What is Home Loan
A Home loan is calculated based on the borrowing amount from the bank or financial company. The bank lends money to the individual at a certain rate of interest who want to buy home.
The individual is required to pay the EMI each month based on the calculated rate of interest. Until the individual pays off the loan, the home is taken as a security by the bank or the company which lends money.
When it comes to home loan, it can be either take for commercial or personal building. In any case, if the borrower is not able to pay the due amount, the lender has all the legal rights to recover the outstanding amount by selling the property.
For individuals who believe in investing they consider buying the home as the bigger investment. Buying a home is not easy, it costs hundreds of thousands hence it is best to take help of a reliable bank or financial company in order to buy home.MY BANKING INFORMATION
How it works
The home loan is calculated by calculating the below mentioned.
- The principal value: This is the actual amount of money which you borrow from the bank or financial institution. The amount is actually the purchase value without the down payment, closing costs and another additional fee.
- Term Value: This is the total time duration within which you have to pay the loan amount. The minimum time to repay the loan amount is 5 years and it can go up to 30 years as mutually discussed by both the parties.
- Rate of Interest: This is the total annual amount which you need to pay the bank or financial company which is lending you the money.
- Frequency of repayment: This is calculated as how often you make the loan payment. It is usually calculated as a 1-month value.
What is the Home Equity loan
A home equity loan is a consumer debt and the owners can borrow loan against their home. The amount is calculated based on the difference in the value of the current market value or the home and the mortgage balance due by the owner.
Example of a Home Equity loan and how it is calculated
The home quality loan is a mortgage, the owner is allowed to borrow money against their residence. It is an easy way to get the equity value of your home in terms of cash.
What is Mortgage
The mortgage loan of the home is the loan amount secured for the house. It is a must for the borrowers to make a series of payments for the loan. The home mortgage should be repaid within the rage of 10- 30 years. It is calculated in 2 types one is adjustable rate and another one is a fixed rate. In both cases, the interest rate varies.
Example of Mortgage and how it works
In order to avail a mortgage, it is must to submit an application and relevant information to the lender. The borrower and lender must agree to legal terms and condition in order to get the loan approval. The payment of the mortgage is made of principal, interest value, property insurance, and annual property taxes.
Source : Teddy Smith