When applying for a mortgage loan to buy a house, it is important to know all the types of mortgage loans that exist in the market and the characteristics of each of them. It is very important to choose a good mortgage loan , because that will depend on the financing of your new home.
Now that we know the importance of choosing a good mortgage loan , let’s get to know the three most common types of mortgage loans better.
Types of mortgage loans
The most common types of mortgage loans are:
- Mortgage credit with letters of credit
- Endorsable Mortgage Mutual
- Mutual mortgage not endorsable
Types of mortgage loans: With letters of credit
Mortgage loans with letters of credit work as follows: “mortgage letters” financed by the bank are financed. These instruments can be traded by the bank in the stock exchange or acquired by this or a third party, in order to obtain the resources that finance the credit granted to the debtor.
The price of the letters of credit varies according to market conditions, therefore, a positive or negative difference can be generated between the value of the letter and the price at which it is traded.
Therefore, in the deed of the house the contracting party that will take charge or benefit from the difference must be fixed. If it turns out to be the debtor, he will have to pay the negative difference that occurs.
Types of mortgage loans: Mutual endorsable
Another type of mortgage loan is the endorsable mutual . In the endorsable mutual credit, the bank finances the credit with its own resources. In these loans the applicant receives the approved amount and the difference we have seen in the loans with mortgage bills is not generated.
The endorsable mutual credit can be transferred by the bank through endorsement, which will be recorded in the corresponding public deed. But the administration of the credit is based in the bank, therefore, the credit applicant should contact the bank for any questions or problems.
Types of mortgage loans: Mutual not endorsable
It is a mortgage loan similar to the previous one, but in this case, although the bank also finances the loan with its own resources, this type of credit cannot be transferred through endorsement.
We must also know that there are subsidy programs that can help us buy, build or lease a property. These subsidies can help us pay our mortgage credit. More information can be found here: Housing allowance: requirements, application date and amounts