Mortgage is usually refer to the method that use one’s property as a security for the debt you are going to receive. Most mortgage will require you to have your personal property to secure the loan in case you ran away. For those who want to purchase real estate without having to pay in full instantly, mortgage is a good way for you to get started.
Basic Mortgage Terminologies
Creditor: The one with legal right to make loans to the debtor. In general, they are bankers, insurers and other insitution with a lot of cash in hands.
Debtor: Borrowers who meet certain mortgage conditions. They are usually potential home owners, corporation or other small business in need of cash.
Mortgage Deed: Document that claimed the lender has legal charge for the property.
What to look at when locking in?
I received a lot of calls every day about mortgage that invite me to lock in my loan. Hundred of thousands of news and reports out there that claimed to help you. But honestly, what factors should you look at before you lock in your rate?
Here are the five “factors” I will consider:
- CPI (Consumer Price Index) - High inflation will generally result in high interest rate. To know what the future interest rate is, a good way to get started is to understand it first.
- Average hour earning - If this number raise rapiding, there is a high chance for inflation in the coming years. As mentioned above, high inflation will result in high interest rate. It is necessary to keep a close eye on this index.
- GDP - When GDP grows rapidly, interst will go up as well. It is a very good indicator for the future interest rate.
- Advance retail sales - It is a bad sign for the economy if no one is willing to spend. But spending too much over a short period of time can also be a problem as it can lead to high inflation.
- New Home sales - It is almost the same indicator as Advance retail sales. Better to keep a close eye on this index.
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