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With a residential mortgage, the house purchaser doesn't really own the house, as the bank can make a claim on the house that if the house buyer fails to pay his residential loan - foreclosing the loan.

If foreclosure is the case the financial institution may force the owners (actually hire purchasers) and sell the property and the income received after selling could be utilized as a payment for the residential loan debt.

Generally 'owners' enjoy discounts on buying mortgages, which save them good amount of money as compared to market prices for renting the same property.

This is the principle of buy to let mortgages which allow people to buy many properties to let out to tenants. The dream is to make money from rents and also capital gains when they are sold many years later.

Mortgage calculater

With a residential mortgage the financial organization is interested in whether you are capable to pay back the loan, on a monthly basis (unlike a commercial loan where the busines splan is studied). Several big elements that play a role in this are what is your annual income over the last few years, your account and credit history, from this is calculated how much can you afford to put aside for mortgage annually.

Every bank has its own rules applicable but in most cases absence of these factors could disqualify you for lending residential mortgage. A general mortgage calculater is used on some sites to see how much you can afford.

There are many types of residential mortgages, the main ones are:

USA - FNMA Standardization

Almost all home lends are standardized to follow rules set up by the Federal National Mortgage Association - known as Fannie Mae. Fannie Mae is a stockholder-owned corporation which was set up by the US Congress in 1968. It is a government-sponsored enterprise (GSE). It was actually founded in 1938 in the Great Depression, as a way to stabilize the market. This is a hot topic so have a look at US news for the still collapsing US housing market.

This gives the truth about how socialized the US actually is - despite all that propaganda about free market capitalism - that is to be forced on the developing world only.

New houses - make sure they are built to standards and have guarantees

Above: New houses - make sure they are built to standards and have guarantees

This FNMA association helps to compare the present rates in the market. As challenges are high, loaners frequently provide perquisites (gratuity), including low interest rates on the loan. These loans have four basic components.

The first one is the refund of revenue that one has actually borrowed.

Next is the interest which is added to the primary total for borrowing.

The third segment is intended to insure the property from natural hazards.

The last component is the revenue enhancement or taxes to be paid to the loan provider.

Guidelines and other feasible options

It is a recommended to try to get loans from friends or close relatives if you find it difficult to go through the whole mortgage process. This is reasonable as for mortgage you need to be committed for a long time, and it is possible that you fail to return money along with interest. This assumes your friends and relatives are relatively well off. Many parents lend their children the deposit for a first house purchase, or help with mortgage payments if they are short of cash.

Additionally, the government may also give loans to military personnel or people in government services. These loans require little to no fee to be deposited.

Similarly, consider interest rate type while getting loans. In long-run fixed rates are better options as in future if rates are going up you still are on the safe side. Moreover, if you getting mortgage for the very first time think of brokers which are often very helpful and they will advise you on family or residential mortgages.

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