San Diego's Top Ten Loan Terms
Everyone in San
Diego knows that you should never sign on the dotted
line without first reading the contract. The same goes
for loans. Signing a loan without knowing the conditions
and what everything means can be damaging to your
finances, credit, and future investments. Before you
sign anything, make sure that you understand the
following terms and how they will affect you.
1. Interest rate. The interest rate is the percentage of
your loan that is added to the total that you owe every
month. The percentage will fluctuate according to the
economy and will affect your payments.
2. Fixed Rate. This is an interest rate that continues
at the same percentage throughout the whole time-span of
your loan.
3. Variable Rate. A variable rate will adjust according
to the economy and the charts that are stating what the
rate amount should be. This type of rate generally
changes every year and adjusts according to a specific
given range of percentages.
4. Principal. The principal is what you will be paying
on your actual house and whatever you pay on your
principal is what you will see in the end as your
investment.
5. Escrow. This is similar to a savings account for your
loan. Whatever you put in escrow will build up without
paying directly into the loan. At the finish of the term
you can use it to finish paying off the loan or to
invest in another loan.
6. Title. A title will be your claim to your home after
it is legitimately yours. It recognizes that the
property belongs to you.
7. Deed. A deed is most often used as a title for a
commercial area. As opposed to declaring ownership it
shows that the property is leased to the one who is
using it as a business.
8. Home Equity. This is a loan or line of credit that
you can get for your home. It will finance up to eight
percent of your other loan and be reimbursed back later.
This helps you if you want to consolidate loans or
invest more into the property.
9. Appraisal. After an inspection of the home is made,
there will be an appraisal. This will be an estimated
value of what the home is worth.
10. Equity. This is the actual amount of the property
that you own. In most cases, the value equals to what is
being paid off of your principal amount.
After you've mastered these fundamental terms, you will
be able to expand on your knowledge and find the right
loan to meet your needs. These basic definitions will
help you in making the right decision for the type of
loan that you want.
ABOUT
THE AUTHOR
Bob Schwartz, is a Certified Residential
Specialist, and a CA licensed
San Diego real estate broker with. Bob has
over 27 years of residential real estate experience,
authored a number of published articles and served as an
expert witness for
San Diego lawyers. You can contact Bob via
his highly popular
San Diego real estate website.
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