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Home Loan Rates: What Home Buyers Need to Know

Are you a buyer who wants a home loan? Learn about home loan rates and apply for the right one.

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Home Loan Rates: What Home Buyers Need to Know

  1. 1. Home Loan Rates: What Home Buyers Need to Know Buying a home is a crucial decision for anyone. It may be a good investment, but it’s a heavy financial commitment. For buyers who could no longer repay, their homes will be repossessed and sold off. Buyers need to know what they are getting themselves into. If you are one, you need to understand how home loan rates work.
  2. 2. What is the Interest Rate on a Home Loan? When we take out a home loan, we are expected to pay the borrowed amount plus interest. Interest is what the bank charges to recover their costs and make a profit. By charging interest, a lending company will have enough resources to lend money in the first place. Interest is charged in percentage. For instance, a bank may charge 2% interest on a $300,000 loan. Interest charges vary among states and countries. A bank in NYC charges differently from a similar bank in West Virginia.
  3. 3. Fixed Interest Loans Listed below are types of interest rates available to homeowners. Fixed interest rate is the specific rate, lenders and borrowers agree on, for a specified time period. A good example is, when a customer agrees to a fixed rate of 2% for five years. Neither a bank nor a customer can break this agreement without consequences. A homeowner, who wants to get out of a contract, will have to pay a fee. Customers can only do this when they find a lower interest rate. The bank loses money when this happens. Banks charge a small fee to reprove a customer for breach of contract. Fixed home loan rates are great for borrowers who want the same payments every month.
  4. 4. Floating (Variable) Interest Loans  Capped Rate Loans Variable rates move with economic climates. If an economy does well, the rates will be high. When there is a recession, rates will drop. Choosing a floating rate will depend on your personal circumstances, the economic climate and your ability to take risks. Capped rates are essentially variable home loan rates, capped at a specified amount. When a variable rate goes above the capped rate, a homeowner need not pay a higher interest rate. Capped rates are ideal for borrowers who want low variable rates without the risk of market changes.
  5. 5.  Interest Only Home Loans Some banks allow borrowers to pay off loan interests without paying off any of their capital. This helps borrowers who are in financial trouble. Though this solution will not make customers wealthier, it should only be used to cut down on expenses. Homeowners should look around for good interest rates. As banks are very competitive, it’s practical to get quotes from several banks.
  6. 6. A small discount on a rate could save a homeowner thousands of dollars on interests. If home buyers could get better rates, they should let their bank know. Some banks are willing to drop rates to secure customers. Flongle Mortgage Contest Address: Level 9,123 Epping Road, Macquarie Park, NSW 2113 Lower Northern Sydney, Sydney Metro Tel: (02) 8599 8080 http://flongle.com.au/ Flongle is a Finance Mortgage service that facilitate Australians compare different mortgage loans from all principal providers. Our Promise - All feasible actions will be conducted to safeguard your identification and information. - Anonymous contest will be published to the Open Market to encourage all reputable, licensed lenders and brokers to compete for your business. - Unbiased analysis will be supplied. Deals will only be ranked or promoted using the features given by you. - Getting pre-approval for deals listed in your contest results is guaranteed.

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