24*7 Support

Overview of Various Types of Mortgage Loans

Mortgage Loans

There are primarily two types of home loan products available in the market like the home equity loan and home equity line of credit and both use the home as collateral.

However, there are some differences: The line of credit releases funds as you pay off the balance and has a flexible rate of interest while home equity loan disburses the entire amount at once and additional amount can be accessed only through refinancing and has fixed rate of interest. Therefore one should evaluate the pros and cons of different mortgage loans carefully before choosing an option.

What Is Better: Fixed Or Adjustable Rate Of Interest ?

Fixed rate mortgage loans, as the name suggests offers interest rates that remain unchanged during the tenure of the loan. While Adjustable rate loans have interest rates that can fluctuate through the loan tenure, depending on the Prime lending rate. Therefore, once must carefully analyze the situation and take a decision after carefully weighing the current as well as prospective outflow.

In such a situation it is better to look at the market conditions and check how the interest rates seem to be predicted to behave over short term and long term period and decide accordingly. If the interest rates are trending upwards, its best to go for a fixed rate while if the rates are at an all time high and expected to go down, it's advisable to opt for flexible rate mortgage loans.

Is it possible to get loans on rental property?

Many banks and lending organizations offer financing solutions for rented properties, though the rate of interest may be higher than residential property, since there’s an element of risk is higher.

How can I pre-approved loan?

You need to apply for mortgage loans with the necessary financial information, which is analyzed by the lender to determine your eligibility. Once you get a pre approval for a certain loan bracket it helps to set the budget and select property accordingly.

What are known as points?

These are a one-time charge that one pays to lower the interest rate and each point corresponds to 1% of the loan amount.

What are the interest rate and APR in mortgage context?

The interest rate is the price that the lender takes for lending the loan funds, while APR refers to the total costs including all charges and interests over the loan term.

What is Private Mortgage Insurance

This is a mandatory formality in case of first mortgages or first mortgage refinance when the borrower has paid less than 20% down payment. The PMI is a protective cushioning against losses for the lender in case the borrowers fail to repay the mortgage loans. Its premium is normally added to the monthly loan repayment.

Copyright © 2017 - 2018 Kenneth Abrighten Business Home.All Rights Reserved.