Making Chicago Mortgages Easy to Understand
Chicago is one of the few areas in the country that still seems to be experiencing a lot of real estate activity despite the speculation on a dawning economic slump. There are literally thousands of homes on the market to choose from and many of them are in beautiful and safe neighborhoods. Since so many of the areas around Chicago are in high demand, many of the real estate listings there can get a little pricey. This is why you will probably want to look into getting a Chicago mortgage.
What is a Mortgage?
If you have never bought a home or applied for a mortgage before, you may not even know what a mortgage is. A mortgage is a financial agreement between a lender and a buyer in which the property is used as collateral for the loan. Consequently, a mortgage gives the lender the right to collect payments on the loan and to foreclose on the property if those payments are not made.
Most people use mortgages when they buy real estate because houses are so expensive. Mortgages can be useful tools but you do need to be realistic about the kind of homes you can afford when you apply for a mortgage so that you don't fall behind in your payments and lose both your money and your home.
Mortgage rates tend to fluctuate over time. Consequently, choosing an adjustable mortgage rate is a very risky gamble. It is true that your mortgage rate may fall and save you money by lowering the amount of interest you pay, but the mortgage rate has an equally strong chance of rising and costing you more money. Consequently, it is wise to choose a fixed rate that you are sure you can pay.
Mortgage rates are often affected by the number of buyers looking for a mortgage. For example, if the economy is strong and people feel financially secure, they are more prone to take out a mortgage than at other times when a lot of economic uncertainty exists. Consequently, interest rates may fall as fewer people decide to buy houses. The low interest rates then entice people to buy homes, demand increases and interest rates rise.
Even though you can always start looking at houses before you figure out financing, it would probably be wise to get pre-approved for a mortgage before you start searching for your Chicago based home. That way you will know the price range you are looking for and realtors and sellers will take you more seriously.