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All residential mortgages are not similar; the terms vary extensively between the lending firms, including those with less credibility. There is also variation in interest rates depending upon the lending firms and the exact requirements of the borrower.

Here are certain aspects that the borrower considers while shopping for residential mortgage:

A loan exceeding 80% of the cost price or appraised value of the property (whichever is less) is a traditional residential property. The balance 20% needed for the purchase is taken as a down payment and is paid from borrower’s resources. If you need to borrow 80% of the funds, you have to apply for high-ratio residential property. If you are not earning income that can be verified or you are self employed, most of the conventional lending firms won’t exceed 75% of the traditional residential mortgage.

If the residential mortgage has fixed interest rate, the interest rate will not be altered throughout the entire duration of the mortgage. The term of this loan may be for 10, 15, 20 or 30 years. The payment is same regardless the life of loan. Conventional residential mortgage is the best for customer. The one who qualifies for this loan can very easily afford own house. When you are planning for the conventional mortgage you may be given a chance to buy points for lower interest rate.

If you can afford higher payment for a term of 15 years loan, it would be much better. This will cut down the length of the loan including the money you pay as interest. This means compromising with a smaller house or managing funds in other areas, but after some time it will be greatly beneficial to you. You should not buy mortgage payments exceeding 25% of your income. This will keep you on the safe side and prevent you from becoming house poor. Borrowing more than this can make it tough for you to meet other expenses. In order to follow this rule, you need to reduce your expectations.

While you finalize the mortgage provider, make research in the market and consider all the options, and counsel the mortgage broker to choose the best choice available. Benworth Capital in South Florida is a leading provider of short term, commercial mortgages and first-position residential mortgages. It is catering with the financial needs of the borrowers at fair and flexible terms. Its goal is to help the clients in acquiring and protecting the value of real estate. If you are looking for any loan for purchasing house or any other purpose, please contact the team of Benworth Capital for initial consultation.

allenhill1 Article's Source: https://www.thearticledirectorypost.com/what-is-a-residential-mortgage/

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  • writerPosted On: February 21, 2014
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