Home Finance Organization

Home finance organization is that type of an institution, which offers financial services related to home loans. A home loan is basically a mortgage loan that is obtained by keeping a house as pledge or security. The property pledged as security can either be a real property or personal property.
In case of a home financing loan or home mortgage, the loan is received for the purpose of buying a house, however, until and unless the loan has been repaid in full, the lender does not transfer the ownership title to the borrower. The house which the borrower is going to purchase is kept as pledge or security.

In case the borrower becomes unable to repay the loan, the lender has the right to sell the house and utilize the sales proceeds to clear the mortgage loan. In a large number of countries all over the world, residential mortgage or home loan is the principal instrument for funding private ownership of residential properties.

The amount of home finance to be offered to an individual frequently depends on the credit history or credit score of that individual.

The fundamental constituents of a home loan are the following:
Property
Interest
Mortgage
Lender
Borrower
Principal
Repossession or Foreclosure

The loans offered by the home finance organizations are long-term in nature.

They are broadly categorized into the two following types:
Fixed Rate Mortgage (FRM)
Adjustable Rate Mortgage (ARM)

The different methods of repayment of housing loans include the following:
Interest Only Repayment
No Capital or Interest Repayment
Interest and Partial Capital Repayment
Foreclosure and Non-Recourse Lending
Capital & Interest Repayment

The repayment methods of housing loans are identical to annuities and the estimation of the payments is done according to the time value of money method (TVM).

The factors which regulate housing loans include the following:
The interest rate either fixed or variable
The term period of repayment
The amount of payment and frequency of payments
Prepayments

The leading home finance organizations include the following:
Fannie Mae
Ginnie Mae
Freddie Mac
Wells Fargo
E-Loan
ICICI Bank
HSBC
ABN-Amro Bank
Bank of America
Genworth Financial

 

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Last Updated on : 1st August 2013

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