Real estate financing
Real estate can be defined as the property which is embraced of both the land and the building and any other natural resources on the land which can contain animals also known as the faunas and the plants also known as the floras, deposits of minerals, water and livestock including the crop plants. Even though real estate is referred to as a place of living or abode as in residential living by the media, in finance, the term real estate is grouped into three sections which are the industrial, residential and commercial.
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The industrial real estate can be farms, mines or even factories, the residential as well-known by the media to be houses, underdeveloped and developing land and the condominium while the commercial real estate is the one with companies, warehouses, wholesale and retail sale building.
Real estate financing breakdown
Real estate financing can be a little bit out of hand sometimes but the real estate agents are always there to help in the getting of good real estate and how it can be finance for any purpose the individual might want to use it for in any of the categories for the real estate. Real estate is also known as real property which can be any of the following; the buildings, land and any other improvements to have been on the land which can be the rights to own and use the land for any purpose except for illegal use. Both the renters and the leaseholders in any of their interest can decide dwell on the land or in the house or the building which they considered to be one of their own personal estates because it is their rights.
Before real estate can be financed, the individual need to know what he is using the estate for in any of the categories of the real estate. If the real estate is for building houses for living or for dwelling, it is actually classified under the category of real estate which is known as the residential real estate. Below are the categories of real estate that can be financed by any individual.
Residential Real Estate
In 2017, December, it was announced by a real estate website which is known as Zillow that the state Gross domestic product was way less than the amount which was used in the building of houses in United States. It was more than the GDP by 1.5 times which makes the values on all homes in the United State to be $31.8trillion at that moment. In the United States, the most common type of real estate investment is the owner occupancy.
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The National Multifamily Housing Council in the United States stated that the two thirds of the people of the real estate owner actually owns the home because the houses in the state are often financed using the house as collateral for the loan in financing it which is known to be called mortgage. There are many options given to people that are purchasing mortgage in the investing in real estate.
There are different types of mortgages which can be given, there can be fixed rate mortgage, variable mortgage rate or hybrid mortgage rate. The loan in the real estate financing can last for many years more than five years. The longer the years, the higher the interest rate and the higher the down payment, the lower the interest rate on the loan.
Commercial Real Estate
Commercial real estate is mainly used for the purpose of commercial business as the name implies. Some commercial real estate are the warehouses, the retail sale shops and so on. Depending on what it is used for, the finance gets different and the mortgage is different. This is for the purpose of business and profit making, so definitely interest rate on this are usually higher than that of the residential real estate financing.
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Industrial real estate
This is a real estate which is basically for industry, the financing in this is not much different from the commercial real estate because they are both income and profit oriented. Some of the examples that falls under this type of real estate is the mines, farms and some companies that produces goods and services.