There are multiple types of mortgage loans that you should know before you choose to take one for your home.
Mortgage loan is the loan that is taken from the banks or private mortgage brokers or even online brokers. This loan is received by pledging the owned property to buy the new property. Mortgage loans usually are available for a period of fifteen to thirty years. The payments that you need to make are distributed over the number of years exactly, the kind of mortgage loan you choose as well as the interest rate that is decided.
To make certain that the borrower repays the loan properly and at regular intervals, there are a few things that the lenders usually examine before. The most important and the main aspects that need to be considered are the down payments and monthly interest payments. All this will be dependent on the kind of mortgage loan that you choose. There are various types of mortgage loans and thus before you take one it is very important for you to know all in brief so that you can take the right decision.
Type #1
Fixed interest rate mortgage loan:
This is the type of loan in which the interest that you need to pay is fixed. This means that, every month the amount of interest that needs to be paid is known to you well in advance. In such a situation, you can calculate the amount of expenses that takes place monthly including the repayment and interest payment. Thus, you can know whether you afford to pay the specific amount every month or not. This one of the most common types of mortgage loans that most of the people prefer to take.
Type #2
Balloon mortgage:
This is the type of mortgage that gives the borrowers low interest rate for a specific period of time. This period generally varies between 4 to 10 years. After the period passes, the borrower needs to pay the entire amount of principal.
Type #3
Sub-prime mortgage:
This is the kind of mortgage that is meant for the people having low credit score. This indirectly means that the lender poses a higher risk. For compensating on this aspect, the monthly payments as well as the interest rates are higher. In case the borrower pays the amount that is due before a particular time, then the lender needs to pay prepayment penalty to the borrower. This is one of the rare types of mortgage loan. This means that not many people prefer taking this mortgage loan.
Mortgage loan is the loan that is taken from the banks or private mortgage brokers or even online brokers. This loan is received by pledging the owned property to buy the new property. Mortgage loans usually are available for a period of fifteen to thirty years. The payments that you need to make are distributed over the number of years exactly, the kind of mortgage loan you choose as well as the interest rate that is decided.
To make certain that the borrower repays the loan properly and at regular intervals, there are a few things that the lenders usually examine before. The most important and the main aspects that need to be considered are the down payments and monthly interest payments. All this will be dependent on the kind of mortgage loan that you choose. There are various types of mortgage loans and thus before you take one it is very important for you to know all in brief so that you can take the right decision.
Type #1
Fixed interest rate mortgage loan:
This is the type of loan in which the interest that you need to pay is fixed. This means that, every month the amount of interest that needs to be paid is known to you well in advance. In such a situation, you can calculate the amount of expenses that takes place monthly including the repayment and interest payment. Thus, you can know whether you afford to pay the specific amount every month or not. This one of the most common types of mortgage loans that most of the people prefer to take.
Type #2
Balloon mortgage:
This is the type of mortgage that gives the borrowers low interest rate for a specific period of time. This period generally varies between 4 to 10 years. After the period passes, the borrower needs to pay the entire amount of principal.
Type #3
Sub-prime mortgage:
This is the kind of mortgage that is meant for the people having low credit score. This indirectly means that the lender poses a higher risk. For compensating on this aspect, the monthly payments as well as the interest rates are higher. In case the borrower pays the amount that is due before a particular time, then the lender needs to pay prepayment penalty to the borrower. This is one of the rare types of mortgage loan. This means that not many people prefer taking this mortgage loan.
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