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Hot Tips For Getting Best Mortgage Loan
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Mortgage loans are the loans which are taken from banks, online brokers or independent mortgage brokers by pledging property owned for purchasing residential or commercial property or to refinance a loan. Mortgage Loans in Colorado Springs are taken usually for a 15 or 30 year period. Mortgage payments are calculated according to the number of years passed, the rate of interest and the type of mortgage. The property purchased is taken and kept as security or collateral to obtain the debt. If the borrower of the loan fails to pay on the mortgage payments the lender has the right to sell the property by employing the foreclosure process.
To be eligible for getting a loan the lender examines the employment and income generation of an individual or family to assess that monthly payment which can be paid on a regular basis by the borrower. The three most vital aspects that are taken into consideration in order to qualify for a loan are:
• Credit Score
• Monthly Income and
• Down Payment
Credit scores always indicate the threat of offering a loan to a borrower. Higher the credit score lower will be the risk. Good credit scores also ensure a lower rate of interest and practical terms of the loan. Monthly income is evaluated to ensure expenses do not overpower the income. The sum paid as down payment further reduces the risk of the lender to cover the full expense of the loan in case of failure to give in payments.
Some types of mortgage loans found in Colorado Springs are:
1. Interest-only mortgage: In this type of a mortgage loan for a specific period of time the borrower requires to pay only interest. After this period the loan is usually changed and a new mortgage amount is generated.
2. Balloon mortgage: This mortgage gives a lower rate for a fixed period to the borrower. Usually, this period varies from 3 to 10 years. Once this fixed period passes, the borrower has to pay the entire principal amount against his or her property value.
3. Sub-prime mortgage: A sub-prime mortgage is meant for people who are having a low credit score. This increases the risk for the lender. In order to compensate for this, they increase the interest rate and monthly payments. By giving out these loans lenders earn good money. Although, if the borrower pays the due amount before the time expected, a prepayment penalty has to be paid by the lender.
4. Fixed rate mortgage: These mortgage loans have a fixed rate of interest over the loan period. They are very popular as interest rates do not get influenced by rises and falls. No matter what, the interest rates remain the same throughout in these mortgages.
5. Adjustable mortgages: This is a type of mortgage loan where there is a fixed rate for a specific period. After completion of this period, the rate of interest is calculated according to the fluctuation in market rates. These loans are the second most common taken loans after fixed rate mortgage loans.
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