Understanding the Basics of Mortgages

Understanding the Basics of Mortgages

We live in the information age and everyone has access to a library of information. If you search for mortgages, you will find a treasure trove of information. Unfortunately, most people are unable to decode it and hence cannot understand mortgages completely.

Types of Mortgages

When understanding mortgages, you need to understand the basic types of mortgages. These include:

Fixed Rate Mortgages – Your mortgage’s interest rate doesn’t change during the entirety of the mortgage.

Variable Rate Mortgages – Your mortgage’s interest rate changes during the entirety of the mortgage, usually to reflect market conditions.

Balloon Mortgages – A relatively short-term mortgage where you make small payments but a large “balloon payment” at the end of the mortgage.

Credit Rating

Of course, in order to qualify for a mortgage, you need to have a credit rating equal to or higher than the requirement set by your lender. As a rule of thumb, the more credible the lender, the higher your credit rating requirement.

Interest Rates

Interest rates are the bread and butter of mortgages. Whether fixed or varying, you need to repay an amount to your lender for lending you the money. In truth, interests rates vary significantly and depend on the lender, legal rates, down payment, credit history, etc.

Down Payment

Another important element of mortgages is the down payment. Every mortgage requires you to make a down payment equal to a specific percentage of your total purchase price. They range from 3% to 40% depending on the program, interest rate provided, the lender and the type of mortgage.

As we said, mortgages are not really hard to understand. Armed with the basics, you can now find the perfect mortgage all on your own. If you need help or more information, don’t hesitate to contact us at (877) 442-4023.

 

 

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