Knowing how mortgage loans work is essential before resorting to this means of financing. For this reason, today's publication presents a small guide to guide the user who wishes to carry out this type of financing.
How home loans work in three steps
The mortgage credit is nothing more than a loan guaranteed for a certain asset. This good is usually a house, which is the one that is bought with the loan.
1. Market research
The first step when applying for a mortgage is to check the different offers on the market . The prices of a loan will depend on the conditions offered by the lender. So, whoever wants to apply for a mortgage loan, should check the offers of various financial operators. In particular:
- Terms and conditions for the return.
- Remuneration interest (TIN).
- Interest on late payment.
- Other expenses and commissions.
The APR is equal to the sum of interest plus expenses and commissions. So it will be the best indicator of the real price of a loan .
2. Establishment of the guarantee
The second step will be to establish the guarantee . In addition, it will have to be appraised, a function that usually corresponds to the borrower . The higher the guarantee, the better the conditions of the mortgage credit. What is this about?
Basically, the mortgage is not born until it is registered in the Property Registry. The owner of the property notes in this registry that he has mortgaged it.
If the borrower stops paying his installments, the financial institution may file a foreclosure claim . In this case, the borrower will have three options:
- Pay your debt.
- Refinance the loan or renegotiate its conditions.
- Cancel the mortgage.
Otherwise, the guarantee will go up for auction (many times the lender himself keeps it). With the money obtained, the debt will be paid and the excess will be returned to the previous owner.
3. Amortization of the mortgage
The APR applicable to the operation will be calculated on the agreed installments, establishing an amortization schedule . By paying the installment on time, the borrower will complete this table until the mortgage is paid off.
The amortization or cancellation takes place when the loan has been repaid and its price paid. But it is also possible that credit:
- It is extended . In cases where the borrower cannot take over the mortgage, he could agree to a new repayment schedule. Generally, this operation will have a cost.
- It is amortized in advance . If you want to pay the loan ahead of time, you will have to pay commissions, which will offset the interest that the bank expected to receive during the course of the operation.
In short, a mortgage is an operation that can suffer alterations throughout its life. That is why it is important to know how mortgage loans work before requesting them . In Ideal Loans you can find and compare different online loan options.