of how much you will be able to pay and also how this will relate to the debt and finances that you already have coming out of your pocket every month. All of these factors will be determined by using formulas that will relate how much money you are making in relation to how much you will be able to pay toward the balance of your loan. This means that the lenders personal feelings will not play any part in determining how much money you will be approved for. If you want to take the right step toward choosing the right loan, the becoming prequalified is the first thing that you should do. This will allow you to move forward and not have any fear of being turned down for a loan during the closing period. By knowing what to expect, you will be able to properly prepare for the process of applying for a loan and moving into the home of your dreams.
Ten Loan Terms That You Must Know Everyone knows that you should never sign a contract without first reading it. This is especially true of signing into a loan because you could end up losing a lot of money if you do not understand what you are signing. There are several terms that you should know and also understand how they will apply to your specific situation before you ever sign on the dotted line.
Interest Rate – The interest rate is the percentage of your loan that is added on every month and this rate will vary according to the economy and your credit. The interest rate will make a difference in your monthly payment. The higher the interest rate is, the higher your monthly payment is going to be.
Fixed Rate – A fixed rate is an interest rate that will remain the same for the entire length of your loan.
Variable Rate – A variable rate will change according to the economy and the charts that state what the rates should be for interest. A variable rate will usually change every year and will adjust according to a specific given range of percentages.
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