Mortgage, Uncategorized

Mortgages 101

The commotion of house hunting is finally over. You found just the right house, and your offer has been accepted. It was a great buy. Now, just one more piece to the puzzle: getting a loan.

Often, buyers are so eager to get this “final piece” behind them, they rush through this portion of the transaction and end up with less-than-ideal terms. In order to avoid this, make sure you take the time to educate yourself about mortgages in general.

A mortgage lender will often work directly with the home buyer. However, mortgage loans vary considerably from bank to bank, lender to lender, and person to person. Many factors determine what’s right for you, including the size of the mortgage, your financial history, the interest rate, and the maturity date of the mortgage.

Globally there are dozens of different types of mortgage loans offered by mortgage lenders, but they all share common features:

• All loans earn interest, which is either fixed (meaning it remains the same during the life of the loan) or variable (meaning at pre-defined periods during the life of the loan it will change).
• Mortgage loans all have a maximum life, or term. This is the amount of years you have to pay back the amount in full. After this you officially own the property and will secure the full deed to the land.
• Mortgage loans set a predefined amount you must pay each pay period. This will also determine how often the mortgage is due, depending on the type of mortgage you secure.

Some mortgages have additional terms, including prepayment penalties if you decide to pay off the loan before the end of the term. So make sure you discuss this with your lender before signing the contract terms of your loan.