Mortgage and mortgage financing is basically the same thing: a loan for a purchase of a property, construction or renovation. If you are thinking of getting a loan, it is very important to understand a number of issues before hiring.
As much as the dream of thousands of people is, some care must be taken. especially if you will be able to afford the benefits. In this article understand what it is, how it works and more.
What is real estate credit
As has been said, real estate credit is borrowing, usually from banks, home finance, renovation or construction.
It is much in demand mainly by those who cannot afford to buy the property in cash. And as it is in installments, it facilitates the payment and so many people can realize the dream of having their home.
How Mortgage Works
To better understand you, there are two forms of mortgage lending:
- Housing Finance System (SFH): for real estate up to 750 thousand dollars.
- Real Estate Financing System (SFI): for real estate over 750 thousand dollars.
It is possible to request financing from several banks, although Savings Bank is the most sought after financial institution.
Where to start a mortgage
The first thing to do is a simulation. Thus, it will be possible to compare the conditions of different institutions. Based on your income and ability to pay, you will have an idea of how much you will be able to finance. You will need to send your proposal to the chosen financial institution with all your personal details as well as the funding. If the property has not been chosen, you have the possibility of obtaining a letter of credit, which can be used later.
Based on all the information provided, it is time for the financial institution to perform the credit analysis, then to verify whether or not it will be possible to release the credit. Having verified the client is with compatible income, it is time to evaluate if the property to be financed meets all the requirements.
Once all documentation of both the buyer and the property is in order, the Financing Agreement will be issued, which will be signed by the buyer and seller.
At this point, you must pay the Real Estate Transfer Tax (ITBI) and then register with the Real Estate Registry. Remember that in the case of SFH financing, if it is the first property, the borrower has discounts on various expenses.
Having completed all the steps above, you must send a copy of the contract, duly registered with the notary, to the financial institution. It usually takes 5-10 business days for the amount to be released to the seller.
How Benefit Payment Works
Close attention must be paid to the mortgage loan agreement, where the value of the installments is established. Also remember that it is important to know about the interest, because the financing is nothing more than a loan. And like every loan, there is interest. In case of default, the owner runs the risk of losing the property.
Register the discharge term
After all the paid installments, the financial institution will issue the repayment term of the property. Only then can the customer call the property ‘yours’.
Is it worth financing?
In fact, although you are financing a property that is yours and will finally come out of rent, it is essential to have discipline, especially regarding the payment of benefits. Therefore, it is important to run simulations and assess whether the benefit amount will not impact your monthly budget. There is nothing better than financial planning so as not to get into more debt. Put it all down on paper, review all your expenses, and think if it’s really worth it.
Keep in mind that depending on the mortgage, your budget may be compromised for years. In some cases 35 years. Some experts advise that it is best to have a good value for input. This increases the value of financing and, consequently, the term of financing.
Once everything is in order, around 10 working days after approval, the amount is released. And if you don’t have a property yet, you can get a letter of credit. Remember to make a simulation to get a sense of the value of the installment, as well as the amount of funding at the end of the contract.