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All About Mortgages

A mortgage is loan document in which you pledge the title to your home as the collateral. Simply put, if somebody loans you money this person will most likely ask that you put something up as collateral of equal or greater value. In the case of a home loan or mortgage, the title is what is held as collateral. Basically, the lender holds the title or in some states holds a lien to the title until the entire loan is paid off. The lender gives you the loan and in exchange you agree to pay monthly PITI (Principal, Interest, Taxes and Insurance).

History of Mortgages:
Mortgages are relatively new. They really came about as a result of the Great Depression. Prior to the Great Depression of the 1930s, people generally paid cash for their homes. If a person did not have all the cash needed for a new home, he would have been taken a balloon mortgage for approximately five years, where interest was being paid for the five years and the entire amount was due after this time. When the stock market crashed in 1929, people were unable to pay off their homes as their entire savings were lost and their homes were taken away form them. People were also unable to pay property taxes and their homes were also taken off them. In Cook County, Illinois, which includes Chicago, so many people (approximately 50 percent) were unable to pay their taxes that the city canceled the year's real estate tax collection. To this day, Cook County collects its real estate taxes in arrears. In other words County homeowners paid their 2001 taxes in 2002.

After World War II ended, the federal government began lending veterans the money to buy homes believing they would be good risks. The plan allowed veterans to borrow money and pay it back with interest over 30 years. This program was such a huge success that commercial lenders began to follow suit. This was the beginning of the modern day mortgage.

How do I get information on Mortgages?
There are almost as many sources for getting information on mortgages as there are mortgage types themselves. The following is a list of the tried and trusted sources of information on mortgages. However, do not limit yourself to these if you find another good source of information.

• Newspapers:
Generally the local papers have Mortgage Watch columns in the real estate section. These will give you the names of a number of local mortgage companies, plus the loan types and rates they are offering. You can then call up the different mortgage companies and compare loan types and rates.

• Local Lenders:
Visit local lenders such as banks, savings and loan companies or credit unions. Your workplace may have a credit union. Credit unions generally have low rates for members and will have a lot of information on mortgages.

• Real Estate Agents and Brokers:
Real Estate agents and brokers will generally have lots of information on mortgages, local lenders and their rates. The firm may even own a mortgage company, which is not at all unusual. Your agent or broker should provide you with information on lenders including their own.

• Federal Government:
The government provides information on mortgages to the public free of charge. However, this information is limited. For a free brochure, write to:
 Consumer publications
 Pueblo, Colorado 81003

• Local Housing Authority:
A local housing authority provides free information to the public on housing and mortgages. There also may be programs with information for the first time home-buyers. These programs may include help with a down payment plus provide information on lower interest rates than the current loans. You will have to meet certain income or location requirements to be eligible.

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