Loans and Insurance
... terms of 15 or 30 years. You can choose other policies as well (3-years, 5-years, and so on). There are basically 3 types of loans: Fixed, Adjustable, and a combination of both the Fixed and Adjustable rate. These types of loans concern the interest rates. For example, if a 30-year fixed rate plan, your interest rate will remain the same for that 30 year (lets say 6.75% - interest rate). Which means if the overall interest rate (depending on economy) goes up, your interest rate will remain the same (6.75%) and the same if the overall interest rate goes down. This is the opposite of the adjustable rate plan. If you choose a 30-year adjustable rate plan, you interest rate will be unstable. Which means if the overall interest rate goes up, your interest rate goes up as well and the same if it goes down. Which then brings us to the fixed and adjustable rate combined. How this works is that you first start out with the fixed rate plan and then you switch to the adjustable rate plan. Which means that you interest rate for the first few years will be constant and then the remaining years will be unstable. When you have decided which type of loan is best for you, the bank will then require you to get an Insurance Title. What the Insurance Title does is that it provides proof that you are the rightful owner of the house. This way they’ll know who is responsible for the monthly mortgage payments. After acquiring the Insurance Title, the bank will then tell you what other types of insurance you need (earthquake, fire, typhoon, etc…). Some of these insurance can be waived if you have proper precautions. For example, the typhoon insurance can be avoided through negotiation, if you secure your house with typhoon shutters. After getting your loan, you now have to pay the down payment for the house. The down payment is the difference between the house price and the loan. Now that you have your house, all you have to do now is pay you monthly mortgage. The monthly payment is just adding the principle and the interest rate. As mentioned earlier, there are many ways of calculating mortgage payments. There is one where your mortgage payment decreases each month. This is how this works. Every time you pay your monthly mortgages (the sum of the principle and interest rate), your balance goes down. This type of loan doesn’t give y...