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The Basics Of Home Loan
Written by Reliable-finance.com

If you are not familiar with the basics of home loan, but are going to apply for a loan to buy a house, then you definitely need to read this article.
The basics of home loan.
Before applying for a mortgage loan, you have to understand the terminology first. You should start with the simplest of concepts and then learn more complex.
1. Principal - The principal is simply the amount of money you intend to borrow to buy your new home. If you are going to get $200.000 in the bank, this sum is called the principal. 2. Interest - any credit necessarily involves a certain interest rate. Of course this also applies to home loan. Interest rate - the amount of money you will have to pay the creditor for the fact that he will lend you the principal.

 
Interest rates - this is one of the main conditions of choosing home loans, as there is a wide range of loans with flexible interest rates, which can vary every year or over several years. Naturally, you should try to find the type of home loan where interest will be as low as possible.
3. Term - this is the time during which you must pay back the money that you borrowed from a lender. Usually it is calculated in months. For example, if you take a 15-year loan, it means that you will have 180 monthly payments. Of course, there are credits at both the shorter and longer terms.

Most likely your home will be one of the largest investments in your life. This is one of the major purchases in your life and this is a very complicated process. The purchase should be treated with methodical manageable process to facilitate his task. Next, we'll describe the preferred options for home loans.

 
One of the most popular mortgage loans is a home loan for 30-year term with fixed rate. Because this is a very long term, your monthly payment can be substantially reduced. And thanks to a fixed rate you can feel the stability for the duration of the loan repayment period. This loan is ideal for people who plan to live in their new home 7 years or more. Disadvantages of such long-term mortgage are that payment of principal in the first years are fairly low and the risk that mortgage rates in the future may be much reduced. But if you have a stable income and your credit history is good, then in the event of decreasing mortgage rates you can perform a mortgage refinancing.

Also the 15-year fixed term of home loan is very popular. In this case interest rate is reduced and the total amount of interest payments decreases. And principal payment increases. But the monthly payments in this case is much higher as the period for which credit is taken is short.