Hey, what the heck is a mortgage anyways?
I know, it sounds such as a silly question, but as a mortgage broker Saskatoon I have been asked this question countless times. There’s no shame in asking this question; mortgages are a very complex financial agreement. Whether or not you’re purchasing your first home in Saskatoon or perhaps your own fifth there are a few aspects you should definitely know regarding mortgages.
In the easiest terms, a mortgage is putting up real property (your home) to secure income in the form of a loan. The borrower is called the mortgagor, the lender as the mortgagee. The amount loaned is referred to as the ‘principle’ as well as the borrower is expected to replay this amount, along with interest, over the repayment period of the loan. This repayment period of the loan is known as the amortization period. Because the home is place up as collateral in order to secure cash from the lender, if you fail to meet the terms of the mortgage, the lender is legally allowed to sell the property in order to recoup the cash borrowed to buy it. This process is called foreclosure – – A process I’m sure we tend to be all very familiar with, or at least know a lot regarding, due to the home owner crisis which has taken put down in the USA.
Obviously as a homeowner, you would want to avoid foreclosure. And so, you need to agree to meet the terms of the mortgage agreement. These terms tend to be outlined in a document in the mortgage called a ‘promissory note’ or ‘note’. This document sets out the terms of the mortgage as well as through signing it you agree to repay the lender the borrowed amount. It is very important to read and understand this document because any unmet requirement gives the lender the legal right to sell your own home in order to recoup funds borrowed. Never sign a promissory note or mortgage unless you know the terms.
Types of Mortgages
Whilst there are literally hundreds of different types of mortgages, the ones listed under are the many common as well as are the ones you’ll probably to be deal with.
- First mortgage
- Open mortgage
- Closed mortgage
- Pre-approved mortgage
- Conventional mortgage
- High-ratio mortgage
- Fixed-term mortgage
- Variable rate mortgage
- Secured lines of credit
- Equity mortgage
- Multiple term mortgage
- The 6 month convertible mortgage
- All-inclusive mortgage
- Bridge financing
This is a small sampling of the types of mortgages you might come across. If you want to learn much more about a certain mortgage just follow its link to detailed information.
If you have any kind of questions regarding mortgages in Saskatoon please do definitely not hesitate to contact me personally. I have been a mortgage broker Saskatoon for over 15 years as well as I will gladly answer any kind of questions you have.
Most of the information here I learned from my friends at CanEquity
To learn more about mortgages and their interest rates here is a video: