The reason it is easy to get a home loan also known as a mortgage is because the home itself is being offered as collateral. You can get a low interest rate on a home loan for that simple fact. Loans given against collateral will get you a lower interest rate. Banks have the assurance of collecting on their loan if you don’t pay.
The lein against the home is a claim against the property and the loan has to be paid in full before you can eliminate the lein against the property. If you don’t pay the loan in full, then when you go to sell the home, the balance of the lein is taken out first and given to the first lein holder, usually the bank or finance company. After the balance is paid to the lein holder, then the rest of the money is yours unless you have other leins against your home.
Secured home loans can come in a variety of packages including:
Fixed Loans
Variable Loans
Capped
Discounted
A fixed loan means the interest rate on your home loan is “fixed”. The rate will not go up or down during the term of the loan.
A variable loan means …
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