This is defined as securing of a property or real estate either on temporary basis or the conditional basis for a specific period to the lender in order to perform certain things like repayment of debts or full filling the obligations. It is secured by one to four family properties.
When the debtor cannot full fill the obligations then the house is put for sale.
There different mortgage rates available for people to own their house. To further enhance the safety of home insurance is also offered. It is provided to ensure the durability of home. The characteristics are:
A certain time period is given during which a person has to pay the premium. The amount depends on the chances of replacement of loss. The mortgage rates vary from company to company and also the value of the property.
A person buys a house costing $300,000. He deposits 10% of the amount and the remaining 90% he debts to the bank for 30 years at the rate of 8% per annum. The formula for the amount which he has to pay per month is
10% of $300,000 = $30,000
The remaining amount is $270,000
Amount to be paid per month A = L*r/1-((1+r) power of -n)
Where L is the loan amount
R rate of interest per month
N number of payments
In the above case L= $270,000
R = 8%/12= .0066667
N = 30*12 = 360
Putting the above values in the formula we get A = $1981.16