Mortagage Loans - Features You Need To Understand

2007-03-08 10:33:40

( Financial )



Most home purchases involve financing a portion of the purchase price. You can find various sources of financing for your home purchase. But most home loans are through professional money lenders (banks, credit unions, savings and loans and other financial firms), and therefore involve mortagage loans.

You may find mortgage lenders’, like National City Mortagage, requirements for borrowing money probing and burdensome. But remember that it is their money and they can put any demands on the borrowing if they want to.

Selecting mortagage loans is an important financial decision you make in your lifetime. You should understand the basics of mortagage loans and the various types of mortagage loans available. You will then be able to find mortagage loans that best fit into your financial plans and save you the most money.

All mortagage loans have four features: principal, term, interest and monthly payment.

Principal

This is the actual amount of money you borrowed. You are expected to pay back the principal to the lender over the term agreed in the contract in proportionate monthly payments or increments.

Interest

The interest is the amount you must pay the lender for the use of the lender’s money. Mortagage rates vary by type of mortagage loans and between lenders. Mortagage rates are agreed to between you and the lender at the inception of the mortagage loans. The lowest rate would result in the lowest cost to you, assuming that all other things being equal.

Term

The term of mortagage loans is the length of the mortgage in years or the total number of payments. The term varies by the type of mortagage loans.

Monthly Payment

The monthly payment is the amount that you must pay to the lender each month to pay off the loan. This amount is determined from the application of the principal, term and interest rate.


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