Table of Contents Hide
A home mortgage is usually borrowed for a period of 30 years. However, there are a variety of other terms that can be borrowed for as well. These include 15 year, 20 year, and 25 year mortgages. The shorter the term of the mortgage, the higher the monthly payment will be, but the lower the interest rate will be. Conversely, the longer the term of the mortgage, the lower the monthly payment will be, but the higher the interest rate will be.
Types of Mortgages
There are many different types of mortgages available on the market. The most common are fixed-rate mortgages, adjustable-rate mortgages, and interest-only mortgages.
- Fixed-rate mortgages have a fixed interest rate for the entire term of the loan. This means that your monthly payment will remain the same, even if interest rates rise.
- Adjustable-rate mortgages have a fixed interest rate for a set period of time, after which the interest rate will adjust based on the market. This means that your monthly payment could rise or fall, depending on the interest rates at the time the loan adjusts.
- Interest-only mortgages allow you to only pay the interest on the loan for a set period of time, usually five or ten years. After that period, you will need to start paying back the principal on the loan as well. This can result in a large increase in your monthly payment.
How To Get a Home Mortgage
There are a few things you need to do in order to get a mortgage. The first is to find a lender. You can do this by looking online, or by asking friends or family for a referral. Once you have found a lender, you will need to provide them with some information, including your income, your credit score, and your debt-to-income ratio. You will also need to provide them with a copy of your mortgage application, and a copy of your purchase contract. The lender will then do a credit check and a property appraisal. If you are approved for a mortgage, the lender will provide you with a loan agreement, which will outline the terms of the mortgage.
Also, you should check our content about 5 Mortgages For First-time Buyers
What is the Mortgage Process
Process can be daunting, but it doesn’t have to be. Here are a few tips to help you through it.
- Get pre-approved. This is the first and most important step in the process. It will tell you how much you can afford and also shows the lender that you’re serious about buying a home.
- Know your credit score. This will also help you determine how much you can afford and what kind of interest rate you can expect.
- Shop around. Don’t just go with the first lender you come across. Comparison shopping will help you get the best deal.
- Read the fine print. Don’t sign anything until you’ve read and understand all the terms and conditions.
- Have a realistic budget. Don’t forget to factor in expenses like property taxes, homeowners insurance, and maintenance.
- Get help from a professional. A good real estate agent can guide you through the process and help.
A mortgage is a loan that a bank or other financial institution gives to a homeowner to purchase a home. The mortgage is secured by the home itself, meaning that if the borrower stops making payments on the loan, the bank can foreclose on the home and sell it to recoup its losses.
Mortgages come in a variety of forms, but the most common is the 30-year fixed-rate mortgage. This type of mortgage has a fixed interest rate and monthly payments that stay the same for the life of the loan. Other common mortgage types include the 15-year fixed-rate mortgage and the adjustable-rate mortgage (ARM).
An ARM has an adjustable interest rate, which means that it can change over the life of the loan. This can be a good or bad thing, depending on how the interest rate changes and how long you plan to stay in the home. ARMs are usually offered at a lower interest rate than fixed-rate mortgages.
Calculating Mortgage’s Total Amount of Repayment
When you are shopping for a mortgage, one of the most important factors to consider is the interest rate. But don’t forget to think about the term of the loan as well. The term is the number of years over which you will repay the loan.
The table below shows the total amount you would repay on a mortgage with a term of 30 years, 20 years, and 10 years. The interest rate is 8%.
Mortgage Term Total Amount Repaid 30 years $306,814.48 20 years $225,721.36 10 years $146,680.48
As you can see, the longer the term of the mortgage, the more you will pay in total. This is because you are paying interest for a longer period of time.