Home Loan
Home Loan
So First Up lets go over some basics:
What is a Home Loan?
A Home Loan
, or mortgage, is a sum of money provided by a bank or lending institution to a customer, to enable them to purchase a property (although it can be used to purchase other assets too). The property is used by the lender as security for the loan. In other words, if you're unable for any reason to pay back the Home Loan, the lender would gain certain rights over your property (see What happens if I can't make the repayments?).
You pay back the money you've borrowed from the bank (known as "principal") over a period of years (the "term"). Typically this is between 10 and 25 years. In addition to paying back the principal, you pay the bank extra money in the form of interest for the privilege of receiving the loan. The amount of interest is determined by the bank (normally rates are tied to the prevailing market interest rate at any given time), and by the type of loan you have (see What types of Home Loan or Home Equity Loanare there?). Your repayments of principal and interest are made regularly - usually each month or fortnight.
In order for a bank or lending institution to approve a Home Loan or Home Equity Loan, they'll need to satisfy themselves that you are capable of paying back the principal and interest. You'll be asked for details of your income, debts and other regular financial commitments. The bank will also carry out a "credit check" to ascertain whether you've received loans before and if you've had any difficulty paying them back, or if you’ve had any other problems with repayment of credit.
Most lending institutions will also require you to be able to pay, up front, a deposit - a lump sum contribution to the purchase of the house. The amount you'll need varies from lender to lender, but typically a deposit of between 5 and 20 percent of the total house price will be required. Equity against other assets may also be used as security for the loan.
A mortgage is a legal contract between the lender and the borrower, so there are legally binding obligations on both parties that you'll need to understand fully. That's why it's usual for solicitors to be involved when you get a loan to finance the purchase of a property.
What types of Home Loan or Home Equity Loan are there?
There are three general types of Home Loan: flat (or interest only) mortgage, table mortgage and straight line (or reducing) mortgage. Visit Home loans for an explanation of each, for information on the different ways that interest is charged, and for other details you should be aware of before you apply for your home loan of choice.
How much can I borrow?
The amount you can borrow to buy a house will be determined by your income, your other regular financial commitments and your credit history - that is, how you've coped with paying off other loans or debts in the past.
The lender will determine exactly how much they are prepared to provide, as different banks employ different lending criteria.
Banks Require This Information:
What will banks check on before offering me a Home Loan?
Credit - Firstly a bank will look at your credit history, everyone who has had credit in one way or another before will have a credit history which for some bank will be a significant part of their dicision as to whether they offer you a loan or not, any remarks on this report that state bad credit will have to be explained, sometimes the bank will except your explanation and go ahead and give you a loan.
It is not always the case with money lenders and financial lenders equity and loan lenders though. Some money lenders and loan lenders will allow you credit even if you have bad credit.
Also some credit card companies are willing to provide you with a credit card even if you have bad credit - although your cash limit will start off quite low until you prove yourself.
Conditional Approval - This is just a first step and is based soley on what you have written on the application form, the bank will have to check out if everything you have written on the form is true and correct before the next step of actually approving your mortgage loan refinancing or second mortgage loan.
Collatera - When applying for a bank loan for a mortgage loan refinancing or second mortgage loan the bank will access the value of your home to calculate the maximum combined loan to a percentage value.
Loan to Value - Loan to value is adding up the combined amount of loans on your property and then dividing it by the value of the home.
Debt Ratio - This is how the bank assesses if you are able to pay back - repay the loan or not. The debt ratio is calculated by taking the total of your monthly mortgage payment any revovling payment loans and installment payments, any bank Automatic payments, any car loan payments, bill payments and other regular outgoing payments combined with the new payments of the new loan refinancing or second mortgage loan this is then divided by your total monthly gross income.
Applying for a loan? Don't forget to find out:
What documentation you will need to bring with you for a loan mortgage loan or refinancing:
Like Last years W-2 forms or IRD forms (depending on what your country uses). A copy of your most recent pay stubs or a bank print out of your weekly/ monthly salary payments etc
Find out about any introductory periods and designs and conditions on your loan refinancing or second mortgage loan.
Find out about any prepayment penalties that may exist in the conditions on your loan.
Find out about increasing your loan repayments home equity etc
What is Home Equity Loan?
Home Equity Loan means the same as a second mortgage loan.
You can find out your Home Equity Loan by getting an evaluation on your home and subtracting the valued amount from the mortgage amount you have left. What you have remaining is your home equity value. If you default on this loan you could stand the chance of losing your home.
Home Loan
So First Up lets go over some basics:
What is a Home Loan?
A Home Loan
, or mortgage, is a sum of money provided by a bank or lending institution to a customer, to enable them to purchase a property (although it can be used to purchase other assets too). The property is used by the lender as security for the loan. In other words, if you're unable for any reason to pay back the Home Loan, the lender would gain certain rights over your property (see What happens if I can't make the repayments?).
You pay back the money you've borrowed from the bank (known as "principal") over a period of years (the "term"). Typically this is between 10 and 25 years. In addition to paying back the principal, you pay the bank extra money in the form of interest for the privilege of receiving the loan. The amount of interest is determined by the bank (normally rates are tied to the prevailing market interest rate at any given time), and by the type of loan you have (see What types of Home Loan or Home Equity Loanare there?). Your repayments of principal and interest are made regularly - usually each month or fortnight.
In order for a bank or lending institution to approve a Home Loan or Home Equity Loan, they'll need to satisfy themselves that you are capable of paying back the principal and interest. You'll be asked for details of your income, debts and other regular financial commitments. The bank will also carry out a "credit check" to ascertain whether you've received loans before and if you've had any difficulty paying them back, or if you’ve had any other problems with repayment of credit.
Most lending institutions will also require you to be able to pay, up front, a deposit - a lump sum contribution to the purchase of the house. The amount you'll need varies from lender to lender, but typically a deposit of between 5 and 20 percent of the total house price will be required. Equity against other assets may also be used as security for the loan.
A mortgage is a legal contract between the lender and the borrower, so there are legally binding obligations on both parties that you'll need to understand fully. That's why it's usual for solicitors to be involved when you get a loan to finance the purchase of a property.
What types of Home Loan or Home Equity Loan are there?
There are three general types of Home Loan: flat (or interest only) mortgage, table mortgage and straight line (or reducing) mortgage. Visit Home loans for an explanation of each, for information on the different ways that interest is charged, and for other details you should be aware of before you apply for your home loan of choice.
How much can I borrow?
The amount you can borrow to buy a house will be determined by your income, your other regular financial commitments and your credit history - that is, how you've coped with paying off other loans or debts in the past.
The lender will determine exactly how much they are prepared to provide, as different banks employ different lending criteria.
Banks Require This Information:
What will banks check on before offering me a Home Loan?
Credit - Firstly a bank will look at your credit history, everyone who has had credit in one way or another before will have a credit history which for some bank will be a significant part of their dicision as to whether they offer you a loan or not, any remarks on this report that state bad credit will have to be explained, sometimes the bank will except your explanation and go ahead and give you a loan.
It is not always the case with money lenders and financial lenders equity and loan lenders though. Some money lenders and loan lenders will allow you credit even if you have bad credit.
Also some credit card companies are willing to provide you with a credit card even if you have bad credit - although your cash limit will start off quite low until you prove yourself.
Conditional Approval - This is just a first step and is based soley on what you have written on the application form, the bank will have to check out if everything you have written on the form is true and correct before the next step of actually approving your mortgage loan refinancing or second mortgage loan.
Collatera - When applying for a bank loan for a mortgage loan refinancing or second mortgage loan the bank will access the value of your home to calculate the maximum combined loan to a percentage value.
Loan to Value - Loan to value is adding up the combined amount of loans on your property and then dividing it by the value of the home.
Debt Ratio - This is how the bank assesses if you are able to pay back - repay the loan or not. The debt ratio is calculated by taking the total of your monthly mortgage payment any revovling payment loans and installment payments, any bank Automatic payments, any car loan payments, bill payments and other regular outgoing payments combined with the new payments of the new loan refinancing or second mortgage loan this is then divided by your total monthly gross income.
Applying for a loan? Don't forget to find out:
What documentation you will need to bring with you for a loan mortgage loan or refinancing:
Like Last years W-2 forms or IRD forms (depending on what your country uses). A copy of your most recent pay stubs or a bank print out of your weekly/ monthly salary payments etc
Find out about any introductory periods and designs and conditions on your loan refinancing or second mortgage loan.
Find out about any prepayment penalties that may exist in the conditions on your loan.
Find out about increasing your loan repayments home equity etc
What is Home Equity Loan?
Home Equity Loan means the same as a second mortgage loan.
You can find out your Home Equity Loan by getting an evaluation on your home and subtracting the valued amount from the mortgage amount you have left. What you have remaining is your home equity value. If you default on this loan you could stand the chance of losing your home.
Home Loan
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