Mortgage: An Opportunity in Real Estate | Scott Huish


Mortgage:

A mortgage is a long-term loan using real estate as collateral. A mortgage loan is commonly used for purchasing a home. Mortgage loans are usually fully amortizing, which means that the payment of the principal and monthly interest you will pay the loan in the number of payments stipulated in the note. Mortgage loans are also described by the length of time for payment, such as 15 or 30 years, and if the interest rate is fixed or adjustable. A mortgage when the down payment is less than 20% usually requires insurance or government guarantee private mortgage insurance (PMI).


Know Mortgage Before Apply

Most mortgage loans require monthly payments, plus additional principal and interest that are reserved in escrow accounts for property taxes paid and homeowner’s insurance. In addition, loans with PMI mortgage insurance or the government may require payment of a monthly mortgage insurance premium as part of the regular monthly payment. Some lenders offer biweekly mortgages that require 26 payments per year.


Mortgage

Details of the biweekly mortgages can vary, so it’s best to ask the lender to outline the details of how these programs work.


Types of Mortgages:

Mortgages come in many forms. The most popular mortgages are fixed for 30 years and a fixed 15 years. Some mortgages can be as short as five years; some can be 40 years or more. payments stretching over several years to reduce the monthly payment, but increase the amount of interest payable.


Fixed-Rate:

With a mortgage fixed-rate loan, the borrower pays the same interest rate for the life of the loan. The payments of principal and interest never change monthly the first installment mortgage to the last.


Fixed-Rate Mortgage

If market interest rates rise, the payment of the borrower does not change. If interest rates fall significantly, the borrower may be able to get a lower rate by refinancing the mortgage. A fixed-rate mortgage is also called a “traditional mortgage”.

Adjustable-Rate:

With a mortgage adjustable-rate (ARM), the interest rate is fixed for an initial period then varies according to market interest rates. The initial interest rate is often a lower rate than the market, which can make it a more affordable mortgage in the short term, but maybe less affordable in the long term.


Adjustable-Rate Mortgage

If interest rates rise later, the borrower may not be able to afford the higher monthly payments. Interest rates may also decrease, making a cheaper ARM. In both cases, monthly payments are unpredictable after the initial period.