Everybody has his own Dream home. When we talk about home, One of the most important factors of having a house is money! If we do not have enough money, how can we have a home?
That’s why we are going to talk about Mortgage loanBecause mortgage loan can help us afford a house.
Let’s understand what is Mortgage loan?
and How different is between mortgage and loan?
Mortgage is a type of loans that is assured with real estate or property.for example, when we want to buy a house that we can not pay as full amount of house cost, we have to use the real estate or the property as collateral to guarantee from borrowing the bank’s money.
Loan is a relationship between a money Lender (Creditor) and a money Borrower (Debtor).The borrower don’t just return the money at the amount of money initially borrowed (Principle) but the borrower also has to return the additional fee (interests).
and the terms that are related to mortgage loans;
ARM (Adjustable Rate Mortgage) = The interest rate of home loan that can be changed periodically based on a standard financial index. (if you want to know more how different between ARM and fixed rates, click here)
Principle = The tolal amount of money you borrow from the lender to buy a house.
For example :
If you have a 250,000$ Mortgage loan, it means that you have the beginning principle balance at 250,000$
Mortgage Insurance = The insurance that includes homeowners insurance and also could include mortgage insurance. Your lender will let you get Homeowners insurance to cover your house and property inside incase you default on your mortgage loan.
Mortgage note = legal document that you have to sign when you get a mortgage. The mortgage note is the promise that you will repay principle, interest or other costs of the house as the period of time. Incase you cannot pay anymore, the lender can take the house back and sell it to others.
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