Real Estate Loan

Real Estate Loan



Real estate loan
Real estate loan: Understanding the​ concept
Real estate loan is​ what a​ lot of​ people use to​ buy their home .​
Real estate loans have been instrumental in​ bringing joy to​ people by making that unaffordable house affordable .​
Some real estate investors too make use of​ real estate loans for buying properties .​
However,​ real estate loan is​ not free money and anyone who buys real estate or​ plans to​ buy real estate using real estate loan must understand the​ concept of​ real estate loan very clearly .​
Real estate loan (also known as​ mortgage) is​ the​ money that you​ borrow from someone (a financial institution i.e .​
a​ mortgage lender) for the​ purpose of​ buying a​ property .​
The real estate loan generally covers a​ part of​ your purchase price and the​ remaining portion has to​ be paid by you​ upfront i.e .​
as​ down payment .​
The amount (i.e .​
the percentage of​ total purchase price) that you​ have to​ pay as​ down payment is​ dependent on​ a​ number of​ factors and you​ can generally reduce it​ to​ even 5% by going for mortgage insurance .​
FHA and VA loans (i.e .​
mortgage insurances through FHA and VA) reduce the​ down payment requirement on​ real estate loan even further .​
Whatever you​ borrow from the​ mortgage lender as​ real estate loan needs to​ be paid back to​ the​ mortgage lender over a​ period of​ time (and,​ of​ course,​ you​ will also need to​ pay appropriate interest on​ that real estate loan) .​
The tenure of​ your real estate loan and the​ prevailing market rate will determine the​ amount of​ interest you​ pay for your real estate loan .​
Generally,​ you​ are required to​ pay back the​ real estate loan in​ the​ form of​ monthly instalments which are composed of​ both interest and principal portions of​ your real estate loan .​
Also,​ there are various types of​ real estate loans e.g .​
fixed interest rate loans and adjustable interest rate loans .​
So depending on​ what type of​ real estate loan you​ have gone for,​ your monthly payments might either remain constant (fixed rate) for the​ full tenure of​ the​ loan or​ keep getting adjusted periodically (adjustable rate) on​ the​ basis of​ a​ financial index .​
Besides that,​ some other costs are also associated with real estate loans e.g .​
there are closing costs,​ inspection costs,​ attorney fee etc .​
Also,​ in​ case the​ property needs some repairs,​ there will be costs associated with that too .​
Again,​ there is​ stamp duty and other taxes that you​ need to​ pay .​
So,​ really,​ you​ need to​ understand the​ concept of​ real estate loans and the​ related costs clearly before you​ actually go for the​ real estate loan .​
And understanding these concepts is​ really not that tough.




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