Aug. 11, 2011

Hawaii Mortgages

Introduction to Mortgages

Buying a dream home in Hawaii is one of the most exciting yet challenging things one would have to go through in life. Selecting the site, the plan of the floor and finally sealing the deal are all part of buying a home. In all of this, there is a very critical element in home buying, and that is home mortgage.  When you plan to buy a home but lack the full amount of money required, you can always seek financing from lending institutions, and this is what is known as mortgage. Note that a mortgage is a type of home loan with the property acting as collateral.

This therefore means that if you do not honor your end of the deal i.e. pay back the loan plus interest, the mortgage lender is at liberty, and legally mandated to take over the procession of the property. This therefore explains the reason why choosing a mortgage lender is one of the very important things you will ever do in your life.

There are several types of mortgages that you can consider. First is fixed rate mortgage which, as the name would suggest, means taking a mortgage for a fixed period of time, normally 15,20,25,or 30 years, whereby the rate of interest is always fixed for the entire mortgage period. Equally, the monthly payments you will be making will also be fixed for period of the mortgage. Adjustable rate mortgage is the second common type of mortgage you can apply for. This is where the interest rate is adjustable with the changing economy and stuff. The rate is always applicable for a short period of time, normally a year.

The third type of mortgage is known as a reverse mortgage, which is mostly taken by people who already own property. It is particularly common among retired people. As the name would suggest, with your existing home mortgage, you can be able to take a new mortgage against the accrued home equity.

Each month, your mortgage lender will pay you an agreed amount of money, which is charged interest. Note that you will not be making any payments to the mortgage company. However, when you pass away or decide to relocate or sell the property, the lender will take the total payments and any extra interest that the balance would have attracted out of the proceeds of selling the property.

Mortgages are important to people who wish to buy a dream home but lack enough funding. However, you need to be very careful when choosing the type of mortgage to apply for, and when choosing the mortgage lending institution to work with so you can end up with the best possible deal in the market.

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