Housing Mortgages 101
We know that most of our homeowners are looking to buy their 1st home. As you prepare to take this step, it’s important to understand some of the language involved in buying and then making the payments on a new house. We are going to tell you about the term mortgage.
Are all mortgages the same?
No, there are several different kinds. The following are the 2 most common. the fixed rate mortgage (or FRM) has the same interest rate for the entire term (usually 30 years) of the mortgage. The nice thing about this option is its consistency, which means that there are no surprises, and you have a set amount of monthly interest to plan ahead. With an adjustable rate (or ARM) you generally start off paying less per month with a lower interest rate than you if you had an FRM, but both will go up and down (sometimes more than once a year) along with the rise and fall of the financial index that they are linked to.
How do I set up my mortgage?
There are several ways you can set up your mortgage and many places you can go to get a loan and finance your home, including banks, mortgage companies, and credit unions. We recommend that, it will help you if you shop around and compare the different rates and prices before settling on the one that can provide you with the mortgage that makes the most sense for your situation. It’s important to remember that getting set up doesn’t all happen overnight, the loan approval process can typically take about 3 – 6 weeks.
What does my mortgage include?
There are typically 4 parts to every loan. The principal is the actual amount you borrowed, the interest is what you pay the lender for lending you the money in the 1st place, part of your monthly costs go toward homeowner’s insurance (for any theft, a fire, or other damaging circumstances that can happen) and of course, property taxes for the city/county you live in.