Definition of Mortgage for 2019
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| Definition of Mortgage for 2019 |
The difference between a trust deed and a mortgage
When buying a property you must have cash and not have cash to resort to loans and requires to put the house to ensure the lender, a common way of guarantee is the trust or mortgage and both lead to the same result is a loan with the home as collateral, but there are differences and differences between them are as follows: [1]
Mortgage
In the mortgage there are parties that share the owner, the borrower and the bank where the loan is provided with the home security for payment, and if the payments are not made, the bank can book the mortgage using the legal system to obtain the right of ownership over the house and the bank resells the house to recover the loan originally provided The sale is often done through an auction and this leads to the sale of the house at a substantial discount. The foreclosure issue is time-consuming and there is also a so-called decision-seeing where the homeowner can recover the king in the foreclosure process by making payments.
Trust deed
Which is a loan contract, where the homeowner remains responsible for making payments to the bank, the custodian who actually owns the house until the loan is paid in full, that is, there is a third party. Once the loan is paid, the custodian who holds the house renounces his ownership of the borrower. Payments can be made by the bank. The bank can recover the house from the custodian and avoid foreclosure. The borrower does not retain ownership rights. The banks prefer a trust deed because they can take ownership of the property and resell it more quickly, reducing the administrative burden and time.
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Alternative Mortgage Tool AMI
In an alternative mortgage tool the interest rate is not fixed in any residential mortgage, or a fully consumer loan at interest rate, it is a loan with real estate as collateral, and includes variable rate loans and interest-only loans, mostly residential mortgage loans as these Non-conventional mortgages make it easier to buy a property by reducing monthly payments and increasing the price that can be financed. Interest is balanced against the high cost of foreclosure if the borrower's income does not grow at the same rate as mortgage payments. Time The price also contains the base index that changes periodically. When the index moves up or down, the scheduled payments of the loan also move. The total capital and interest rate are calculated equal to the age of the loan. There are other types of alternative mortgages such as interest rate mortgages Variable and at an adjustable rate of interest and others. [2]
Mortgage adjustable ARM rate
A loan based on a benchmark interest rate known as an ARM or an adjustable rate loan. Each lender decides how many points he will add to the benchmark rate, which is several percentage points and depends on the terms of the loan, can occur every month, year or every three years. That the payment could rise suddenly after the initial five-year period if the LIBOR rose to 2.5% and the new interest rate would rise to 4.5% or 5.0% reveal the historical LIBOR rate. The advantage of these modified mortgage loans is that the interest rate is lower than the mortgage rate but Monthly payments can go up if interest rates have become popular In 2004, when the Federal Reserve began to raise the rate of federal funds, bankers devised new types of loans such as interest loans where the monthly payment only goes towards interest for the first three to five years and then begins to pay higher amounts to cover the original, It is similar to negative consumer loans. [3]
Home Mortgage
It is a loan from a bank or finance company to buy primary or investment housing and to mortgage either fixed or floating rate. It is paid every month. As the homeowner pays the capital over time, mortgages allow citizens to own property, Debt is widespread. Mortgage loans come at slightly lower interest rates than other types of debt, ranging from 10 to 30 years. There is more than one type of home mortgage but the two most common types are: [4]
• Fixed rate mortgage: The interest rate and periodic payment in general are the same throughout the period.
• Mortgage at an adjustable rate: interest rate and periodic payment varies and changes.