Top Ten Terms For Loans

Top Ten Terms For Loans



Top Ten Terms for Loans
Everyone knows that you​ should never sign on​ the​ dotted line without reading the​ contract .​
This same term applies to​ loans .​
Signing a​ loan without knowing the​ terms and what everything means can be detrimental to​ your finances,​ credit and future investments .​
Before you​ sign on​ the​ dotted line,​ make sure that you​ know these terms and how they will apply to​ you​ .​

1 .​
Interest rate .​
the​ interest rate is​ the​ percentage of​ your loan that is​ added on​ every month .​
the​ percentage will vary according to​ the​ economy and will make a​ difference in​ your payments .​

2 .​
Fixed Rate .​
a​ fixed rate will be an​ interest rate that stays at​ the​ same percentage throughout the​ entire period of​ your loan .​

3 .​
Variable Rate .​
a​ variable rate will change according to​ the​ economy and the​ charts that are stating what the​ rates should be for interest .​
a​ variable rate usually changes every year and adjusts according to​ a​ specific given range of​ percentages .​

4 .​
Principal .​
the​ principal is​ what you​ will be paying on​ your actual house .​
Whatever you​ pay on​ your principal is​ what you​ will see in​ the​ end as​ your investment .​

5 .​
Escrow .​
This is​ similar to​ a​ savings account of​ your loan .​
Whatever you​ put in​ escrow will accumulate without paying directly into the​ loan .​
At the​ end of​ the​ term you​ can use it​ to​ finish paying off the​ loan or​ to​ invest in​ another loan .​

6 .​
Title .​
a​ title will be what you​ get to​ your home after it​ is​ officially yours,​ stating that the​ property belongs to​ you​ .​

7 .​
Deed .​
a​ deed will most often be used as​ a​ title for a​ commercial area .​
Instead of​ giving ownership it​ shows that the​ property is​ leased to​ the​ one who is​ using it​ as​ a​ business .​

8 .​
Home Equity .​
This is​ a​ loan or​ line of​ credit that you​ can get for your home .​
It will finance up to​ eight percent of​ your other loan and get paid back later .​
This helps if​ you​ want to​ consolidate loans or​ invest more into the​ property .​

9 .​
Appraisal .​
After an​ inspection of​ the​ home is​ made,​ an​ appraisal will be made .​
This will be an​ estimated value of​ what the​ home is​ worth .​

10 .​
Equity .​
This will be the​ actual amount of​ the​ property that you​ own .​
Most likely,​ it​ is​ what is​ being paid off of​ your principal amount .​

Once you​ know some of​ these basic terms,​ you​ will be able to​ expand on​ your knowledge and find the​ exact loan that will fit your needs .​
These basic definitions will help you​ in​ making the​ right decision for the​ type of​ loan that you​ want .​




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