Behind the final mortgage loan payment is a set of principles that guide the industry throughout the course of trading to ensure that standards are being maintained by all those people that are participants.
These principles are not set in stone because the market has been liberalized. Each mortgage loan company will have the discretion to configure their products in the most effective manner at the time. They will also want to manage the process in such a way as to minimize the risks that they are facing when they lend their money to the applicant.
Thus we cannot really talk about a unified set of principles for the mortgage loan industry. However we can look at the fundamentals that make the business tick:
1. The applicant on the mortgage loan has to be the person that they claim to be. The government has been very strict on measures that prevent the money laundering activities of certain elements. Therefore all mortgage loan applicants have to indicate sufficient proof identity.
This identity is stored on file until there are further issues to be explored. If there is a problem with the mortgage loan then the person might have to refer back to that original document and see where it takes them.
2. The mortgage loan contract is binding on both parties and there are penalties for failing to follow the terms of the agreement. One of the parties might have more leeway in terms of changing the interest rates but at the end of the day each party will have certain obligations that they have to fulfill in order to make life easier for them in the mortgage loan process. If the client has a good negotiator they might just get away with good terms that will give them the advantage in any decision.
3. The applicant does not fully own the home until they have paid up all the money that they borrowed. In fact in many instances the mortgage loan company will keep the title deeds until it becomes clear that the home has been paid for.
The applicant can then get the title deeds for themselves. In working with the mortgage loan, it is imperative that we take consideration of the overall cost of the implementation process and the impact on the individual people within that process.
4. The mortgage loan gives the applicant the discretion to either pay the interest alone or to also pay the principle on the debt. This is very important because one has to work out a strategy for paying the bills as they come in. If they pay the interest alone then they will have a bigger debt to pay at the end of the agreement.
However if they combine both the interest and the principle then they might face some problems of meeting all the financial obligations. At the end of the day it is all a balancing act and one can only hope that they will succeed on the mortgage loan.