A mortgage is a loan used for the purpose of purchasing a property. The most common type of mortgage is for the purchase of a home.
How Much Can I Afford?
When considering to buy a home you should ask yourself, if you could reasonably finance it. The banks have developed some practical rules about the maximum desirable credit and interest rates that one can typically afford. Read more about your personal affordable maximum mortgage…
Fixed Or Variable Rates?
Mortgages come in different flavors. You can basically choose among a mortgage with fixed interest rates and with variable interest rates. A fixed rate will usually provide more safety for the price of higher costs. Read more about mortgage rates…
Conditions Of A Mortgage
The conditions specified in a home mortgage include:
- Principal Amount
- The principal amount is the amount of money borrowed up front.
- Term of the Mortgage
- The term of the mortgage is the time period over which the mortgage will be paid. This can be as long as 30 years.
- Rate of Interest
- The rate of interest is the periodic charge for the use of the mortgage loan money. The rate is usually charged monthly.
- Maturity Date
- The maturity date is the date that the loan is scheduled to be fully paid off.
- Some individual arrangements as to whether prepayments of the mortgage are allowed, the mortgage may be adjusted or renegotiated, and similar details.
In some cases it is reasonable to consider refinancing a mortgage. That is particularly the case, if a new mortgage would come with noticeably lower interest rates. Read more about mortgage refinance…
Private Mortgage Insurance (PMI)
Some banks will ask you to sign off a Private Mortgage Insurance. The sole purpose of this insurance is to reduce the risk of the bank. A PMI is usually required if a homeowner borrows more than 80% of the sales price of the home.
The PMI for a $100,000 loan would cost about $750 per year. The PMI is usually required for a fixed amount of time as about two or three years. A homeowner would have to discuss with the bank to get it annulated earlier.