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What Is A Mortgage Loan?

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What Is A Mortgage Loan?

Are you a first-time house buyer and your agent told you something about getting a mortgage loan but you have no clue what it is?

Don’t worry, we got you on this one.

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What is a mortgage loan?

A mortgage loan, which is simply called a mortgage, is a type of loan that is used in purchases of properties to raise funds so a person can buy real estate. The loan is secured on the borrower’s property through the mortgage origination.

What does that mean?

Well, this means that a legal mechanism is placed where the lender could take possession and sell the property to pay off the loan in case the person who got the loan fails to pay the premiums that were agreed upon.

Repaying the mortgage

When you are repaying the mortgage, which is anywhere from 20 to 30 years or even more, there are variations in how that cost is paid and how the loan is getting repaid. Remember, the repayment depends on where you are and what the tax laws are in your country.

Mortgage insurance

Mortgage insurance is a type of insurance policy where the insurance company compensates lenders or investors in mortgage-backed securities for losses due to the default of a loan.

The mortgage insurance can be public or private, but this one depends on the insurer.

Is it useful?

Short answer, yes. Long answer, still yes.

Unlike homeowner insurance, mortgage insurance protects the lender rather than the borrower.

In short terms, mortgage insurance is going to guarantee repayment of a mortgage loan in the unfortunate event of the policy holder’s death or if they become disabled.

Interest Rate

There are two types of mortgage interest rates:

  • Fixed Rates

In a fixed-rate mortgage, the loan’s interest rate will remain the same throughout the term of the loan.

For example, if you have a 30-year fixed-rate loan with an interest rate of let’s say, around 4 percent, you are going to pay 4 percent interest until you pay off your loan.

  • Adjustable Rates

The adjustable-rate mortgage is a mortgage loan with the interest rate on the note getting adjusted periodically depending on an index that reflects the cost to the lender of borrowing on the credit markets.

Why GS Mann?

If you are looking for one of the best commercial mortgage broker Calgary NE, then GS Mann is your guy. Top mortgage broker Calgary NE has over 10 years of experience in the market and has been in the list of the top mortgage brokers in Calgary NE.

To know more about how we can help you out, call us on the number below or send us an email so we can contact you right away.

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