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Thursday
Aug122010

3 Things you must consider before taking a mortgage loan (By Samantha Taylor)

Everyone dreams of buying their own homes, probably so do you. However, if you lack the financial resources to purchase it, then mortgage loans can help you. Mortgage or home loan is a loan that you may take to pay for your house and the land that it is on. If you do not make the payments towards the mortgage, then you may lose your house. You can use a mortgage calculator to determine whether or not, you will be able to afford a particular mortgage. Thus; mortgage becomes a very important part of buying your home.
You must consider the following factors before buying a mortgage.
1. Principal: The principal is the amount that you are borrowing. This amount is not equal to the price of your house. The principal is the price of your house after the down payment that you make has been deducted. When you go around from bank to bank, they will tell you how much you can get, based on your income and credit score.
2. The type of mortgage: Mortgages are of two types-fixed interest rate and adjustable interest rate. In case of fixed interest rate you pay a fixed amount every month as long as you are paying for the loan. In case of adjustable interest rate mortgages there is an initial lower interest rate but the rates change with the changes in the market. The fixed interest rate mortgages have a lower risk involved but have a higher interest rate. On the other hand adjustable interest rate mortgages are market determined and there is always the risk of payments increasing.
3. Interest rate: This is the money that you pay to your lender, for using his money. The rate of interest adds to the principal amount to become the total amount you owe. The best way to find out the overall cost of the loan is to see its annual percentage rate. The annual percentage rate is the interest rate and the other costs related to the loan.
You should consider these but you should also remember that you can use a mortgage loan calculator to choose the mortgage loan that suits you best. 

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July 21, 2011 | Unregistered CommenterErica Smith

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