Mortgage Loans Finding the Ideal Mortgage Loan: Buying a home is a great financial commitment and finding the right mortgage can be a confusing and frustrating process; especially for those who are buying a home for the first time. The key to getting the best deal for a home loan is comparison. It is essential that you talk to several lenders and financial institutions about the processes, requirements and the alternatives they offer with the conditions of each loan. But what should you keep in mind when evaluating a mortgage loan? The following are important questions to ask yourself when deciding which mortgage is right for you.
Which one suits me more, a fixed rate mortgage or adjustable?
Mortgages generally have two classifications: fixed or adjustable rate. Fixed rate mortgages block the borrower at a constant interest rate that the property owner is going to pay in the course of the loan. This means that the part of the monthly mortgage payment that is allotted to the principal (mortgage amount without interest, insurance, etc.) and the loan interest rate, remain constant throughout the term of the loan; although some taxes and other costs could fluctuate.
The interest charged on an adjustable rate mortgage fluctuates over the life of the loan. It usually starts with an introductory period of ten, seven, five or even a year, where the loan rate is locked (does not change). After that period, rate changes are based on a standardized index, such as the preferential interest rate. This is the interest rate index used by banks and lending institutions as a base rate to calculate or measure adjustable rate loan products. Home equity loans and credit card rates can be tied to the prime rate. This rate is induced by the monetary policy adopted by the monetary authorities of the state to promote the dynamization of the economy. Many people are attracted to these types of mortgage products, since they usually offer much lower introductory rates than those of a fixed rate mortgage loan; but you should consider whether you will be comfortable with the possibility that your monthly mortgage payments will rise significantly in the future.
The rates of mortgage loans are always marked by financial market trends and are adjusted according to the needs of the Financial Institutions. Look closely at this clause where it gives the bank the freedom to raise or lower that rate and make a decision based on their particular interests in acquiring the property and the mortgage loan.
Can I and should I pay the capital?
Certain Financial Institutions allow you to make extraordinary payments to the capital to lower the interest rate and therefore, your monthly payments will fall. In some cases, a lender will offer you the option to pay principal (principal) along with your closing costs. If you leave the same monthly installment, the term (term of the loan: 5, 10, 15, 30 years) drops immediately, but if the monthly fee falls, the term remains the same. Capital is usually paid to reduce the rate of fixed rate mortgages. This type of transaction makes sense if you plan to keep the loan for a long time and do not plan to sell in the near future; since the initial costs are higher and their closing costs soar. In short, you will have to dispose and pay more money at the time of closing, but this in the long run benefits you; since in the end the total cost of investment decreases. However, if you plan to resell the property in the near future, it is not worth it to spend so much money at the time of closing, because you will not see the real profit in the long run. If your bank proposes this option and you think it suits you, make sure that the amount paid is reduced from the amount owed, ask your bank for a statement of the loan so that you can verify it.
What are the closing costs (costs)?
Transfer tax 3% of the value of the property.
Mortgage registration 2% of the value of the loan.
Charges will depend on the location of the property, the type of property (apartment, commercial premises, property, etc.) and the value of the property.
Drafting of contracts and / or legal expenses, which could also depend on the type of mortgage and the amount.
Obligatory insurance of fire and misrepresentation. The latter is intended to cover debts contracted by the insured at the time of death and is a very useful tool for banks and financial institutions; Since of
