Owning a home is the dream of many people. Also, if you decide to start, you need to buy a store or buy a plot of land to build a building. However, if you do not have enough capital to pay the property in cash. People have the opportunity to buy a property through a mortgage loan .
A mortgage is a financing granted by a bank, with the purpose of buying a property. In addition, the term of return of the financing can be in the medium or long term. Likewise, with the money granted, a house, a place or land can be acquired, remaining them as a mortgage guarantee. This guarantee is in favor of the credit granting bank, until the borrowed capital is amortized. Know more.
Types of mortgage loans
It should be noted that the money from a mortgage loan is not only used to buy a property. Also, it can be used in different projects such as:
Buy a property
With the best mortgage credit a family can buy a house or apartment. Also, an entrepreneur can establish his office in a commercial establishment.
For those people who see a good business with a piece of land because of its location and dimensions. Through home equity loans, they can have a great investment opportunity. In addition, the value of the land will increase if the area where it is located, improves infrastructure.
If you already own your own land, but you do not have the capital to build. Applying for a mortgage loan would be the solution to build a home, office, department or a business.
Rebuild and decorate the house
Mortgage loans are ideal if at any time you want to expand any part of the home. Also, make changes related to the decoration and furniture of the house.
It is possible that the conditions of your current mortgage are not the most favorable and you do not feel comfortable. Requesting a mortgage loan with a financial institution that offers a better credit scenario. The entities allow you to settle the previous debt and start paying for new financing, where people do not feel so pressured economically.
It is important to point out that depending on the credit entity. The borrower will have all the money or only part of the mortgage loan. That is, as you need money to execute your construction project, you can receive the outstanding capital.
In the Republic of Mexico, various financial institutions grant loans with a mortgage guarantee for the purchase of homes. Among them can be mentioned:
- Banks: These commercial financial companies offer different credit products to their clients, such as mortgage loans.
- Sociedad Financiera de Objeto Múltiple (SOFOM): These are companies that grant mortgage loans in Mexico. They have a financial relationship with community financial companies or savings and loan cooperatives. Likewise, they are controlled by the National Banking and Securities Commission.
- Government Institutions: The Mexican Government has affiliated institutions that offer mortgage loans to build, acquire or improve homes. To the workers that quote in their jobs to INFONAVIT. Likewise, employees of the federal public administration have FOVISSSTE. In addition, there is the Federal Mortgage Company (SHF) that operates with financial intermediaries.
- Savings Banks: These institutions of official or private sponsorship, non-profit, public interest. They attend to the need of their members by granting them loans with mortgage guarantee.
How mortgage loans work
When you know what a mortgage loan is, you need to understand how these loans work. Which are granted by a financial institution to a specific period of time, including the payment of interest. Generally, these financings are adapted to the financial profile of the applicant. Since every month you must cancel the amount of the agreed fees.
The conditions related to mortgage loans are negotiated and, as already mentioned, are adapted to the needs of the applicant. It is recommended, for those who require a financing of this type, to investigate to know several options. In this way, a project as important as the acquisition of a property will not become a priceless nightmare.
When a person benefits from mortgage credit , he commits himself to the institution that granted to cancel some monthly installments. These fees will be canceled for a period of time that may be years. On the other hand, the credit entity is responsible to respect the conditions established in the contract signed with the borrower.
The debtor of loans with mortgage guarantee, must be aware that his property will be mortgaged, with the financial organization. So if you stop canceling your credit from the first delay amortizing capital. The creditor entity will charge delinquent interest and they may be higher than the payment of the financing.
Also, after three months of defaults, the interest rate of the mortgage loan is frozen. But the arrears interest continues to accumulate. Subsequently, after three months of payment delays, the issuer of the credit will initiate a legal action. Where it is possible that you lose the mortgaged property.
Due to this, before signing a mortgage loan contract it is advisable to analyze all the established clauses. As the amortization period, interest rates, administrative costs, moratorium penalties, economic reference, among others. The idea is to acquire your real estate property, pay your financing and in the end obtain your certificate of freedom of encumbrance. This document guarantees that the property belongs to you and has no mortgage.
How to apply for a mortgage loan
- The applicant for home equity loans should contact the financial institution that he considers most reliable. There a credit officer will provide information on the types of mortgage financing available. In addition, it will guide you according to your economic profile, which is the most convenient.
- When the borrower has chosen the mortgage loan and the amount. You will be informed by the bank about the requirements you must deliver. These check the petitioner’s economic solvency and determine if it is suitable to cancel the debt. The required documentation is related to the applicant’s personal, labor and financial information. As your identification, work letter, credit history, bank vouchers, among others.
- After submitting the required documentation when requesting the mortgage loan and completing the application. The applicant will wait for the time established by the bank, to study its financial profile and decide whether to grant the loan.
- At the time the mortgage loans are granted, the property must be valued. For what the financial institution sends an expert, to perform the appraisal of the property you want to buy. This management has a cost that the applicant must pay. In addition, you have to record in the notary the details of who will make the sale of the property.
- The notary performs the deed and orders all documents, related to the property subject to mortgage loan. As the purchase – sale document, certifications, among others. This is done to verify that the property is free of encumbrances and does not present any inconvenience.
- At the moment that the notary has the documents related to the negotiation, the buyer and seller are cited. In the notary’s office, the contract is signed and all the procedures have tariffs that must be canceled.
- The duration of the procedure to apply for mortgage credit varies depending on the financial institution and the notary. Generally, the time is around a month or month and a half.
How to compare mortgage loans
Before asking for financing to buy a property, you must compare mortgage loans to make the best choice. An important aspect is the amount of the monthly payment to pay for capital and not for interest or insurance. Ask your bank for the amortization table, so you can make the comparison. This determines how much you would pay in 5 years. Because in loans where little capital is amortized, no patrimony is created.
On the other hand, you must compare the term to pay of the loans with mortgage guarantee . The term must not exceed 15 years. In case the monthly payment is too high for your ability to pay. Then, you must request a longer term but make sure it does not exceed 20 years.
Another important aspect is the denomination, it is advisable to apply for the mortgage loan in pesos. It is not recommended to make the request in units of investment (Udis) or minimum wages. Because in pesos it will be known exactly how much will be paid monthly. The other benchmarks change according to inflation, so a person will eventually pay more money.
Additionally, we must consider the engagement of the negotiation. In banks, an approximate 80% of the value of the property is usually financed. So, you must have available that 20% that you will not get in the mortgage loan. For example, if the property costs 4 million pesos, you must have 800 thousand pesos for the down payment.
Next, you must be informed about the fees charged by the bank with which you will contract the mortgage loans . The costs of commissions are variable. In some institutions they can be 2.7%. So if you find a lender that has lower costs, you’ll be saving money. For example, if the property costs 3 million pesos, the 2.7% commission will be 81 thousand pesos. If you get 1% commission, you will only pay 30 thousand pesos.
Also, you have to investigate about the cost of insurance. When you ask for a mortgage loan, you must purchase insurance. Make sure you have full coverage in case of unemployment or death. Also, find out if the property will be insured for damages caused by natural disasters. This is important during the life of the financing.
Characteristics of the best mortgage credit
Finding the most convenient mortgage loan will depend on the applicant’s ability to investigate market options. Also, your interest in reading more about the subject. Below we present the characteristics that the best mortgage credit should have.
- The mortgage credit rate is the cost that is canceled by receiving a mortgage loan . Said cost could be at a fixed rate, which does not change during the life of the loan. This rate can also be variable, that is, changes according to agreed revisions. When you apply for loans, check what average interest rate the bank uses, since mortgage interest depends on it.
- The amount of financing for home equity loans is important. In most lenders you can get 80% on the value of the property. However, by doing a little research it is possible to get up to 90% financing. Which means that you will not have to contribute so much money for the hitch in the purchase.
- The terms to pay off a mortgage loan and the payment schemes are important factors when choosing financing. If the terms and the interest rate are adapted to the borrower’s economic profile, everything will be easier. If the rates are low, long periods are advisable.
- The commissions to pay for mortgage loans are several. Before signing the contract, ask them to explain what they are and the terms to cover them. You should know the percentage you will repay monthly, how much is dedicated to pay the credit and what amount will be interest. If the repayment paid is higher than the interest, you will have more right over the property.
Requirements for mortgage credit
- Mortgage loan application form.
- Current identification document.
- If you are a foreigner, submit an immigration form.
- Certified copy of the birth certificate.
- Receipt of domiciliary payment that has not been issued for more than three months.
- Authorization and format to consult Credit Bureau.
- In the case of being a salaried employee, proof of employment with time of work and salary accrued.
- If you are an independent worker, present RFC, partial and annual tax declaration, account statements of declared income. In addition, record of registration before Secretary of the Treasury.
- Statements issued by your bank.