Home Loan vs Mortgage Loan – What Is the Difference?

For sale sign in front of a home

Home Loans and Mortgages are two types of loans that are used to purchase or build a new home. An assurance home loans Coral Springs loan will enable you to buy a property outright, while a mortgages Coral Springs loan can help you to finance the purchase of a property.

What Is a Home Loan?

A home loan is a financial product that can be used to finance the purchase of a residential property. Banks, credit unions, and other lenders offer home loans. The lender will typically require a borrower to have good credit history and sufficient savings to cover the initial down payment, maintenance costs, and interest payments on the loan.

Eligibility Criteria

A person cannot get a loan for a home that is under construction or in the process of construction. The property must also be purchased from within the country and not abroad. The applicant must also have a valid passport and home registration certificate.

The eligibility criteria for Coral Springs home loans vary depending on the lender and the type of loan. Generally, the following are some of the eligibility criteria that you need to fulfill to know if you qualify:

  1. Have a good credit history.
  2. Have a steady income source.
  3. Be able to make payments on time without any issues or delays in payments.
  4. Have sufficient funds to pay off your loan amount and other expenses like insurance, property tax, etc., over time.

What is a Mortgage Loan?

A mortgage loan is a loan used to purchase real estate. It is a type of loan, which allows you to buy a property and use it as collateral. It is normally a fixed-rate, interest-only loan that you pay back in monthly installments over a period of years.

Eligibility Criteria

The eligibility criteria are usually based on your income, assets, and credit score. These criteria will determine your eligibility for the mortgages Coral Springs loan:

  1. You must have a minimum credit score of 620.
  2. You must be currently employed and earning at least 30% of the median household income in your area.
  3. Your monthly debt-to-income ratio must not exceed 43%.
  4. You cannot have been delinquent on any previous loan with us or any other lender within the last three years.

The Differences between a Home Loan and a Mortgage Loan

Interest Rate: A mortgage loan is secured by the property you live in and the home equity you have built up. If you cannot make your payments, your lender can repossess your house. They will require a higher interest rate than a home loan.

Loan Amount: Coral Springs home loans are usually for up to 90% of the property’s value (the appraised value), while mortgages are usually only for 60% to 70%. The difference is “prepayment penalties,” which often make it more expensive to refinance or sell down the road.

Use: Mortgage loans are used to purchase a home, whereas home loans are used to obtain funds for paying off your current mortgage or taking out a new one. Mortgage loans cover all real estate transactions, including commercial, residential, and investment property. Home loans are usually used by buyers who intend to buy a home.

Repayment Periods: Home loans generally have more extended repayment periods than mortgages, which means they require more money upfront before they start making payments on your behalf.

Owning a home is a monumental achievement that is desired by the masses. The herculean task is not easy to achieve due to the high prices of houses. Mortgage loans and home loans aid your purchasing power through loans helping you to achieve your dreams. For the best assurance home loans Coral Springs contact Ace Mortgage Loan Corporation. You will receive counsel and packages that fit your home needs.

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