WHAT IS MORTGAGE || TYPES OF MORTGAGE || MORTGAGE INSURANCE
WHAT IS MORTGAGE
Mortgage is a type of loan which is used to purchase a home and mortgage is offered by credit unions, banks, other financial institutions. When you try to purchase any house using mortgage, your lender or bank loaning you the funds —actually pays for the home outright. Then, over the length of your loan, you pay the lender back for those funds + interest, month after month.
When you are buying a home using mortgage, you will make regular monthly payments until balance clear. Your payments can cover several costs, including Principal, Interest, Homeowners insurance, Taxes and Mortgage insurance points on a mortgage
WHAT IS PROS AND CONS OF ADJUSTABLE AND FIXED RATE
Pros of adjustable rate are: 1. Lower monthly payment, initially 2. Lower interest rates, initially 3. Good for short-term homeowners 4. Higher debt-to-income allowed. Cons of adjustable rate are: 1. Unpredictable payments after a certain point 2. Risk of an interest-rate increase later on 3.Risky for long-term homeowners. Pros of Fixed rate are: 1. Predictable monthly payments 2. No risk of an interest rate increase 3. Good for long-term homeowners 4. Easy to budget and plan for. Cons of Fixed rate are: 1. May be harder to afford the home you want 2. Higher interest rates, at least initially.
WHAT IS MORTGAGE INSURANCE
Mortgage insurance is a type of insurance policy designed to protect mortgage lenders. If a borrower defaults on their mortgage loan, mortgage insurance steps in and pays off all or a portion of the outstanding balance. On Federal Housing Association (FHA) mortgage loans, this type of insurance, commonly referred to as MIP, is required for all borrowers.
There is no need to register a mortgage in an oral mortgage loan. Oral mortgage loans are very common in India, but most companies demand property documents.
In a mortgage loan, you can take a loan up to 80% of the value of the property. In some cases the loan amount reaches 85-90%.
The repayment period of mortgage loan is decided by HFC.
The repayment period of a mortgage loan is known as the term of the loan. You can repay a mortgage loan through EMI in a pre-determined period.
Mortgage loan balance keeps decreasing daily, monthly and annually.
Just as you down for a home loan, in a mortgage loan, the down payment amount can be up to 10-20%.
If you want, you can repay the mortgage loan ahead of time. Through prepayment, you can save interest by paying the loan before the due date of the mortgage loan.