Depending on the credit score, the lender may ask if guarantees are required for the approval of the loan. Mortgages include Federal Housing Administration loans, veteran loans, reverse mortgages and balloon mortgages. DHA and VA loans offer eligible borrowers interest rates and preferential terms. Reverse mortgages are a special type of mortgage that allows seniors to lend money using their home as collateral, without having to pay payments or interest while living in the home. Balloon mortgages offer small payments for a fixed period and then require payment of the balance in a single payment. The terms of the type of mortgage you choose are included in the loan agreement. A mortgage agreement defines the contractual terms between a lender and a borrower. After signing, the agreement gives access to the money to the borrower. Such an agreement also gives the lender the right to take possession of the mortgaged property if the borrower does not pay the loan payments. A loan is not legally binding without the signatures of the borrower and lender. For additional protection for both parties, it is strongly recommended that two witnesses be signed and that they be present at the time of signing. Borrower – The person or company that receives money from the lender, who then has to repay the money according to the terms of the loan agreement. Private loan contract – For most loans from one individual to another.
Depending on the amount of money borrowed, the lender may decide to have the agreement approved in the presence of a notary. This is recommended if the total amount, the capital plus interest, is more than the maximum acceptable rate for the small claims court in the jurisdiction of the parties (usually 5,000 usd or 10,000 USD). Repayment Plan – An overview of the amount of principal and interest on the loan, loan payments, payment maturity and term of the loan. If you decide to borrow online, be sure to do so with a well-known bank, as you can often find competitive low interest rates. The application process will take longer because more information, such as your work and income information, will be needed. Banks may even want to see your tax returns. Renewal contract (loan) – extends the maturity date of the loan. Default – If the borrower is late due to default, the interest rate is applied in accordance with the loan agreement set by the lender until the loan is fully repayable. Depending on the loan that has been selected, a legal contract must be designed with the terms of the loan agreement, including: The most important feature of a loan is the amount of money borrowed, so the first thing you want to write about your document is the amount that may be in the first line. Follow by entering the name and address of the borrower and then the lender. In this example, the borrower is in New York State and asks to lend $10,000 to the lender. In addition, the mortgage agreement includes the amount of money the mortgage lent to the mortgage (the so-called investor), as well as all issues related to the payment, including interest rate, maturity dates and advance.