Debt Consolidation is an arrangement wherein all your debts are combined into a single manageable debt. The idea behind debt consolidation is to offer you ease in meeting your monthly repayment obligations. With a single payment obligation, you can easily plan for your other expenses. Also, it offers you the flexibility to decide the amount of monthly repayment obligation that you can pay comfortably. Also, there are many finance companies that offer consolidated loans at a much lower rate of interest.
Debt consolidation loans can be secured and unsecured. Unsecured debt consolidation loans do not require a home, property, or any other asset as collateral. This means even tenants have the opportunity to consolidate their loans without worrying about any collateral security. An unsecured debt consolidation loan is usually taken to settle various debts such as credit card bills, utility bills, medical bills, personal loans, or any unpaid debts. Before opting for debt consolidation, it is advisable to seek expert advice. This would help you get a better deal at a lower cost. Home loan debt info provides the best and most updated information on best home loan, mortgage loans, mortgage insurance, and home loan debts.
Basic Concept of Home Loan
A home loan or a mortgage can be simply described as the money taken out in order to purchase a home. Now we are going to discuss some basic concepts of a home loan or a mortgage so that the first-time home buyer can have a clear idea about the terms and conditions of a mortgage loan.A mortgage is a kind of loan, which is secured by real property through the presence of legal documents, which evidence the existence of the loan. Very few individuals have enough cash to purchase a home. So, most people prefer to take out mortgage loans for financing their homes. Two basic types of mortgage loans are Fixed Rate mortgages (FRM) and Adjustable Rate Mortgages (ARM).
Fixed-rate mortgage (FRM): In the case of an FRM, the rate of interest remains fixed for the life or the term of the loan. Usually, the term stretches from 15 to 30 years.
An adjustable-rate mortgage (ARM): In an ARM, the interest rate remains fixed for a certain time span. Then, the interest gets adjusted according to the market indices. There are some other classifications of a mortgage loan, such as balloon mortgage, home equity loan, jumbo mortgage, reverse mortgage, etc.
Balloon mortgage: It is a kind of mortgage that does not fully amortize over the term of the loan. So, a balance remains due at maturity. The final payment is called a balloon payment. Sometimes, the balloon payment and ARM create confusion. However, the distinction can be made like this – the balloon payment may require refinancing but ARM usually doesn’t require to be refinanced.
Equity loan: An equity loan is a mortgage involving real assets with the objective to provide financial support to the borrower. The interest rate on an equity loan is much lower than that of an unsecured loan.
Jumbo mortgage: Jumbo mortgage is a loan involving a huge amount above the industry standard definition of conventional conforming loan limit. The standard is set by the two largest secondary market lenders, namely, Fannie Mae (FNMA) and Freddie Mac (FHLMC).
Reverse mortgage: Reverse mortgage is a kind of home loan, which is available to senior citizens. The homeowner’s obligation regarding the repayment of a loan is deferred until his or her death or the property is sold or the owner moves out of the home. In the case of a conventional mortgage, the homeowner pays monthly installments to the lender, and thus the equity increases in the property. In the case of a reverse mortgage, the owner does not have to pay any monthly installment to the lender, and the interests get added to the lien of the property.