34. Commercial bank services: mortgage loans.

First of all mortgage is a type of bank loan. Mortgage is a debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages come in many forms. With a fixed-rate mortgage, the borrower pays the same interest rate for the life of the loan. Her monthly principal and interest payment never change from the first mortgage payment to the last. Most fixed-rate mortgages have a 15- or 30-year term. With an adjustable-rate mortgage (ARM), the interest rate is fixed for an initial term, but then it fluctuates with market interest rates. The initial interest rate is often a below-market rate, which can make a mortgage seem more affordable than it really is. If interest rates increase later, the borrower may not be able to afford the higher monthly payments. Interest rates could also decrease, making an ARM less expensive. You can use mortgage for different purposes; the main condition is using real property as collateral of loan. This service is very popular and there even exists mortgage market. Direct participants of the mortgage market: mortgagor-the party who borrows the money and gives the mortgage (the debtor) ( Usually it is a bank) and mortgagee – the party who pays the money and receives the mortgage (the lender)(It can be individuals and legal entities). Indirect participants of the mortgage market: investment bank - the bank which buy mortgage agreement from bank and issues bonds backed by these mortgages, and investors - individuals and legal entities who buy Mortgage Backed Securities and get their interests. So, mortagee gets a loan from mortgagor. Than mortgagor sells his mortgage agreements to the investment bank, who issues mortgage backed securities and sells these securities to the investors. An important condition of getting a mortgage is downpayment. Downpayment is the initial upfront portion of the total amount due and it is usually given in cash. Down payment in the USA begins from 5% of the purchase price of the home while in Ukraine it begins from 10%. The higher downpayment you will make, the lower interest you will have to pay. If you want to calculate mortgage monthly payment, to can use the next equation: , where m- monthly payment, p – principal amount, i – interest rate, n – number of payments.

35. Commercial bank services: issuance of credit cards and debit cards.

Credit cards are accompanied by opening their own credit lines due within which you make payments or cash with these cards. Therefore, the owners of some open credit accounts that operate independently of their other accounts (current or savings). In issuing the credit card issuing banks eyeing the creditworthiness of its customers and only then determine whether to implement a particular credit card to a customer and sizes credit line limit it to install.

Terms of the loan and the procedure for credit card payments determined by the issuing bank. They can significantly vary depending on individual issuers. Thus, some of the credit card billing has to be repaid within a month, while other payments made within 25 days generally not considered a loan and are not charged interest. Some issuers may require confirmation of the loan, others - no. According to one single card payments may be limited to certain amounts, and the second - no, but the total limit of the credit line, the third may be acceptable even exceeding that limit. Competition between banks for clientele makes them continually improve credit cards, making them more attractive to customers.

Payments by Debet cards are made debiting money directly from a checking account card holder, but not at the expense of the loan. Its purpose is purely payment cards. However, they did not rule out the use of the owner, in some cases the loan, including:

- If it has a current account with an overdraft facility, the overdraft limit within the customer uses the card payments for bank loans. In this case, the debit card is a little different from the credit;

- Between the time of registration card for the purchase of goods or services in the trade structure and withdrawal from a current account holder may take a period of time during which the buyer uses the product purchased, therefore, receives credit. However, it is rather technical credit caused by technological features of this card, not its nature. At first, when the exchange of information between the parties was long, the loan played an important catalytic role in the rapid spread of debit cards.

Debit cards are also several species. Depending on the focus of operations carried out such a card, select:

- Cards for cash transactions by which owners can get cash from their accounts at the bank or through automatic machines (ATMs).

- Cards for payment of goods (services) terminals in trading rooms. The presence of terminal and network electronic connections enables seller of goods quickly identify the payer and the last - to immediately withdraw money from his account to the dealer;

- Check guarantee card used to identify the issuer and guarantee payment by check. Guarantees provided by existing current account cardholder funds and the right to a loan granted to him by the bank in case of failure to pay the check own funds