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Mortgage is the process where a legal document by which the owner of the Philadelphia condominium transfers to the lender an interest in to secure the repayment of a debt, evidenced by a mortgage note. Because most people cannot afford to buy real estate with cash, nearly every real estate transaction involves a mortgage.

The party borrowing the money and giving the mortgage is the mortgagor; the party paying the money and receiving the mortgage is the mortgagee. Under early English and U.S. law, the mortgage was a complete transfer of title from the borrower to the lender. The lender was entitled not only to payments of interest on the debt but also to the rents and profits of the real estate.

This meant that as far as the borrower was concerned, the real estate was of no value, until the debt paid completely. The mortgage has to go according to the formalities required by the laws of the state where the property is located. Some states require witnesses as well as acknowledgement before a notary public.

The mortgage note, in which the borrower promises to repay the debt, sets out the terms of the transaction: the amount of the debt, the mortgage due date, the rate of interest, amount of monthly payments, whether the lender requires monthly payments to build a tax and insurance reserve, whether the loan may be repaid with larger or more frequent payments without a prepayment penalty, and whether failing to make a payment or selling the property will entitle the lender to call the entire debt due.

Shopping around for a home loan or mortgage will help you to get the best financing deal for your Philadelphia condominium. Home loans are available from several types of lenders such as the thrift institutions, commercial banks, mortgage companies, and credit unions. Different lenders may quote you different prices, so you should contact several lenders to make sure you are getting the best price. You can also get a home loan through a mortgage broker. Brokers arrange transactions rather than lending money directly; in other words, they find a lender for you.

A broker's access to several lenders can mean a wider selection of loan products and terms from which you can choose. Brokers will generally contact several lenders regarding your application, but they are not obligated to find the best deal for you unless they have contracted with you to act as your agent. Consequently, you should consider contacting more than one broker, just as you should with banks or thrift institutions. Some financial institutions operate as both lenders and brokers. In addition, most brokers' advertisements do not use the word broker. Therefore, be sure to ask whether a broker is involved.

This information is important because brokers get a fee for their services that may be separate from and in addition to the lender's origination or other fees. A broker's compensation may be in the form of points paid at closing of your Philadelphia condominium deal or as an add-on to your interest rate or both. Be prepared to negotiate with the brokers as well as the lenders.

Be sure to get information about mortgages from several lenders or brokers. Know how much of a down payment you can afford for your Philadelphia condominium property, and find out all the costs involved in the loan. Knowing just the amount of the monthly payment or the interest rate is not enough. Ask for information about the same loan amount, loan term, and type of loan so that you can compare the information. Ask each lender and broker for a list of its current mortgage interest .Ask whether the rate is fixed or adjustable. If the rate quoted is for an adjustable-rate loan, ask how your rate and loan payment will vary, including whether your loan payment will reduce when rates go down. Ask about the loan's annual percentage rate.

The APR takes into account not only the interest rate but also points, broker fees, and certain other credit charges that you may be required to pay, expressed as a yearly rate. Points are fees paid to the lender or broker for the loan and linked to the interest rate; usually the more points you pay, the lower the rate. A home loan often involves many fees, such as loan originating or underwriting fees, broker fees, and transaction, settlement, and closing costs. Every lender or broker should be able to give you an estimate of its fees. Many of these fees are negotiable. In some cases, you can borrow the money needed to pay these fees, but doing so will increase your loan amount and total costs.

Some lenders require 20 percent of the home's purchase price as a down payment for the Philadelphia condominium homes. Once you know what each lender has to offer, negotiate for the best deal that you can. On any given day, lenders and brokers may offer different prices for the same loan terms to different consumers, even if those consumers have the same loan qualifications. Generally, the difference between the lowest available price for a loan product and any higher price that the borrower agrees to pay is an overage. They can occur in both fixed and variable-rate loans and can be in the form of points, fees, or the interest rate. Whether quoted to you by a loan officer or a broker, the price of any loan may contain overages. Have the lender or broker write down all the costs associated with the loan.

Once you are satisfied with the terms you have negotiated, you may want to obtain a written lock-in from the lender or broker. The lock-in should include the rate that you have agreed upon, the period the lock-in lasts, and the number of points to be paid. Lock-ins can protect you from rate increase, if rates fall, however, you could end up with a less favorable rate. Should that happen, try to negotiate a compromise with the lender or broker. When buying a Philadelphia condominium home, remember to shop around, to compare costs and terms, and to negotiate for the best deal. Your local newspaper and the Internet are good places to start shopping for a loan.
 
You can usually find information both on interest rates and on points for several lenders. Since rates and points can change daily, you will want to check your newspaper often when shopping for a home loan. However, the newspaper does not list the fees, so be sure to ask the lenders about them. The mortgage shopping worksheet that follows may also help you. Take it with you when you speak to each lender or broker and write down the information you obtain. Do not be afraid to make lenders and brokers compete with each other for your business by letting them know that you are shopping for the best deal.

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