Mortgage loans – Your home; security to clear your debts!
Mortgage loans are loans where money is borrowed and a promise to repay is given, and as a security the borrower
or the mortgagor gives the lender or mortgagee an ownership on his property. A mortgage loan
is usually used to fund the purchase of real estates, usually with fixed payment periods and
interest rates.
The borrower gives the lender the property as collateral for the loan. This is somewhat similar to
home equity loan;
the only difference being the property is directly mortgaged rather than secondarily as in home
equity loans.
The lender's ownership on the property expires when the mortgage period ends or the loan is
completely paid off.
There are many types of loans when considering a mortgage. They are the government sponsored
Conventional and Jumbo loans, Subprime Loans, temporary B/C loans; other Government loans such as
FHA loans, VA loans, and RHS loans, Second Mortgages
and home equity lines of credit, fixed rate mortgages, adjustable rate mortgages, introductory
rate adjustable rate mortgages, balloon mortgages (short term mortgages), graduated payment
mortgages, interest rate buy-downs, reverse mortgages (for older or retired homeowners),
commercial loans and others.
There are many benefits to this type of loan. Mortgage rate is fixed, making it simple and
predictable. Alternatively for those who are not favourable of this, there is also the adjustable
rate mortgage which is flexible. They are uniquely adaptable and great for fast movers.
Furthermore, you can customize your loan through a "buy down and buy up programs".
The term or length of the loan is usually 15 to 30 years. The shorter term carries a lower
interest rate and higher monthly payments, but more money is saved over the long run while you
build equity at a faster pace. A longer term on the other hand carries a higher interest rate and
a lower monthly payment, so it makes a larger mortgage more affordable. However, you build equity
at a slower rate.
Read more on
Home Loans here.
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Mortgage loans