The World of Mortgages
Buying a home is usually a very overwhelming and big event
in a person or a couple's life. It takes lengthy
considerations and life searching to find out if you are
ready to do so. One thing people will most definitely need
is the money to buy a home which in terms of home prices,
people don't generally have that much saved up.
Everyone wants to own a house, it doesn't matter what
country you live in. What most middle class type people
will need is a home loan, and home loans are different in
each country. If you think you know a lot about home loans
in America, you could go over to the United Kingdom or
Germany and expect to know everything but come to find out
that everything isn't the same over there.
In each country around the world, a mortgage is usually
different. In the United States, to get a loan you must
have a down payment, which is a percentage of what you are
borrowing that is regulated by the company you get the loan
from. In Germany, the borrower has to have at least 15 -
20% of the entire loan amount with him to take a loan.
One of the main things that differentiate the United States
and other countries is that the U.S. mortgage market is
backed up by a very well maintained secondary market in
which global investors keep local lenders aware of money.
They do this most through large secondary entities like
Fannie Mae and Freddie Mac. These are government-sponsored
enterprises to make sure lenders always have money to lend,
even during periods of high interest rates, and private
conduits that perform the same function.
In Great Britain, they have variable-rate mortgages, or a
floating rate mortgage. A mortgage loan where the interest
rate on the note is periodically adjusted based on an
index. This is done to ensure a steady margin for the
lender, whose own cost of funding will usually be related
to the index. Consequently, payments made by the borrower
may change over time with the changing interest rate.
In the UK, Germany, and the States, citizens pay interest
on top of what they owe back to the lender. In Muslim
countries, Muslims mortgages get a little tricky. The
Sharia law of Islam prohibits the payment or receipt of
interest, which means that practicing Muslims cannot use
conventional mortgages. Because real estate would be way
too expensive to just use regular cash. Islamic mortgages
solve this problem by having the property change hands two
times. An example would be as if the bank bought the house
and act that the existing landlord to the person who wants
to live in the house. The person will pay rent and in
addition will pay contribution towards the purchase of the
property. When the last payment is made, the property
changes hands.
No matter where you are in the world, getting a mortgage
will always be a struggle. When that house is finally
yours, the feeling of having the house will be worth it.
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This article was written for our friends at Darlehen -
hp to explain the differences in mortgages around the
world. Article written and distributed by Steve Cancel, IT
Manager of Computer Repair Michigan -
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