Understanding Mortgages and the Types
A mortgage is a type of loan whereby there is a legal agreement for the mortgage dealer maybe a bank or a building society, to lend you money for financing a real property which acts a security to the loan. With desire for good homes, it’s becoming almost impossible to have one without getting a mortgage. There are a number of things that people consider when taking a mortgage such as the interest rates, type of mortgage, fees, and the flexibility. To a great extent such factors influence the overall cost of the loan and the duration by which it will be completed. Fixed rate mortgage is one type of the loans and in this one the interest rate you will be charged for the given period of time will remain constant. For a fixed rate mortgage, it might be fixed for the whole period till completion but in other cases it will be specified like maybe a fixed rate for one or two years then from there terms might change, hence it’s important to know for how long your rates will be fixed. One great advantage of this type of loan is that you are sure of the amount you are supposed to pay hence you will be able to plan and budget with surety. With a variable rate mortgage, the rates can change at any time and there are different types of such a loan. One type of variable mortgage is hybrid ARMs which kicks off with a fixed rate and later changes to a variable rate mortgage. Government insured and conventional loan is another category for understanding the various types of loans. A conventional loan is not in any way guaranteed by the government. The government insured or protected mortgage can have varied forms. One of the most popular type of mortgage is annuity mortgage whereby you pay the monthly interest rate and a certain portion of the loan amount. The monthly repayments are therefore well planned to ensure the loan decreases as the time pogresses until it is eventually fully paid at the end of the loan repayment term. I is always important to ask any questions you might have to your lender so that you fully understand what are about to get yourself into. Mortgage is way of ensuring that you own a home conveniently and in an affordable way.