Choosing the Best Mortgage Terms
There are several things to consider when choosing mortgage terms. You should also be aware of Acceleration clauses, Annual percentage rate and Loan deficiency. Hopefully, this article will help you make a wise choice. If you are unsure, contact your Home Lending Advisor and ask them for advice. They can help you decide which mortgage term will best suit your needs. Choosing the best mortgage terms for your needs can be a complicated process. 아파트담보대출
A variable-rate mortgage (also known as an adjustable-rate or tracker mortgage) may be a good option for you. Basically, these loans offer a variable rate based on an index that represents the cost for the lender to borrow money from the credit markets. You may be offered a standard variable rate by the lender or you can opt for a mortgage that has a higher rate. Regardless of the type of variable-rate mortgage you choose, there are benefits and disadvantages to every type.
A variable-rate mortgage can be a great option for borrowers who are looking to lock in a lower rate than what they can get elsewhere. This type of loan lets borrowers take advantage of falling rates without having to refinance the entire loan. Because the interest rate is indexed, it is possible to lock it in for a period of time. The interest rate you pay will be determined by the index and the required margin.
You may not have realized it, but mortgage terms often include acceleration clauses. These clauses may cause the lender to force you to pay the full balance of the loan immediately, even if you have missed a few payments. These clauses will typically apply to mortgages that have a balance of $150,000 or more. In this situation, the lender will inform you of the date on which you must begin making payments.
This clause can have many ramifications. Most of them will require you to pay off a large sum of money at a short notice. If you are a layperson, this could be confusing and frustrating. Moreover, you can lose your mortgaged property and the money you have paid for it, if the clause is triggered. Therefore, you may want to seek the counsel of a mortgage lawyer in order to make sense of an acceleration clause.
Annual percentage rate
The interest rate is the most common type of payment when comparing mortgage terms, but you may also see APR on a variety of loans. The annual percentage rate is the true cost of borrowing a mortgage and includes the interest rate as well as fees and points charged by the lender. This figure is higher than the interest rate, because it takes into account the cost of closing costs and broker fees. This percentage makes it easier to compare loans and see which one offers the lowest interest rate.
The APR is often used to compare fixed-rate loan offers and variable-rate mortgage options. This term is important to know, because most people move before they can completely pay off their mortgage, and it can make financial sense to minimize upfront costs rather than risk paying higher interest rates. To be sure, look for the APR next to the loan payment. You should never assume that the advertised interest rate is the same as the actual interest rate.
Deficiencies in mortgage loans arise when the borrower defaults on the loan and the lender takes possession of the home. Foreclosure sale proceeds may fall short of the amount owed by the borrower, so the lender can seek deficiency judgment. Fortunately, there are ways to prevent a deficiency judgment. One option is to pay off the deficiency in full. However, this can be expensive and time-consuming.
Most states allow banks to seek deficiency judgments against defaulting debtors, but the bank is limited to recovering only the difference between the outstanding loan amount and the fair market value of the property. For instance, say the property sold for $400,000 in a foreclosure sale. The bank would receive $25,000 from the sale of the property. The bank would be able to recover the remaining $50,000 if the lender pursued a deficiency lawsuit.