Q & A
Questions Answered:
Understanding Mortgages
What is a mortgage?
A mortgage is a specific type of loan loan from a bank or financial institution that is used to help purchase a home.
The bank or financial institution pays for the cost of the home upfront, and then it is your responsibility to pay the lender back with interest included, over the term of the loan, which is a set period of time.
What is a down payment?
A down payment is the amount of money you pay to decrease the total size of the loan.
How much do I need for a down payment?
You will be able to get the best interest rates and a variety of loan options with a down payment of 20% or more, but it isn’t a necessity. Home buyers have loan options available for a lower down payment. Some loan programs are available to those who pay as little as 3% of the loan amount and some options for no money down. We can help present you with the best options for your financial situation.
What does term mean on the loan?
The term of the loan is the length of time you are given to pay off the loan. The most popular loan term for a mortgage is the 30-year term. Different terms may be available depending on your financial situation and the type of loan.
What term should I choose?
The term you choose depends on your budget and your goals. A shorter term will allow you to pay off the mortgage sooner and pay less interest, but it will be a higher payment. You will also build equity faster. A longer term offers more time to pay off the loan, which in turn will include more interest over the loan term.
What is interest and an interest rate?
Your mortgage company includes interest, a fee included within the mortgage, for borrowing money from their institution. Interest rates are included as a percentage. The amount of interest you pay is based on the interest rate percentage on your loan and your loan balance.
How is an interest rate determined?
Interest rates are determined by market trends, but also loan type, down payment and credit history.
I’m Planning.
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I’m Looking.
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