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Consumer's Guide To Mortgage Loan Companies
Mortgage loan brokers didn't come about until the 19th century when the United States really began to take shape. In 1893 the first mortgage loan company, Sonnenblick-Goldman, was established in New York City in order to finance difficult real estate projects. Around the same time on the West coast, ìloan arrangersî were becoming popular. These businessmen would arrange loans between wealthy people and borrowers who had been turned down by banks; thus the birth of the mortgage broker.
With the Great Depression in full force, the 1930's brought a drastic change to U.S. housing policies and financing. Laws were implemented such as The U.S. Housing Act of 1937, which was created to improve the living conditions of low-income families, and the Federal Home Loan Bank System, which provided stable and cheap funding for home mortgage loans. These programs were put into play in order to extend qualifications for home mortgages.
In 1979 Paul Volcker was appointed chairman of the Federal Reserve Board and created a monetarist policy to counteract the United States' growing inflation problem. The policy caused interest rates to skyrocket and it created sheer chaos within the financial world. While second mortgages are quite common today, in the 1980's it was almost unheard of and any borrower who needed one was seen as a financial outsider. However, once interest rates peaked it became apparent that secondary mortgages were necessary. Brokers closed their mortgage loan departments and commissioned mortgage brokers were terminated.
Charles W. Knapp, founder of American Savings & Loan implemented a mortgage-banking approach to the industry. Soon after, brokers and realtors began working together, marketing the convenience of ìone-stop-shoppingî in which brokers would find the best mortgage loan while realtors found the best home. This combination of mortgage brokers, bankers and real estate agents became the mortgage-brokerage business that we are familiar with today.
Currently, fixed rate and adjustable rate are the two basic types of mortgages. An adjustable rate mortgage, or ARM, has an interest rate that constantly changes over the duration of the loan. The rate is linked to an economic index and it will fluctuate from high to low depending on the market. Fixed rate mortgages lock you in at a certain rate that will not increase or decrease with the changing market. This can be wise if the interest rates are historically low however rates are very unpredictable and a fixed rate could possibly cost you money in the long run.
Finding the right mortgage loan can seem like a daunting and tedious task. However, there are plenty of ways to acquire information before making a final decision. After speaking to friends and family, one of the best resources for finding a decent mortgage loan is the Internet. It's best to search for local mortgage loan companies that have reputable backgrounds. Once you have a list of a few mortgage companies, check out their websites for competitive pricing and the various types of loans that are available. You will want to compare fees, percentages and interest rates between each mortgage loan company in order to calculate what your specific cost will be. It's also important to find out how long a mortgage loan company has been in business, if they have a FAQ section and how helpful and available their customer support services are. Some mortgage loan companies will even offer free guides for first time home buyers so you will know exactly what to expect. You can also opt to monitor local home sales via email and speak with customer service representatives through email, phone or on location.
Many mortgage loan websites will offer a consumer reviews section which is also helpful to read over. If other customers have used the company and had satisfying results, perhaps the company will be right for you too. Most mortgage websites will be divided into specific sections such as first time home buyers, moving, vacation homes, investors and refinancing. Each section will be equipped with information and some websites even offer a mortgage rate and payment calculator which allows you to find out what your potential monthly payment will be. With the entry of a few simple facts such as the state you will be purchasing in, your down payment amount and the price of the home, you could find out a ballpark figure for your monthly mortgage loan payment. Another excellent feature that mortgage loan companies are beginning to use is the ability to manage your mortgage online. With this handy feature you can view your balance, request a quote, transfer money, and obtain tax and interest rate statistics. Most websites are user-friendly with clear and comprehensive pages. Some sites even offer a loan checklist so you know exactly what documents you will need to have on hand prior to filling out an application.
The mortgage loan application process can take you anywhere from a few minutes to over a half hour to complete, depending on what mortgage loan company you apply with and what questions they ask. Some standard questions can include your address, email, phone number, social security number, how many dependents you have, annual income, employment history and liabilities.
You should also have a list of questions to ask your mortgage loan company, or mortgage lender, before agreeing to do business with them. Some questions should include: what type of loan is best for you and what are the upsides and downsides of the loan, interest rates, percentage rates, what are the total costs, are there loan rate locks available and how much time will it take to process the loan?
Applying and agreeing on a mortgage loan can seem like a tedious task, but this loan will likely stick with you for at least the next fifteen years. You want to be thorough in your research and find the best mortgage loan company with the most choices and the most competitive pricing.
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