subject: What Is Mortgages 101? [print this page] Unless you're independently wealthy with access to a lot of funds, you won't be able to afford buying or purchasing a home outright. Houses and property are one of the most expensive purchases and greatest investments most people will make in their life. For most people, their house is the most valuable piece of property they will every own or buy. But, in spite of the expense of purchasing and furnishing a home, people still want to have that piece of land that they can call their own. Even if it puts them into debt, people will want to have that place that is their own haven from the world, where they can feel safe, raise a family, and maybe grow old in.
People who don't have the access to funds and basically cannot afford to purchase and furnish a home outright have the option to take out a mortgage loan or bank loan in order to get the money to purchase their dream home. What a mortgage is a bank loan, which basically covers for most, if not the entire, cost of the purchase of the house itself. Except that, where most loans don't require specific collateral rather you would be required to prove that you can afford the monthly payments of the loan. In this case, a mortgage is a loan where the house is the collateral. Should you be unable to pay the monthly payments, the bank or loaning body can choose to foreclose on your house. There are mortgage companies in Saudi Arabia have to offer loans for house and other properties that you may want to loan.
Like all loans, mortgages incur interest, which is essentially the bank or lending body's fees for lending you the money in the first place. Generally, mortgages are paid over a period of 15 or 30 years and depending on what you've chosen, the interest can be fixed or changing. Generally, it's advisable for people to go for fixed interest rates since changing interest rates would mean that your monthly payments could rise with no warning. For those who have a tighter monthly budget, fixed rates would be a better option. You also have to pay part of the principal amount, or the entire cost of the house, as a sort of down payment for the loan. Generally, the lower the "down payment," the higher the interest rates.
Once your mortgage is approved, you pay the entire amount minus your down payment divided into monthly payments for the total loan period, although, the 15 or 30 years is more like a deadline. If you can afford to over-pay on your loan payment, you can find yourself able to pay off your mortgage much sooner than you expected.
