MORTGAGE (n.) – a legal agreement wherein the bank or another creditor lends money while holding a debtor’s property accountable. This means that failure to pay within the agreed terms & conditions will compel the bank to sell the debtor’s property to cover the debt. This kind of loan agreement is a good settlement on the side bank because they wouldn’t have to worry about not being repaid. However, on the side of the debtor, is it more of a good settlement as well or bad? Let’s find out.
The idea of a mortgage is risking a property of yours to be sold against your will. Any bank or creditor will agree to lend you money given the terms & conditions, however to be sure, they would require you to give them a property of yours they can hold on to just in case things go wrong and you cannot pay back.
Having that said, it is the reason why you have the option to pay in installments within a certain number of years.This way, you would have an ample amount of time to full pay the debt and you can pay in small amounts. So if you pay religiously, this leads to another good chain reaction. Paying on time and in complete amounts will put your name on the good people category for keeping a good credit score. Having a good credit score will give you a good image of being a responsible debtor and so the next time you loan, you might be offered lower rates and much better benefits.
The number one downside of any kind of loan is that you’re actually paying more than you borrowed. While it makes sense why we have to pay a little bit more, some banks and creditors have very high interests and even have underlying fees. Before finally signing contracts and agreeing to such terms and conditions, make sure you have asked everything you needed to ask so you are aware of what kind of agreement you’re getting yourself into, and so that you know what exactly you are paying for. On top of that, we must all know that property values changer over time. When this happens, these can affect the interest rates you are paying. It’s pretty unpredictable when it comes to properties and how much they affect you so it’s best to be prepared for it all.
To sum it all up, just be a responsible debtor and no karma will haunt you down and bite you in the butt. It’s all about agreement and honor on both sides of the party. Work hard, pay on time, stay aware, and all will be well. Best of luck to you!