With the rate at which current property prices are soaring, it is not
possible for everyone to afford a home on their income or on mere
savings. This is the reason many mortgages and home loans exist. This is
also the reason why there are many mortgage brokers who help in getting
the borrowers and the lenders together. They also help out with
arranging and submitting the paperwork to the lenders on behalf of the
borrowers. They charge a fee or commission for their services. The
lenders charge interest for the loans they lend. These interests are
known as interest rates or mortgage rates.
What is a mortgage?
A mortgage is basically a lien against property. It is a loan obtained
by a borrower by pledging his home with the lender, usually the bank.
This is in the eventuality that if the borrower stops making payments,
the lender can foreclose. In cases where the borrower borrows from the
bank, for example, the bank has a claim on his property in case where he
doesn’t pay up. The bank can then evict the tenants in the property and
sell the house and appropriate the sale proceeds towards the repayment
of the loan. Los Angeles mortgage rates have a big effect on mortgages
that are adjustable rate mortgages. The other type of mortgages that
home buyers can opt for are the fixed rate mortgage and foreign currency
mortgage.
What is a mortgage rate?
In a mortgage, a lender lends money to the borrower and charges him
interest. The rate at which the lender charges the interest is known as
the mortgage rate.This rate could be fixed or variable. Depending on the
interest rates, the mortgage rates in Los Angeles too fluctuate and
have an impact on the homebuyers’ market. There are several factors that
affect this rate and one of the most important among them is the
borrowers’ credit. Another important factor affecting the mortgage rates
in Los Angeles is the size of the loan the borrower intends to take
out. This rate in turn decides the amount the borrower eventually pays
out in equal installments and the total interest component of the entire
mortgage.
Basic concepts of a mortgage
In Los Angeles, or in fact anywhere, in addition to Los Angeles
mortgage rates, there are other concepts too that one must understand
when it comes to mortgages. These are property, which usually means the
property being financed; borrower, meaning he home buyer taking out the
mortgage and the lender, usually the bank. There are also some others,
such as redemption, foreclosure, insurance, principal and so on. Yet
other important terms one always gets to hear when talking about
mortgages, are closing costs, escrow, loan to value ratio, lock-in,
title ratio and so on. Apart from keeping oneself abreast of these
terms, it is always advisable to do your homework and compare more than
one mortgages available in the market so as to ensure that you end up
with the best deal.Knowledge is correctly said to be power and helps you
carry out a smooth transaction.
