Acquiring properties may not be as difficult as it used to be. Nowadays, you can acquire properties even without the full cash payment at hand. Just by having a sufficient source of income, any bank or lending institution can help you acquire a property through a mortgage.
A mortgage is an agreement between a bank or other financial institution lending the borrower money for the purchase of a property. The money is paid by the borrower with interest. The lender takes hold of the property title until the debt has been fully paid. Mortgage has been the easiest financing method to acquire a property.
Types of Mortgage
There are two types of mortgage loans, a fixed rate mortgage and an adjustable rate mortgage. A fixed rate mortgage loan is a type of loan that earns interest through a fixed rate. If the borrower wants a predictability of a steady monthly payment, having a fixed rate mortgage is the type of mortgage the borrower must apply. Fixed rate mortgage protects the borrower from sudden fluctuation of the interest rate available in the market.
On the other hand, if the borrower intends to live in the house for 3 to 5 years and intends to sell it, an adjustable rate mortgage would be best. An adjustable rate mortgage often has a fixed rate for the first five years which is much lower compared to a fixed rate mortgage. After the fifth year, that is the time when the rate starts to change which will then be shouldered by the new owner of the house.
Mortgage lenders range from banks to other financial institutions who have legally acquired the right to grant mortgage loans. If you plan on getting a mortgage, I would highly recommend that you compare different banks and list of licensed moneylenders. It is quite important to have a checklist and a compare sheet. This will allow you to get a good idea what your mortgage lender can offer you.