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Mortgage


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Brief detail on mortgage.Brief summary on mortgage loan types.



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A mortgage is a practice by which the ownership of the property is passed from the mortgagor, to the
mortgagee, in return for the loan of the money, the mortgagee is the lender and the mortgagor is the
borrower. The mortgagee has limited rights on the property until the loan is paid off. Most probably the
mortgage loan is taken for home improvements, or financing college education. The interest rate for
mortgage loan varies depending on the type of the loan


Mortgage banks and Mortgage brokers are the best options for reviewing of mortgage loan applications.


For Mortgage banks, the staff of the bank will process the loan application, as most of the banks are
controlled by the government agencies, the borrower can be assured that the mortgage loan will be approved
and granted by reliable sources and there will be no discontinuation in the loan. The bank will provide a
range of mortgage service providers for a particular loan application, and the borrower should select the best
available option from them. The borrower should deal with the service providers, compare each of the
interest rates and select the best option. The loan application will be processed much faster by bank staff.


Mortgage brokers will present the best available option for a particular loan; the brokers will provide the
best option for a loan application that meets the borrowers' needs. If the loan product is selected, then the
borrower should deal directly with the service provider to finish the formalities. Most of the information on
loan products of mortgage service providers will be available with the mortgage brokers.


The borrower before using the services of the brokers should verify whether the mortgage broker is
registered with any reliable company or service.


<b>Mortgage loan types</b>


There are many types of mortgage loans available in the mortgage industry, but the two most common types
of loans are Fixed Rate Mortgage (FRM) and Adjustable Rate Mortgage (ARM).


For fixed rate mortgage, the interest rates are fixed and are high, the rates will not change during the life of
the loan, the repayment time ranges from 10 to 20 years.


For adjustable rate mortgage, the interest rate fluctuates with respect to a standard market index, it will
increase or decrease with respect to the index, the borrower cannot predict the interest rate for the next
interest period before hand, if the interest rate increases, the borrower has to pay the extra cost, to avoid this,
some lenders offer interest lock, using this, the borrower will repay the debt on a fixed interest rate for a
particular period, the lender will charge extra money for this service. The repayment time ranges from 5-10
years.


The borrowers who borrow fixed rate mortgage loans are more financially secure than who borrows
adjustable rate mortgage loans. The proceeds from adjustable rate mortgage negates any risk and most of the
borrowers' uses this loan as repayment mode.


Presently the mortgage markets in Asia are growing mush fast than the developed countries. In Asia, India
has the second highest interest rate of 7%.In UK, interest rate for a 15-year fixed rate mortgage loan (FRM)
is 12% and for 30-year adjustable rate mortgage is 15%.For a 1-year adjustable rate mortgage loan (ARM) is
4.05%.




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posted:3/4/2012
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