You can define loan as money borrowed that is usually repaid with interest within a specific period of time. Today, loans are usually offered by banks to help you in funding your business or your home. Though each loan may differ in terms of their features, interest rate, fees, and flexibility, all loans, including mortgage plans, are structured based on an adjustable-rate arrangement. To guide you in choosing what type of home loan is suitable for you, here are some of the things you should consider.
Typically, interest rates are noted annually, also known as Annual Percentage Rate (APR). This is the amount charged by a loan provider to a borrower for the use of money or assets. Interest rates are usually expressed in percentage. In the case of humongous assets, like real estate properties or vehicles, the interest rate is sometimes considered as the amount of your “lease rate.”
Repayment structure is a series of payments over a period of time to repay your business or mortgage plan. For this one, you will have the freedom to choose whether you want to repay the interest of your debt first (table loan) or your pay goes directly to your account (revolving credit loan). Depending on what repayment option you chose, you will definitely need a sense of self-discipline to be able to pay off your loan completely. Just make sure to choose a structure that will work best for you.
Origination or Lender Fee
A lender fee is an up-front or add-on payment charged by the loan provider for processing your loan application. The fee is generally a 0.5% to 2% value of your total loan. Thus, the origination fee is closely similar with commission-based payment for real estate agents and the likes.
To find out right type and structure of loan service for your situation, it is best to consult a financial advisor first to help you in assessing your options. Remember, it is better to know everything first before you apply for anything.