Common Home Mortgage Terminologies

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Buying the very first house for your family is not difficult if you have cash at hand to make that purchase. However, if you are like the average Indian, you will have to get a loan to afford a house. There are various different terms that you must know in order to understand home loan which may help you in picking the right loan that you can afford.

Here are some common terminologies:

By planning to purchase a house, you are actually applying for a mortgage. A mortgage can be defined as a loan that you can avail in order to pay for a real estate. This may include a house, a commercial space or a residential land. The real estate that you are purchasing will be used as a collateral to your loan. This simply means that in case you are unable to make payments for your loan, the bank or your lending company has the right to take your property away in order to cover up for your missed payments.

There are some other terms which you need to understand:

Principal: it is a term used for the actual amount of loan that you have taken to purchase the property of your choice. Bank allows you to use this amount ...
... of money to purchase the house or property that you want.

Interest: it is the amount which the bank charges you for taking the loan and using their money to purchase your house. The bank earns the interest amount by investing money in your real estate project. It is often calculated as a percentage on the principal amount and the rates may vary largely from bank to bank.

These interest rates may be fixed or floating depending on the type of lending institution which is paying the loans. It also offers set rate of interest which does not change all through the loan term.

Term: The term is basically the time that you will be allowed to pay your bank the amount of money that you have borrowed. Since buying a real estate requires a large amount of money, these terms may vary from fifteen to 30 years.

Amortization: it is the term given to process of dividing the total of principal and interest in EMIs over the term of loan. The payments that you regularly pay towards the interest payment during the initial years of your term. The later payments of your term go to cover your principal amount. The process is same for any home loans you take, including DDA home loan in Dwarka and other parts of Delhi-NCR.

PITI: The regular payments that you make towards the fulfilment of your loan is not just the combination of interest and principal. PITI stands for principal, interest, taxes and insurance which are also included in EMIs of your home loan. Many lending institutions offering home loan in Dwarka will be happy to negotiate this amount.

Source:https://www.freeprnow.com/pr/common-home-mortgage-terminologies