are already guaranteed, and you can push through the transaction much more quickly. This will make buying a house much less stressful, and help you to get the home you really want.

Housing and Economic Recovery Act Makes Mortgage Loan Originator Licensing Mandatory in Each State

The recently passed Housing and Economic Recovery Act included a provision called the S.A.F.E. Mortgage Licensing Act, which stands for the Secure and Fair Enforcement for Mortgage Licensing Act. The recent legislation passed by our US Congress and signed by the President requires every state to create mortgage licensing laws and regulations for loan originators and requires the states to take part in a national mortgage licensing registry. If the state does not comply within 12 to 24 months, the SAFE Mortgage Licensing Act then requires HUD (Department of Housing and Urban Development) to create regulations to license the loan originators.

In the new law a loan originator is defined as an individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain. The definition does not include clerical or administrative staff such as underwriters, processors, assistants, and other non sales staff. What is very unique about this new law is that it is the first ever loan originator licensing that is also required for sales persons that work for state and federally chartered depository institutions, aka banks. Most likely the states will just allow HUD to regulate the loan originator licensing for the banks, but some states that are very strong on states rights will likely expand their current laws to require loan originators of banks to be licensed with the state.

The requirements under the SAFE Mortgage Licensing Act are backgrounds checks using fingerprint cards, credit history checks using credit reports, pre-licensing education, passing a written test, and net worth, surety bond, or fee that goes into a state fund. The Background check will verify that the loan originator has not had a felony in the last 7 years, and it will verify that the loan origiantor has never had a felony involving an act of fraud, dishonesty, a breach of trust, or money laundering. The credit check will verify that the loan originator is financially responsible. That is fairly vague, so I would expect each state to come up with more specific regulations that may even include a minimum credit score or other similar criteria that would be reviewed when applying for a loan. The pre-licensing education will have to be a minimum of 20 hours of approved education. Many mortgage companies are hoping that this will allow for further cross-certification of education courses between the states. The written test will be required to cover state and federal mortgage origination law. The test will have to be passed with a 75% or higher, and if failed 3 times in a row, the loan originator will have to wait 6 months to retake the test.

In addition to the new requirements for loan originators that each state must meet, every state must begin to use the nationwide mortgage licensing system. There are currently 15 or more states on the new system, and there have been even more states transitioning on to the system each month. It is expected that by 2010, every state will have transitioned on to the nationwide mortgage licensing system (NMLS). The hope is that this system will streamline the process, but until the states start to make their regulations similar, everyone will still need to supply each state with different items making the process very burdensome and far from streamline.