Mortgage Loans

With mortgages in the USA being a hot topic over the last few years, I wanted to know if any of you have a mortgage?  When did you get it, and are you happy with your rate and terms?  Did you get your mortgage through a mortgage broker, direct lender, or your bank?

There are still a lot of people getting mortgage loans today, and I think this information would be interesting to display in the comments section.  If you do have a bad loan, perhaps others could share their experiences to help everyone out.

Mortgage Loans

A mortgage loan is a type of loan that is secured by real property via a mortgage note.  This mortgage note documents the existence of the loan and the encumbrance of the property through the granting of the mortgage that secures the loan.

In the United States, since the prices of homes and properties are very high, it is typical for a prospective buyer to secure a mortgage in order to purchase the property.  These mortgages can be secure from a bank or a mortgage broker.  (In a future post, I will talk more about the differences between obtaining mortgage loans from these two).

When obtaining a mortgage, you can either get a fixed rate or variable rate.  You can also get interest free for a specific time period and/or have a balloon payment clause.  In the last decade, lenders created many different loan programs to get prospective buyers to bite on low initial rates (without necessarily being able to afford the real interest and principal payments), and this caused many defaults and foreclosures.

When applying for a mortgage, your assets and credit profile will qualify you for a specific rate.  It is up to you to decide if your rate and payment fit within your income and lifestyle.

Payday Loans (aka Paycheck Advances)

A payday loan (or paycheck advance) is a short term loan that's designed to cover the borrower's expenses until the next payday.  Sometimes, this type of loan is also referred to as cash advances.  (Cash advances can also be taken against an existing line of credit like a credit card.)

Payday loans don't fall under as strict legislation like conventional secured loans (homes, cars) and unsecured loans.  It is common to have a payday loan have an APR of over 50%.  Therefore, it is imperative that the individual who takes out the payday loan pays it back as soon as possible to avoid extreme interest charges.

Paycheck garnishments are never fun.

If necessary, only use payday loans as a short term solution to a cash shortage problem.  People who run payday loan shops know that the business is very profitable.  Since you use your paycheck in the application process, a default on the payday loan can easily be taken to court, and a judgment will result in a garnishment of your wages.  A $200 loan could eventually turn into a couple thousand dollars if the process is dragged out long enough.  Also, your credit score will dip due to the default.