For most people who undertake them, a mortgage loan will be one of the most significant financial commitments of your life. They involve significant planning and research, plus long-term savings and the kind of financial health that many work years to achieve.
At Wasatch Peaks Credit Union, we’re thrilled to assist a wide range of clients with a huge variety of mortgage rates and loan options. We’ll help walk you through every step of this important process, from getting pre-approved and assessing your finances to finding the right home and putting ink to paper for closing. Within this latter area, the mortgage agreement is one of the most important documents that will be produced during this process – here are some basics on what a mortgage agreement is, why it matters, who is involved with it and the areas it covers for your situation.
Mortgage Agreement Basics
A mortgage agreement is a simple legal document that lays out a contract between the financial institution lending the money and the borrower receiving it. At its simplest, the agreement is meant to specifically grant access to the borrowed funds to the person doing the borrowing.
In practice, things are obviously a bit more complex than this simple description. The mortgage agreement will list the funds being transferred and all related details, including a specific set of consequences if the borrower fails to make the appropriate payments (this will generally result in vacating of the property). This is the legal foundation for the entire mortgage, and one that could be used in court if issues arise with repayment.
There are a few important details you’ll want to keep track of in any mortgage agreement:
- Mortgage type: Your mortgage might be a conventional type with a traditional down payment, or it could be through one of several specialty programs – FHA loans, VA loans, USDA loans, jumbo loans, construction loans and home renovation loans are just a few examples of the various additional options you might have available.
- Interest rate and type: The mortgage agreement will define your specific mortgage rate, plus whether this number is fixed or adjustable based on the market.
- Fees: All fees, such as closing or appraisal fees, will be included in the mortgage agreement.
- Legal protection: Details will be included on protections for both parties in case of any impropriety by the other.
For any mortgage agreement, both the borrower and the lender will obviously be involved. In addition, if there’s a guarantor of mortgage funds, this person will have to sign the mortgage agreement as well. All such agreements must be notarized and filed with a County Clerk’s office to become official, at which time copies will be sent to both major parties.
For more on mortgage agreements, or to learn about any of our other home loan or small business loan services, speak to the pros at Wasatch Peaks Credit Union today.