Mortgage is an agreement or a deal between the borrower and the lender. Under this borrower borrows some money from the lender for buying his house. And for this lender take his money in the form of premium with interest at certain rate. When the borrower declared himself solvent or does not pays his borrowed money, then the lender has full rights to take his property or asset away from him i.e his property becomes collateral between the borrower and lender. It is a document which makes the lender the right for foreclosure of your home.
Mortgage rate is the rate of interest charged by the mortgage lender. Mortgage rates are determined or decided by the lender and can be fixed, staying at the same rate for long duration or can be fluctuating or changing rate interest. Mortgage rates also varies from lender to lender according to their credit profile.
Mortgage home loans make it possible to buy home, because real estate is very expensive and every people cannot afford it. And through home loans they can pay monthly premiums easily. For it they pay make down payment of 20 percent and rest money is raised in the form of monthly premiums. Moreover they also get the benefit through mortgage home loans because they have to pay money at lower rate interest and have lesser risk of any mishap.
There are several kinds of mortgage home loans available. You have to check among them which suits to your need.
- Fixed rate mortgages: this loan is the simplest kind of loan. It is also regarded as “vanilla wafer”. Under this loan you have to pay the exact amount of loan which is required in the entire term. The term of fixed rate mortgages lies from 15 to 30 years. The monthly premium can be easily calculated by your own calculation. All you need is rate of interest, time in which you have to pay loan and the loan amount.
- Adjustable rate mortgages: this loan is similar to standard loans. But in this loan the rate of interest can be change at any term of point in future. This can be costly as the rate percent might increase gradually in future which will make you pay more monthly premium. So this loan can be risky for you.
- Second mortgages: also known as EQUITY LOANS. Second mortgage are also used for the purpose of higher education and the maintenance of your home.
- Reverse mortgages: this mortgage loan will provide income to the person especially who are above the age of 62 years. Retire person use this loan as kind of supplement to their income or to get cash out of homes that they paid long ago.
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