viernes, 16 de septiembre de 2016

Introduction to the Best Home Loans

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Not many homeowners have the funds to fully pay the purchase price of their homes and so they investigate the best home loans for financing their investments. There are hundreds of home loan products, although these fall under several types, with varying features.

Home loans consist of the principal and interest rate which must be paid in full at the end of the loan term. Interest rates may be fixed or variable and may be applied in different ways by the lender, depending on the terms of the best home loans.

Honeymoon loans: The honeymoon loan imposes a lower interest repayment rate during the first few months or introductory period.

Honeymoon loans are usually offered to new borrowers and may seem advantageous at the early stage of the loan. However, the interest rate after the end of the introductory period (also known as rollover rate) may be one of the most expensive in the market.

Adjusting to the rollover rate can be difficult and can lead to significant lifestyle adjustments for the borrower. The lender may also impose high exit fees when the borrower decides to get out of the loan at the end of the introductory period. Recent legislation, however, has imposed a ban on excessive exit fees, leading more borrowers to offer loyalty discounts in order to save their accounts.

Construction loan: Here the lender releases the loan amount in several tranches coinciding with the stages of construction. The staggered releases will result in lower repayment amounts at the early stage of the loan because the interest payments are calculated on the outstanding balance instead of the maximum amount agreed upon.

Pro Pack: Originally designed for higher income professionals and borrowers, professional packages (pro pack) are available for large loan amounts, usually $200,000 or higher. Pro packs bear discounted interest rates but these must first be weighed against the annual fees imposed by the lender.

Low-Doc loans: Low document loans do not require borrowers to show traditional proof of income such as financial statements, tax returns and pay slips. Instead, the borrower submits a self-certification confirming his own capacity to pay. This is ideal for self-employed and full-time investors who are unable to show proof of high levels of income but who possess sufficient assets and cash flow to repay the loan.

Each type of loan features different benefits and costs that are attractive to specific borrowers. The key to choosing the best home loans lies in understanding the needs and circumstances of the borrower and conducting enough market research before making a decision.



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Source by Miriam Bronkhorst


















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