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                                                                                     What is a Mortgage Company?

If you are thinking of owning a home, you have probably heard of mortgage. So what is a mortgage? A mortgage is a kind of loan that you can used to finance a home. Mortgages are a way of buying a house without having upfront cash. This is a kind of loan which uses the property you are buying as collateral. In case you fail to remit your payment, the lender, who is the mortgage giver, repossess the house.

A mortgage company deals with providing mortgage services to individuals. This could be a bank of a lender that does not necessary provide financial services like banks.

Source of Income for Mortgage companies
A mortgage company engages in originating and funding mortgages for residential or commercial properties. Mortgage companies are usually originators of loans; they market themselves to potential borrows and get funding from one of the financial institutions which provide capital.

Some of the mortgage companies are the traditional banks. They use their financial muscle which include savings and their investments to offer mortgages. However, banks tend to focus on select mortgage products and encourage their sales agent on the same.

The mortgage Process
When one intends to take a mortgage for a house, they approach one or more mortgage lenders. Since a mortgage is a kind of loan, the lender requires the borrower to provide evidence that they are capable of paying the loan. This document could include proof of employment, tax returns or investment statements.
Once the application gets approved, the lender offers the borrower a certain amount at an interest rate. At this stage, the borrower has identified the property they intend to buy. The buyer (mortgage borrower) and the seller agree on terms of the deal and they will meet or their representative to a closing. Here the seller transfers ownership of the property to the buyer and will receive the agreed amount.

Types of Mortgage
There are two types of mortgages. These are fixed-rate and adjustable-rate mortgages. Adjustable-rate mortgages are also known as variable rate mortgages.
Fixed rate mortgages also referred to as traditional mortgage, have interest that stays the same for the whole mortgage period. The monthly payments are the same throughout the period. The term of payment as typically, 15, 20 30 years. Since the interest rates are fixed, the shorter the term over which a borrower pays, the higher the monthly payment.

The advantage with fixed-rate mortgage is that the borrower is able to set budget for their monthly mortgage payments since they are the same throughout the loan period. a borrower is sure there will not be unexpected charges from month to month.

Adjustable-rate mortgages on the other hand come with interest rates which usually change of the duration of the loan. The market rates changes affect the interest rates on the mortgage. This affects the rates a borrower pays and as such affects the monthly payments. The interest rates are usually adjusted at specific times such as once a year or after every six months.

Before I forget, always remember to check va refinance rates when applying for mortgage.