It is crucial to have your research pat down before you invest in your own property. Mortgage loans can appear scary, especially for a first-time home buyer. These loans can be confusing to those who are not in the know of property investment. Therefore, we have collated based on research to give you the run down on everything and anything mortgage. We’ve allowed you to look at what the different mortgage loans are ranging from a home refinance loan, home purchase loan, and a home equity loan. You will be on your way to purchasing the home of your dreams by being smart about your mortgage choices.
Here is the 101 on mortgage loans for first time prospective property owners
What is a mortgage loan?
A mortgage involves a loan that is commonly used to pay for your home or an investment property without you have to pay the full total right away. The individual who borrows this loan when able to pays it back through repayments that are payments made over a particular time span, with principal and interest added on top. Until the whole loan is paid, the name on the property is under the lender and not the one borrower. Mortgage repayments include principal and interest. Principal is the money that is lent to the borrower to purchase the home. Interest is the price from taking the money.
What is a home refinance loan?
A home refinance loan is a method of carrying a fresh new mortgage in replacement of a loan that is already in existence. Although this can be with the same lender, this process involves changing banks. Priva Mortgage is a top-notch mortgage broker that can provide you with an experienced team of lenders who have the best advice when it comes to finding the right mortgage best suited for your situation. If you are planning to move properties or renovate, this could be the best solution. A home refinance loan could provide you with the option to benefit from extra elements such as smaller interest rate and an offset account. There are a variety of advantages to getting a home refinance loan such as flexible payments, redraw amenities, an improved interest rate, and may other beneficial features. You can spend money on enjoyable things in life such as a holiday or a better car. You can also improve the organisation of your finances, making you able to keep merge your other loans such as car loans, credit card alongside your mortgage.
What is a home equity loan?
A home equity is the cost of your property minus the how much money you are indebted to in your mortgage. For instance, if your property is valued at $600,000 and you owe $150,000 in your home loan, the equity is 450,000. Equity is built up in your property after some time, which is when you pay you home loan and if your property rises in value. This is the part of your property that you own yourself. You will be able to utilize this equity to allow you borrow money with banks and other lenders. With the help of a home equity loan, your term will be lengthened, this will help you to do repayments if your interest rates increase. With this, you can massively decrease the amount you owe in your mortgage and overall boost your property’s value.
What is a home purchase loan?
A home purchase loan is protected with your property as the equity. There is a huge range of home loans such as construction loan, first home buyer, owner occupier, property investment, refinancing, or only interest. There is a range of different kinds of interest rate including a fixed rate, split rate, or variable rate). With a home purchase loan, you will have to trade your property to resolve the issue.
The main takeaway
There is so much that goes on when it comes to a mortgage loan. There is a variety of directions to go when it comes to choosing a loan to pay off your property such as home equity loan, home purchase loan, and home refinance loan. You can expect your home to be bought in no time with the ability to know as much as you can about the mortgage and finance world. Doing your “home-work” definitely pays off!