Generally, you will pay a certain percentage of the total loan amount as interest on your mortgage. This is the cost of borrowing the principal each year. The monthly lending payment includes the 주택담보대출 interest accrued that month, as well as other fees, points, and closing costs. Your monthly payment also covers property taxes, which are normally deposited into an escrow account to be paid when due. Mortgage finance is a complex process, so it is important to know everything you can about it.
Interest rate
A study conducted by Muguchia (2012) examined the effects of inflation and interest rates on lending financing. It found that an inflexible interest rate negatively affected loan uptake. Inflexible interest rates increased the borrower’s uncertainty and discouraged them from obtaining a mortgage. However, a fixed interest rate offered the borrower some predictability and increased their borrowing capacity. Moreover, a fixed interest rate can increase the borrower’s credit score in turn, and thus, mortgage financing.
Closing costs
Before you sign any loan documents, you should understand what the closing costs will be for your loan finance. The loan estimate is a three-page document that lays out all the costs associated with the mortgage finance process. The costs are listed in the same order as on the loan estimate, and include the origination fee and any fees you’ll pay to your loan officer. You may also pay a fee to prepare the loan documents for closing. Finally, you should know that the mortgage rate lock fee is not included in the closing costs of your loan.
Lender’s risk
Lenders base the terms and conditions of mortgage loans on the lender’s risk of not collecting the loan. This practice is similar to the pricing of credit cards and car loans. Higher risk borrowers get better lending rates than lower risk borrowers. These risk-based mortgage rates are used to differentiate between high risk and low-risk borrowers, and to offer borrowers tailored loan terms. The disadvantages of risk-based loan pricing are discussed below.
Debt-to-income ratio
Lenders use a formula called the debt-to-income ratio (DTI) to evaluate your eligibility for a mortgage loan. Your DTI will be calculated as a percentage of your income, and the lower the number, the better. To calculate your DTI, you can use a DTI calculator or manually add up your monthly expenses. The formula does not account for alimony, child support, or separate maintenance income. The calculator will also adjust non-taxable income.