Select The Best Mortgage Loan For Your Needs
You may have the desire of getting a home of your own
, but lack of finance may prevent you from fulfilling your dream. This is where a
mortgage can help you. It provides a financing option that can make your dream come true. A mortgage is a loan secured by a property or house and paid in installments over a set period of time. The mortgage secures your promise that the money borrowed will be repaid. Your home is collateral for the loan, which is also a legal contract you sign to promise that you'll pay the debt, with interest and other costs, typically over 15 to 30 years. If you don't pay the debt, the lender has the right to take back the property and sell it to cover the debt. To repay the debt, you make monthly installments or payments that typically include the principal, interest, taxes and insurance, together known as PITI. In general, a mortgage transaction involves two parties - the lender or the mortgagee and the borrower or the mortgagor. A mortgage lender is typically a bank, credit union, building society or other form of financial institution. A mortgage borrower is probably you - the person looking to borrow money to fund a purchase.
A house is the largest purchase most of us may ever make so it's important to calculate what your payment will be and how much you can afford. There are several components that go into a
mortgage payment. Missing something can often lead to an unpleasant and very stressful surprise. A monthly mortgage payment includes at least two parts. Firstly, an amount that goes toward the principal of the loan (the money you've borrowed) and a secondly, the amount that goes toward interest (the cost of borrowing the money). A quick and easy way to calculate your monthly mortgage payments is probably to use the mortgage calculator. Simply enter the amount you wish to borrow, the term over which you intend to pay it off and the interest rate. Then hit the 'Calculate' button. A mortgage payment calculator is a great tool to help home buyers estimate the cost of monthly mortgage payments. Whether you're interested in mortgage refinancing or looking to see how much tax you can deduct, these free mortgage calculator tools are here to help you.
By the time you finish paying off the mortgage on your home, you'll have probably paid more in interest alone than the actual purchase price of the house. For example, if you borrow $125,000 at 8% for 30 years, you'll end up paying over $205,000 in interest, plus the $125,000 you borrowed. Your $125,000 house has cost you $330,000! So, it makes sense to shop wisely for the
best mortgage, since it will probably be the biggest financial decision of your life. There are two basic types of mortgages. They are fixed-rate mortgage and variable rate mortgages. Fixed-rate mortgages offer an interest rate that stays the same throughout the tenure of the mortgage. Whereas, variable-rate mortgages which are also known as adjustable-rate mortgages or floating-rate mortgages, offer rates that can be changed, adjusted or that fluctuate. Normally, fixed-rate mortgages have terms of either 15 or 30 years, which is the length of time the mortgage borrower has to pay off the mortgage. In the case of floating-rate mortgages, terms are normally only one year in duration. What is important to note is that interest rates for fixed-rate mortgages with 30-year terms are higher than those with 15-year terms. So, it may be advisable to carefully study the mortgage options and choose the best home mortgage that fits you and your personal situation.
by: Ask Bill
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