In this article, understand what fees are included when applying for mortgages
Many people are still in doubt about the amounts to be paid when applying for financing for a new property. This is not for less. As much as the process is becoming less bureaucratic, there are still many values involved.
Home financing can have a different value depending on the chosen financial entity. So, if you want once and for all to have your dream of homeownership fulfilled, make sure that all your doubts are answered by this entity.
If you want to know more about how the loan installment is calculated, you are in the right place! In this article, clear all your doubts and have a pretension of how much you will need to save to have the keys to the new house in hand.
How is the financing fee calculated?
When they want to calculate the interest on a loan, many people consider the difference in price for cash and installment payments and then divide this number by the number of installments. Although it is simple, the account does not bring the correct result. Let’s take an example.
A consumer wants to buy a car that costs 80,000 Mexican pesos in cash, but the store also offers the option of purchasing the car in 24 installments of 4,000 Mexican pesos. Therefore, the most common reasoning would be:
24 x 4000 = 96 000 Mexican pesos
96 000 – 80 000 = 16 000 Mexican pesos, that is, 20% more than the cash payment amount
20% / 24 months = 0.83%
Following this thinking, the vehicle financing interest rate would cost 0.83% per month. However, to find out the rates, installment amounts, or amount of installments involved in a fixed-value financing, such as for cars and real estate, the following formula is applied:
Amount financed = [{1 – (1+ interest rate) – term}/interest] x installment amount
What is the step by step to apply for financing?
When there is no correct payment, these additions increase more and more. So the debt that started with an X value becomes Y. Nobody wants that, right?
To try to protect themselves from this type of unforeseen event, the institutions require from their clients various factors and documents that prove income, age, etc.
This is where the financing steps come in. Do you know what they are? All this procedure is essential so that there are no differences between clients and banking institutions.
1 – Discovering your profile
As already mentioned, financial institutions request various documents that prove the health of your credit. In short: if you normally pay your bills well, or if something unforeseen has happened before. These documents also certify if the financing will be a risk negotiation.
By discovering your fixed income, it will also be easier for institutions to know how much you can afford each month. Another determining factor is age. The financing is generally granted to young people over the age of 25 who already have a credit history; some exceptions may occur.
2 – The moment of the offers
When you hire a company specialized in real estate financing, these entities send all your data to financial entities, proving that you can receive the financed amount. Thus, the offers begin to appear; at that moment, it is important to choose the one that fits your claim.
The good news is that you can run simulations even before proposals start to appear. This is a good way to prepare financial planning, essential in this type of agreement.
3 – The moment to sign the papers
Immediately after being sure of all the risks involved in financing, it is time to receive the amount you dreamed of and invest in your own property. This part can be quite bureaucratic and complicated for those who don’t understand big deals, so don’t hesitate to ask professionals for help.
Companies that carry out financing mediation usually advise for free, allowing the whole process to be very clear for clients. Get your value with confidence.