Lenders And Most Common Type Of Loans

Lenders And Most Common Type Of Loans

Lenders And Most Common Type Of Loans
According to​ nwmservices.com any licensed person or​ entity advancing funds that are to​ be repaid .​
Also known as​ a​ mortgagee in​ other words lender is​ someone who lends money temporarily to​ a​ person on​ the​ assurance that he repays within an​ agreed amount of​ time with interest .​
These lenders may lend money for different purpose or​ stated in​ other words money is​ borrowed for different reasons like educational loan,​ hospital loan,​ loan to​ built a​ house,​ loan to​ start a​ business,​ etc .​
Different sources like individuals,​ savings and lending institutions,​ Banks,​ Government etc.,​ again offer loans .​
The most common reason for borrowing is​ car loan,​ personal loan and home loan .​
the​ lenders usually ask for a​ security before the​ money is​ lent,​ the​ security might be in​ the​ form of​ an​ asset like house,​ land etc.,​
What we are going to​ see here are the​ most common types of​ loan prevalent in​ United States .​
The common type of​ mortgages are a​ .​
Fixed Rate Mortgage b .​
30 year fixed rate mortgages c .​
15-year fixed rate mortgage and d .​
Adjustable Rate Mortgages and e .​
Balloon Mortgages.
According to​ the​ Fixed Rate Mortgage,​ the​ loan interest remains fixed for a​ long period of​ time and doesn’t change .​
the​ only disadvantage is​ that,​ when the​ interest decreases the​ rate remains the​ same and the​ borrower looses on​ the​ decreased rate .​
in​ case of​ the​ 15-year fixed rate mortgage the​ loan amount and the​ interest remain fixed for 15 years (by which time the​ house can be built and the​ amount paid off) this can be applied to​ cases of​ short term loan and the​ owner decide to​ sell the​ house in​ a​ few years time .​
in​ case of​ the​ 40-year fixed mortgage rate the​ rate remains fixed for 30 year period and is​ usually recommended for those people where they decide to​ built the​ house with the​ help of​ the​ loan and stay there for a​ long period .​
It is​ commonly believed that lenders reduce the​ interest rate in​ a​ 30 year fixed rate mortgages than in​ a​ 15 year fixed mortgage rate.
The Adjustable Rate Mortgages or​ ARM is​ where the​ loan rate remains fixed for a​ period of​ time for example for a​ annual rate mortgage the​ rate remains fixed for one year and adjusts according to​ the​ prevailing rate .​
This is​ the​ most common mortgage facility as​ the​ interest rate reduces when the​ rate index falls and the​ borrower is​ at​ an​ advantage because of​ the​ same .​
Balloon Mortgages are where like the​ ARM or​ Fixed Rate Mortgage the​ amount remains fixed for a​ period of​ time and when the​ period is​ lapsed the​ rest of​ the​ amount is​ paid accordingly .​

The above-mentioned mortgages or​ loans are usually used while building and selling a​ house .​
Whereas the​ ARM or​ the​ Adjustable Rate Mortgage is​ a​ prevalent type of​ loans that the​ lender might apply in​ any other types of​ loans.

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