The Tax Cheapo

When someone wishes to borrow a certain amount to fulfill his urgent needs, he goes to other someone, usually, a bank, a company, or even an individual to borrow from him the money he wishes. Therefore, the first individual is called the borrower, the person or a financial body that lends him the money is called the lender, and the said amount is called the loan. Therefore, to proceed this transaction, the borrower must offer a guarantee to the lender, usually a real estate, which is called in this case, the mortgage. Generally, in our recent time, the word mortgage is referred to mortgage loan. The mortgaged real estate is considered such a temporary transfer of the real estate ownership from the borrower to the lender, which may be returned to the original owner, the borrower, as soon as he fulfilled the payment of his borrowed loan. Generally, the mortgaged loan will be returned with a plus of some agreed interest ratio paid monthly. Consequently, the parties, the borrower and the lender, at certain conditions, will sign a contract, which will be terminated at fulfillment of the payment.

The characters of the loan, such as the size of its amount, the interest rates, the term of payments, or even the way of payment may be different according to the mutual agreement. As a general, there are two main types of mortgage loan, the first is the adjustable rate mortgage and the other is the fixed rate mortgage. The first, (ARM), is meant that the interest rate of the loan will be fluctuated and adjusted periodically, according to the ratio of the market. The other type, (FRM), means that the ratio of the interest that will be paid will be constant as agreed on the contract. However, it must consider that the failure of paying the value of the loan according to the signed contract will result in losing the borrower of his real estate completely.