Glossary of Business Terms - Mortgage Loans |
Mortgage
Loan : Is a loan used to purchase
property, often referred to as a mortgage
or a home loan.
Mortgage loans
are the most common method used by residential
home buyers or builders of their home because
of the large costs involved in purchasing
property.
Banks and financial institutions are the
most common providers of mortgage loans,
but alternative methods are also available.
The features of each mortgage or home loan
vary greatly from bank to bank and from
country to country. Loan maturity, mortgage
interest rates, the financial risk of the
borrower, the frequency of payments, the
mortgage deposit, and the amount of money
borrowed for the home are factors that influence
and vary with each mortgage loan.
The credit risk of the mortgagor (the person
borrowing the money) is a major factor in
the amount of money and interest rates charged
by the mortgagee (creditor or lender). Most
major lenders require the mortgage applicant
to have a good credit rating and have a
deposit of 10% or more.
Borrowers that have poor credit histories
or do not have a mortgage deposit often
use alternative borrowing methods, like
no deposit home loans, low
doc mortgage or subprime
loans. These riskier lending methods
caused the American
subprime crisis in 2007 where billions
of dollars were lost by financial institutions
and financial markets in the United
States and around the world.
Also called : Mortgage, Real Estate
Loan, Home Loan, and House Mortgage.
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