Today, many people buy a house with a loan. However, what is the difference between buying a house in installments and taking a mortgage? PChouse takes everyone to find out.
The difference between installment payment and mortgage payment is that the term of installment payment is generally not more than 1 year and the object of installment modification is the developer, and no interest is paid; while the mortgage period is long, the object of repayment is the bank, and interest is paid.
Specifically, a mortgage loan means that a house buyer obtains a loan from a bank by using the purchased building as collateral. The house buyer pays the bank in installments according to the repayment method and term stipulated in the mortgage contract, and the bank charges the interest at a certain interest rate. . If the lender defaults, the bank has the right to take the house.
Generally, installment payment is mostly used in some product transactions with a long production cycle and high cost. Such as the export of complete sets of equipment, large vehicles, heavy machinery, and equipment. Most of the rest of the payment will be paid in installments after part or all of the products are produced and shipped, or when the goods are installed, commissioned, put into operation and the quality assurance period expires.
What is a mortgage payment?
The word “mortgage” comes from the English “Mortgage”, which means “mortgage loan” and “commercial housing mortgage loan”.
“Mortgage” has two meanings of real estate mortgage and installment repayment. It means that the mortgagor transfers the property rights of the property to the mortgage beneficiary (bank) as a repayment guarantee. After repayment, the mortgage beneficiary transfers the property rights of the property back to the mortgagor. Specifically, a mortgage loan means that a house buyer obtains a loan from a bank by using the purchased building as collateral, and the house buyer pays the bank in installments according to the repayment method and term stipulated in the mortgage contract; the bank charges interest at a certain interest rate. If the lender defaults, the bank has the right to take the house.
The Basics of Mortgage Payments for Foreigners
early loan prepayment penalty
With very few exceptions, you can pay off part or all of your loan early without penalty. Whether you choose to pay more each month than necessary or make special irregular payments to Bank of America based on your liquidity, depending on the dollar conversion rate, or pay off the loan in one go, the bank doesn’t ask for any penalties or penalties. cost. This allows maximum flexibility when financing in different currencies.
Classic loan model. Monthly installments (annuities) from interest and principal repayments. The interest and principal repayment components vary over time. The interest portion decreases while the principal repayment portion increases. By the end of the loan term, the loan is fully paid off. Because almost all residential real estate loans in Florida have a contract term of 30 years, the loan repayment period also applies to this period. The advantage: their interest rates are very low.
Building construction loan
For the financing of building construction, there is no installment payment in the general construction period itself, and no commitment interest will be charged. This means that, during the construction phase, installments occur at irregular intervals, and the total increases slowly. Interest is only charged on the amount used, and after the construction company has completed a specific construction phase. All construction loans automatically become annuity loans after construction is completed.
The process of direct debit
As a foreign borrower, you don’t have to worry about mailing checks promptly or the transaction process related to loan repayments, using direct debit makes it easy to debit monthly installments from your U.S. account.