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Mortgage 101: Knowing the Basics

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Mortgages – these are important things we need to learn about especially when we are adults, but even though this is extremely significant in our lives as working individuals and as breadwinners, we were not able to learn this at school.

But fear not, because Coldwell Banker Olympic, an agency where you can enjoy >real estate services in E. Imperial Hwy. La Mirada California, is going to fill you in with the information you need. So let us be your teacher as we explain to you everything you need to know about mortgages.

What are mortgages?

According to www.investopedia.com, “A mortgage is a debt instrument, secured by the collateral of specified real estate property that the borrower is obliged to pay back with a predetermined set of payments.” 

Debt instrument is defined by www.investorglossary.com as “a contractual or written assurance to repay a debt. [It] can be a promissory note, a bill of exchange, a bond or other such instrument. A debt instrument may also be referred to as an instrument of indebtedness.

In most cases, a debt instrument can be sold, traded, or otherwise used as a form of currency or barter, with the debt owed to the debt instrument’s current holder.”

Who uses mortgages?

Mortgages are typically used by individuals and businesses. As we have mentioned earlier, most adults, especially those who are employed, benefit from these. If ever you are planning to have a family of your own and if you are already able, you need to move out to a new house in order to have your own privacy and to be a family.

Aside from that, business owners turn into these in order to complete the 4 factors of production. Because we all know from our economics classes that in order to make a business work, it needs to have the manpower, capital, land and an entrepreneur.

How important are mortgages?

The reason why mortgages are conceptualized is “to make large real estate purchases without paying the entire value of the purchase up front.” – Investopedia
In short, in order for people to afford to buy a product (in our case, a house), that has 6 digits in its price tag; you need the help of mortgages. So that you will not suffer bankruptcy or loss of income, you can pay the ridiculous amount in smaller digits for many months until you have already paid it all in full.

How does a mortgage work?

When we talk about the residential mortgage, the purchaser will pledge his or her ownership of the house. This is typically given to a bank and the bank, in turn, acquires the claim on the house.

If the owner will not be able to remain faithful in paying the mortgage, the bank has all the rights to force the residents to leave and sell the house. How so? The bank will simply utilize the income it can garner in order to pay the mortgage wholly.

Knowing all these information, we are positive that you will take mortgages more seriously now than ever, right? But there is a pressing concern among home buyers nowadays and it is their ability to pay the mortgage. Aside from that, how does one pay a house with a mortgage?

Those are pressing questions indeed. But you do not have to worry because our expert and experienced real estate agents, representatives and realtors here in Coldwell Banker Olympic open their arms to help you not only in finding the right home for you and your needs but also in giving you tips on what to do and on what not to do when you do so.

Coldwell Banker Olympic’s real estate services in E. Imperial Hwy. La Mirada California have been trusted by clients because we make it our mission to promote honesty, integrity and professionalism.

Not only will we help you in your mortgages but we are also experienced in selling houses, looking for your dream home, giving you house options and manyuch more. For more details, visit www.cb-olympic.com.

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