The basics of mortgage
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- Published on Tuesday, 06 September 2011 16:25
Mortgage is an agreement between borrowers and lenders. Borrower will lend money and give his property for guarantee. So if he cannot pay his loan, lender have right to take his property away and sell it. So as we can see, taking a mortgage envolves many risks and should be considered thouroughly. There are different types of mortages:
1. Fixed rate mortgage
2. Variable rate mortgage
3. Ballon rate mortgage
Choosing one can be a challenge. With fixed rate mortage, you will get a fixed interest rate. You will pay a fixed amount of money every month. It doent matter if the interest rates will rise or fall, you will pay the same amount anyhow.
Variable rate mortgage also know as adjustable rate mortgage or ARM has a lower interest rate, but on the other hand, if interest rates rises, you have to pay more.
Ballon interest rate mortgage is similar to the fixed rate mortgage. You will get a fixed interest rate and have to pay every month. After certain amount of time, for example 5 or 7 years, you have to pay all back that you own at this moment.
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