Mortgage is a legal agreement between two persons; the borrower, someone that is interested in collecting the money and the lender; the financial institution that makes provision for the loan acquisition. The money that is requested for must be used for something that is tangible and can be accountable for. The inability of the borrower to be accountable for the loan will bring a responsibility on himself and the lender as well.
Mortgage is a loan that is acquired with the aim of giving back the money when the time for the agreement elapses. The loan is often obtained from a financial institutions and the loan is collected on the basis a repayment plan.
Anybody that wants to obtain a mortgage must see to it that strategies are put in place to put things in order and also to channel the money into the rightful use. Mortgage should be obtained with a plan to repay it with whatever interest that is attached to it.
Institutions that are Responsible for Loan Issuance
Bank: A bank is an institution that is responsible for the issuance of loan to interested persons. The person’s involved must be willing and able to agree to the terms of payment that is provided by the bank. A bank is trusted because a bank is a financial body and the persons involved are are accountable and reliable.
Other Financial Institutions
Aside the bank, there are other financial institutions that are responding for issuing out loans to the general public. These financial institutions have the disadvantage of making with people’s money and resources and they may be sometimes difficult to trust.
Steps to obtaining Mortgage
- The money should be obtained for the right purpose
For persons that are about embarking on the journey of loan mortgage, the purpose of the loan should be fully known in order to channel the energy towards deriving the most productive need of the loan.
- There should be availability of collateral security
The borrower should make provision for collateral security. The availability of collateral security will enable the lender to stay devoted to his/her word.
- The borrower should be Disciplined
The borrower should be disciplined. The disciplinary attitude of the borrower will stir in him or her the urge to make provision for the loan payment and do away with entitlement mentality.
- Provisions should be made in the case of uncertainties
There should be a provision for plan B in case of the borrower’s inability to pay up the borrowed amount of money. This should be discussed at the initial stage of the agreement. The discussion will enable the borrower and the lender to know what will become of them.
- The mortgage should be obtained from a financially trusted institution
The mortgage should be obtained from a financially trusted organization in order to avoid the risk of fraud or theft.
- The institution should be ready to stick to their own side of the agreement
The organization should honor the terms of the agreement in order not to kill the customer’s interest of reinvesting with the financial institution.
Advantages of Mortgage
- Mortgage ensures the availability of financial assistance to the people in need
- It leads to accumulation of wealth
- It leads to financial freedom
Disadvantages of Mortgage
- When the loan is used for an unintended purpose, it leads to the inability to pay back the loan.
- Some financial institutions might raise the interest rate
- Lack of adequate information on how to embark on the process of mortgage.
Limitations to Mortgage
- There are individuals that might be interested but there is no information on how to go about the whole process.
- The people in the rural areas are not well vested with the information regarding mortgage. Most of them do not have the necessary document and this acts as an hindrance towards the application process of accessing mortgages.
- Some people hear the reverse side of the information regarding Mortgage. Some people only study the disadvantages other than the advantages.
- Some persons are misinformed. When they are misinformed, it leads to stunnted decision making process. This therefore leads to the fear of taking decisions that is meant for the betterment of themselves and the financial institutions involved.
Conclusion
Mortgages are obtained because of the need to attend to an unmet needs. The financial institutions involved should cut down some of the requirements so that the people that are involved can access the money the way they want to and the agreement should be honored.
