subject: What is a Standard Mortgage? [print this page] What is a Standard Mortgage? What is a Standard Mortgage?
The accepted definition of a standard mortgage is that it is a loan made in agreement with the underwriting criteria that follows generally accepted principles to qualified borrowers of any particular income level.
A standard mortgage is the traditional mortgage where there is no more than seventy to eighty percent loan to value. What loan to value or LTV means is that it is a lending risk assessment that lenders and banks use as a determining factor before approving a mortgage.
So, if the lender determines that the loan to value ratio is quite high then the lending risk is considered high. Thus, if the lender approves the mortgage, the person borrowing the money will face higher costs or they will have to buy mortgage insurance.
The traditional or standard mortgage is amortized over thirty, twenty, fifteen and ten years and payments are made monthly. In recent times, the biweekly mortgage has gained in popularity as it helps to pay down the mortgage quicker than the monthly payments do.
By the end of the mortgage, the homeowner will have saved quite a bit of money if they opted to pay the standard mortgage down bi-weekly as opposed to monthly.
One aspect of paying a bi-weekly mortgage that many homeowners may find difficult is that there are a couple of months when there could be three payments made, which of course can affect the cash flow of homeowners, especially young couples with their first mortgage. This is something to think about before agreeing to a bi-weekly payment plan.
Whenever you are securing a mortgage, you must always find out about any fees. In fact, always find out before you sign the mortgage documents.
With the current economic concerns around the globe, many lenders are now following stricter guidelines when it comes to lending out money, even for a standard mortgage. Therefore, it is harder for first time home buyers to actually get their first mortgage.
