Buying real estate is not an easy decision, and getting a fair mortgage is never easy. There are so many mortgage companies and options to choose from that it is almost a superhuman task for the average person to become familiar with the area. Family and friends, as well as financial advisors and online comparison sites, can help you make your decision.
Great Benefits
The huge and greatest advantage of an American loan is obviously its interest rate. This is mainly due to the fact that the banking company guaranteesits own real estate, and because it has a lower interest rate than other types of loans. This means less risk for the banking company and therefore the banking company can also offer lower interest rates.
Another major advantage is the longer repayment period, usually 15 to 20 years. It is also nice to be able to borrow a relatively large amount of money to purchase a home. As with other types of mortgages, you can borrow up to 70%of the actual amount you need. However, it also depends on your creditworthiness, or ability to pay.
What disadvantages can I be prepared for?
The biggest advantage and also disadvantage is that you are insuring your own property . This means that if for some reason you are unable to make regular payments, you could lose your roof. No one wants that to happen. Thus, one can take out an unsecured mortgage, but one must consider the relatively high interest rates.
Furthermore, the longer the fixed term , the higher the interest rate. Generally, you can choose from 1, 3, 4, 5, or 10 years. Another disadvantage is the amount of paperwork involved, although it does not affect you financially. In order for the bank to approve the mortgage, a number of documents and certifications must be submitted. This is a good point.
The bad point is that there are a number of fees . First, there is an application approval fee, which ranges from 0.25% to 1% of the amount. Then there is a monthly account maintenance fee of 40-150 kroner. In other words, if the loan is repaid over 20 years, these fees alone amount to 36,000 kroner.
Furthermore, in the case of an off-purpose loan, the repayment amount cannot be deducted from taxes, cannot receive government assistance, and cannot be repaid early without penalty. Be sure to do the math before signing to avoid unpleasant surprises later.