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Mortgaging a real estate

By Knight Frank Published 08/18/2007 | Real Estate
The very common practice of todays world is that whenever you are looking for a real estate find out its various mortgaging options. Most of the professionals or mid-aged people prefer mortgaging than down payment or paying from available resources, which they keep as a safeguard of their rainy days. The general mortgaging options are Adjustable-rate Mortgage (ARM), Balloon loan and fixed rate mortgaging.

The adjustable rate mortgaging or ARM is the most common type of mortgaging, people opt for. This is also called the Floating rate mortgaging, where the rate of interest floats with the variation of index. The indices vary with the countries. If we want to look at the US market the key factors are One-Year Treasury Index, Federal Cost of Funds Index, National Contract Interest Rate National Cost of Funds Indices (11th District),  The Cost-Of-Funds, Federal Reserve Statistical Release etc.

The Balloon loan is ideal for short term effects. The buyer pays the interest component on monthly basis and makes ad hoc part payments of the principal at specific intervals. However most balloon loans are also convert able to Fixed or Adjustable type after a certain period of time, when a part of the principal component has been repaid.

The Fixed-rate mortgaging are the least risk-prone loans, where the buyer comes to a contract with the mortgaging company and the interest rate is fixed in the beginning of the contract and carries through out the repayment tenure. Fixed Rate mortgaging is a highly seasonal proof as the rate never varies irrespective of any turmoil in the economic scenario of the country.

Dont worry! Contact the Knight Frank experts; they will open up several avenues for you.