The home loan is a financial product through which a financial institution lends us money based on a real guarantee, which is our property (home, garage, storage room, premises, site, etc.). In case of non-payment, the entity may require us to collect the money owed through a judicial procedure and in the last case, it may be left with our home as part of the debt collection in full or in part.
The housing loan is a financial product that allows us to receive money in exchange for our personal commitment to return that amount, together with the corresponding interest, through periodic payments and placing a property as collateral.
Banks can grant housing loans at a fixed, variable or mixed interest rate.
Fixed interest rate: The interest rate and therefore the monthly payment to be paid remain fixed throughout the life of the loan. The advantage of this modality is that you will know in advance how much you will have to pay each month, without worrying about the increases and decreases of rates. As an inconvenience, at the time of contracting, a higher rate is usually established than for variable-rate mortgages. The allowed repayment terms are also shorter; A maximum of 20 years is usually fixed.
Once the interested party has identified the conditions that he expects to find in the home loan according to his personal needs, it is best to make a comparison of the available financial institutions. As it is a considerable amount, even the smallest percentage differences can lead to significant savings. Among the highlights to take into account when choosing an entity, are the amortization period, the fixed interest rate, commissions and any other expenses associated with the operation.
Variable interest rate: The variable interest rate is reviewed annually or semiannually (sometimes quarterly) and is adjusted to the market conditions at that time. The advantage of this method is that at the time of contracting, the initial interest rate is usually lower than that of loans at a fixed rate and the option of longer repayment terms is usually offered, usually between 20 and 30 years or even more. With a variable interest rate, one runs the risk of having to pay a larger fee if the interest goes up, although it can benefit if it goes down.
The professionals of the Authorized Appraisal Societies are in charge of defining the value of the home, and for that they must consider factors such as: their age, their location, their characteristics (dimensions, qualities, orientation, number of floors, amenities, state of conservation, etc.), their legal status of occupation and their registration identification.
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