To buy a new property or to meet some personal needs, you might consider opting for property loans or mortgage loans. So before you go and take a loan, understand the basics. Have a look at some of the major things you need to understand before taking a property/ mortgage loan;
1) Loan Amount – The loan amount given by a provider is based on your income, down payment, expenses and the current mortgage rates. Hence, it should be an amount that you are comfortable borrowing.
2) Features of Mortgage – From the many types of home loans, fixed rate mortgages, which also feature different interest rates that might fluctuate. You need to make equal payments for the loan tenure. There is Adjustable Rates Mortgages which has rates that go up and down as per the changes in the financial markets. ARM rates increases when the economy heats up and drops when the economy dips.
3) Mortgage Rate – A mortgage rate is the interest rate of your loan. It is also the most visible part of your loan. A loan that has lesser interest rates but a higher closing cost can be an expensive option. These rates are divided into fixed interest rates and floating interest rates. Here, the fixed rates will remain constant throughout the loan tenure. Whereas, in floating rates, the interest rates keeps on changing/ fluctuating.
4) Monthly Payment – Monthly payments are your equated monthly installments (EMIs). According to the loan amount and tenure, the loan provider or bank decides upon an amount of EMI you need to pay every month to the loan provider.
5) Term – The term of a property mortgage loan is the duration in which you will pay back your loan amount. It can either be 10 years, 15 years, 20 years or 25 years. This is the time frame in which you can pay back your loan through EMIs.