subject: Home Investing: Creating A Mortgage Deal And Selecting A Loan [print this page] You need to be able to decide how to purchase a home especially if you need financing and which property should you consider. There are properties that are much higher in terms of price but have better potential for capital growth and income. For an investor, however, not all properties are able to make the same amount of profit. The profit of the property ultimately has to do with the financing cost of the investor.
Financing Cost for The Home
There are many houses that are bought after applying for mortgage loans from mortgage lenders and as banks. The moment you make a decision to do home financing, it could greatly affect your finances. It is thus important to choose which loan you should apply for wisely which could answer your needs and the circumstances.
The Parts of a loan
The loan has an interest rate, principal, loan period or what is called the term and the repayment schedule. The amount you borrow from the mortgage lender or the bank is what is called the principal value. The interest rate is the amount charged for the use of the principal. The interest rate is multiplied against the principal and can be a variable amount or a fixed value.
Interest is the number of months or years (sometimes days) when a loan must be completely paid including the interest amount and can be 25 to 30 years. The interest free and the principal are included in the total amount due specified and must be fully paid as specified in your payment terms.
There is a security option that we grant to the lender when we secure a mortgage giving them the right to take or hold and sell the property. This agreement specified on the mortgage gives the lender the right to decided to sell or forclose the property when the lender is not able to pay the loan after the loan period has finished.
How to Get a Home Mortgage
Getting approved when you apply for a loan all depends on your capacity to repay the loan. The lenders require that you show them bank reports, financial statements, and other proof that will show that you are worthy to get the loan. Usually banks and lenders would get the difference between your income and your debts.
If the lender feels that there is a higher risk granting a lender a loan due to its capacity to pay, he is asked to pay a bigger down payment or he is asked to pay a much higher interest rate. The downpayment is the loaned amount that is paid cash up front, which reduces the amount of the loan or the house mortgage. The value that you put up front as a form of down payment is subtracted from the amount of the mortgage.
Most investors consider the loan approval to be challenging. There are many loan products that you can select from and they have varied features that is suitable for some types of investors and borrowers. If you want to get some tips with regards a particular loan product, seek the advise of a mortgage broker and he could also give inputs on how to get the bank to approve your application.
