Real estate accounts for a significant percentage of people's wealth globally. Financial independence and freedom are reasons people desire to be homeowners. Mortgages have come in handy in their quest, as only a few people can purchase homes cash on hand.
If you are looking to buy a home and don't have the cash, a mortgage lender will help you acquire the property. A mortgage lender will be any financial institution or bank that will loan you the money to buy a home. Here are the responsibilities of mortgage lenders like MLD Mortgage.
1. Providing financing to homebuyers
The most critical role of mortgage lenders such as banks is to give homebuyers financing to buy homes. They also refinance existing mortgages. Mortgage financing is a loan given for the property the buyer intends to purchase.
The financial institutions provide the borrowers with cash up front. The borrower then starts paying for the property on agreed terms. The property is also used as the collateral in this case.
2. Loan evaluation
Before lenders give a borrower mortgage, they are responsible for evaluating the borrower's eligibility for financing. They, therefore, conduct loan evaluations to establish the creditworthiness of an applicant.
In the process, they are required to verify the applicant's credit history, employment status, and other relevant financial information. In addition, the lenders ensure applicants answer all questions designed to support the evaluation process.
The lenders will not give out a mortgage if the applicant's evaluation does not prove their repayment ability.
3. Financial counseling
Applying for a mortgage is a big financial decision. The lenders can offer this service to help you put your finances in order before you take the loan. In addition, they can help you understand the available options and how you can improve your credit score to get a good interest rate in the process.
They educate first-time homebuyers before making the purchase and, in the process, disclose the risks involved in the process. A good example is a financial risk of falling behind on the mortgage payment. Through pre-purchase counseling, they help potential homebuyers evaluate their financial status, set a budget, and make a purchase they can afford.
The lenders may provide additional education that can help potential buyers choose good real estate agents, prepare for home closing costs, manage the loan, and even bounce back if they fall back on the mortgage fees.
4. Loan servicing
While some mortgage lenders transfer the rights of servicing loans to other institutions, loan servicing is one of their responsibilities. Mortgage servicing is essentially the administration of the mortgage. That is from the time the mortgage is given to the borrower until it is paid off.
Some of the activities involved in the servicing of a mortgage include sending monthly payment statements to the borrower, maintaining the records of the mortgage, including the payments, collecting monthly payments from the borrowers and remitting funds to the note holder, and following up in case of any delinquencies to mention a few.
Mortgage lenders conduct loan servicing to ensure that all borrowers meet their obligation of making timely payments and maintaining their creditworthiness.
5. Conducting foreclosure proceedings
In case of mortgage delinquencies for a given period, mortgage lenders can start foreclosure proceedings. Foreclosure can take place when the borrower defaults on loan repayment. It may also happen when the homeowner fails to pay homeowners association fees or property taxes.
This is a legal process whereby the mortgage lender takes back the unpaid property and resells it to recover the money the property lost through the default.
Conclusion
Mortgage lenders' participation in the homebuying process is end-to-end. From financing the purchase to the completion of the mortgage, the homeowner gets the keys to the property. The responsibilities of the mortgage lenders between this period include financing, appraisal of the borrower, financial counseling, loan servicing, and foreclosure in case of delinquency.
