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Well, today a Capped Mortgage is sets the maximum interest rate, adjustable-rate mortgage. Any spike of interest on the maximum rate of interest rate does not affect the repayment of the mortgage. The borrower knows the maximum mortgage payment.
When the interest rate takes a dive, the borrower pays a lower monthly mortgage payment or payment of a mortgage basement. The capped mortgage, the borrower is protected from a surge in interest rate.
This interest rate spike protection comes with a price. Mortgage lenders will charge an interest rate slightly superior. For example, current interest rate is 4.5%. The borrower pays the interest rate of 5.0%.
The main benefit of Cap mortgage is the peace of mind; lenders know exactly how much is the highest payment of the mortgage. In addition, the lender knows that payment of the mortgage will not exceed the maximum mortgage payment.
Recently, mortgage lenders face melting mortgage. The interest rate was high enough that the borrower cannot pay the mortgage. There are so many foreclosures today; CAP mortgages could have been advantageous for the borrower.
Capped mortgage interest rate is a compromise between the fixed rate and adjustable rate. As a result, the interest rate will be slightly on the fixed rate.
Mortgage lenders charge mortgage penalties annually to allow a certain level to pay a sum of fixed finances or additional without having to pay the penalty. Although the borrower pays the additional amount, or amount fixed on the level of certain amortize mortgage to principles.
Most lenders mortgage CAP is a mortgage available with a purchase options. The borrower purchases property in his or her favor; so that they can buy several properties.
We say, "It’s a lender's market".
"What do you mean by that?" you ask. In our opinion, today's real estate market is "controlled" by the lenders. If the homebuyer wants to get a loan, and if a home seller wants to sell their home to the buyer who has to get a loan, then both the homebuyer and the home seller have to conform to the lender's requirements.
Homebuyers must qualify for the loan with strict lender guidelines.
Home sellers know that their property must qualify for the loan via the appraisal, and stringent appraisal guidelines. These appraisal guidelines changed significantly this past May 1. Read more about it here: Home Valuation Code of Conduct, enhancing the independence of appraisers. The result? Strict appraisal guidelines.
So, in today's real estate market - today's "lender's market" - it is what the lenders want that determines the fate of the transaction.
At least, that is our opinion. Labels: appraisal, buyer's market, Home Valuation Code of Conduct, lender's market, real estate, & seller's market.
Other Associated sites:
http://www.offerin12hours.com/kfranklin
http://www.renttoownbuyer.com/kfranklin
http://www.realestateinvestordeals.com/kfranklin
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