The 6 Important Mortgage Terms You Need to Know
Are you planning on taking out a mortgage? Here are several terms you need to know before filling your first mortgage to the bank!
Since mortgages are big financial decisions, it is crucial to understand the terms associated with one. You will want to make sure that you are aware of all the terms involved before proceeding with your mortgage. Especially if this is your first time, a mortgage process can be a daunting task for you.
Lokalist is here to spell out the basics, so your knowledge is on par with any real estate expert!
Mortgage Interest Rates
A mortgage interest rate is the percentage of the existing loan you borrow from your lender. The higher the interest rate is, the higher you will need to pay for your monthly repayments.
With an assumable mortgage, a buyer takes over the seller’s house while being the one who resumes the seller’s mortgage payments on a monthly basis.
A down payment is the payment amount you give to receive a loan that covers the principal and interest of your mortgage. Typically the higher your down payment, the lower your mortgage interest rate will be.
When deciding on applying for a house mortgage, you will decide on a mortgage tenor. A mortgage tenor defines how long you have to pay back your loan before the lender gets the right to demand your outstanding loans.
An appraisal is a process done by an unbiased party to determine the value and worth of a home. An appraisal is carried out as a consideration to measure the creditability of a buyer.
Collateral Mortgage (Agunan)
Collateral is an asset or valuable item that is entrusted by a debtor to the lender as a guarantee. This means, if a buyer fails to pay for his mortgage, then the collateral will change ownership to the lender according to the agreement made. This is also known as Agunan in Indonesia.
Those are the six important mortgage terms you need to know before you decide on taking one. Remember, be wise and be smart before making your big purchase!