Becoming a homeowner is everyone’s dream, but it requires consistent efforts and a lot of sacrifices just to earn that title. Almost everyone had to work and save to buy the building materials, housing lot, and labor fees just to find themselves still lacking with monetary funds—and it is still because of inflation. It is a heartbreaking scene to witness your dream house almost became a reality. But you do not need to worry anymore, it is because the banks have made a favorable option for you to become a homeowner through—a home loan.

Home Loan: Defined

A home loan, formally known as mortgage, is defined as the amount of money lent by a bank to a person in order to buy a property, especially a house, under a written agreement which states that the bank has the sole right to seize the property if the borrower has failed to repay the money on time after several warnings. So, it is a necessity to only apply for a home plan from a legit entity like a bank to avoid issues on legal ownership once the agreement has complied. Below is a list of 5 common types of mortgages a person can avail of.

• Adjustable-Rate Mortgage (ARM) has a fluctuating interest rate that is affected by the market’s current condition.
• A Conventional Mortgage is a non-government insured loan with a varying value.
• Fixed-rate Mortgage has an interest rate that remains the same over the loaning period.
• A government-insured Mortgage is operated by government agencies to help its citizens become legit homeowners.
• Jumbo Mortgages are non-conforming conventional home loans wherein the house price exceeds the limit set by the government.

fixed rate home loan is the most beneficial mortgage for people who seek longer house occupancy and financial stability.

7 Benefits of Availing a Home Loan   

Applying for a home loan that is approved by a bank can give you the following benefits:

• Makes you a legit homeowner.
• Allows you to own a fixed asset.
• Saves you from paying inflated monthly rent.
• It aids you in budgeting your finances.
• Offers payable interest rate per month or annum compared to other plans.
• Helps in reducing your taxes.
• Provides another source of income if you are a home investor.

Disadvantages of Availing a Home Loan

There are always two sides to a coin and so is availing a home loan which is shown below.

• Obliged you in a long-term commitment of repayment UNTIL the agreement is fulfilled.
• Does not make you a 100% homeowner UNLESS you have fully paid without sanctions.
• Selling the house in the market will not ensure a good profit since both the principal and interest, which are the base price,  are too high.