The Nuts and Bolts of Homeloans | HelpGetRidOf.com
A home loan is sometimes referred to as a mortgage. A home loan is used to purchase a home or property. it is paid in installments over a set period of time.
Essentially home loans are offered in four major types. The most popular, especially among home owners is a fixed rate home loan. A fixed rate loan, like it sounds, retains the same interest over the term of the loan. Fixed rate loans usually last between 15-30 years, are low risk, protected under inflation, and easier to budget.
Adjustable rate home loans, unlike fixed rate home loans, adjust the interest rate over an initial period (between a few months and few years). Adjustable interest rates begin high during the initial period and slowly reduce in rate.
Balloon home loans are based on a 30 years amortization schedule, but the entire home loan balance is due at the end of the loan?s term, which is between five or seven years. If you cannot pay the entire home loan balance at the end of the term, then you can elect to reset the home loan at the current interest rate.
A newer type of home loan is called a reverse mortgage. this appeals to older homeowners, especially those interested in supplementing their retirement savings. in a reverse mortgage, the home owner receives money instead of making a monthly payment. The reverse mortgage does not need to be repaid until the home is sold, the owner dies or the owner no longer uses the home as their primary residence. you must be 62 years old and living in the home as a primary residence in order to qualify for a reverse mortgage.
A down payment is required when getting a home loan. Depending on the type of home loan, the required down payment is usually between three percent and 20 percent of the home?s total cost. The buyer?s credit history, income and the home?s cost can also influence the amount of down payment required. anyone who puts down less than 20 percent is required to carry private mortgage insurance (PMI) on their home loan. this protects the bank if the home owner defaults on the home loan.
The buyer will also have to pay closing costs on their home loan. The closing cost is between 3-7% of the total value plus taxes, financing, and other settlement costs. Negotiating with the lender may reduce the closing costs or you can request that the seller covers the closing costs.
Tom Martens is the content coordinator for South Arica?s leading Homeloans portal which amongst others offers Bond origination services for all major banks.
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Tags: Banking, Bonds, Finance Personal Finance, Homeloans, Loans, Money, Mortgages, Personal Finance, Property
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The Nuts and Bolts of Homeloans | HelpGetRidOf.com