What exactly is a Mortgage?
Hi, This question may not apply to my life currently seeing how I am a student who does not own any property or a home. But I am still curious to know what exactly a Mortgage is because I think it will be useful to understand in the future.
A mortgage is a loan that obtain from a bank in order to buy a house. You repay that loan in monthly installments over a period of time. The installment that you would pay will include principal repayment and some interest component as well to compensate the bank for the lending you the money for period of your loam.
Say for example, you want to buy a home that is currently @ $400,000 and you want to obtain a mortgage loan for 30 year and the current 30yr interest rate is 4.50%, then:
1) You will generally make a down payment of 20% of house value i.e. $80,000 in this scenario.
2) For the remaining $320,000, you will obtain mortgage loan from a bank that you will repay over the period of 30 years i.e. 360 monthly installments. (Note: the better is your credit score, the better interest rate you will get.)
3) You can use online mortgage calculators to calculate your monthly installments. For example, using the below online website:
I get the monthly installment of $1,621.39. This installment includes principal repayment and interest on the outstanding loan balance. Over the period of 30 years (i.e. 360 monthly installments), you would have paid $263,701.48 for interest along with the repayment of $320,000 mortgage loan.
http://www.mortgagecalculator.org/ is also a good resource for calculating various other options.
that's a good question. it's essentially a loan from the bank to finance a home.
A mortgage is a form of financing that allows you to buy a piece of real estate. Say you want to buy a house for $100,000, but you only have $20,000. You would need to borrow $80,000 in order to buy the house. You would go to a bank and ask the lender for the money to buy the home. The bank will ask you about your finances, (such as how much money you make) in order to determine if you can afford the monthly payment. If the bank thinks you are a good credit (they expect to be paid back) they will lend you the money. Your house then becomes collateral for the loan. If you don't make your payments the bank, the bank has a right to foreclose on you and take the house back. So borrow money wisely and always pay off all your debts.
A mortgage is essentially a loan you would enter into as the borrower to purchase a home. Once you decide you want to purchase a home, you will need to get approved for a loan if you don't have the amount of the purchase price in cash. It might be a good idea to get pre-approved for a loan before you start house hunting so you know your home price budget and the amount of the loan you would be approved for.
You can pay a certain sum of money upfront called your down payment to reduce the total cost of the loan. Most mortgage lenders require at least a certain percentage of purchase price in down payment. Once you complete some information with the bank and they run your credit, they will supply you with the interest rate of your loan.
When you make monthly mortgage payments, they will be applied to interest and the principal balance of the loan. For instance, if you purchase a $250,000 home and your interest rate is 4.00%, your monthly mortgage payment will first be applied to interest and then to the principal balance. You can find many mortgage calculators online that will do the math for you on how the payments are applied.
Hope this helps!
It's a great question! In addition to what others have said, I would add that if a borrower is unable to make the payments on the mortgage, the lender or owner of the mortgage can foreclose or repossess your house; this is why it's so important for a borrower to understand their financial obligations when entering into a mortgage. If a borrower undergoes a hardship (job loss, illness with a lot of medical bills, divorce, etc.), they can work with their lender to make other arrangements to pay their mortgage, such as a forbearance, repayment plan, or even a modification of the mortgage terms in some cases, but they are still on the hook to make the payments. It's a very important factor to consider when trying to determine how much 'house you can afford,' in addition to where you are buying and how much money you can put down.
At some point in your home, you will probably want to transition from renting an apartment to owning your own home. This is where a mortgage will come into place as you will have to qualify for a loan thru your bank, credit union or some type of government entity such as Fannie Mae. Some helpful tips in helping you to have a better chance at qualifying and getting a good interest rate are as follows:
1) Always pay your bills on time whether it is credit cards, car loan or your apartment lease.
2) Try to keep very low credit card balances and don't max these account or charge up very high balances
3) Save as much as you can so you can put bigger down payment. This will help you to avoid paying monthly mortgage insurance.
Doing all of these positive things can also help you get a lower interest rate which means your monthly payment will be lower. It might be the difference between paying 4% interest rate or 5% interest rate which could equate to saving hundreds of dollars a month. Good luck!
a legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt
A Mortgage is a document that shows you have title to a house. The mortgage industry is very interesting and can be very rewarding if you work really hard and learn all that you can while you are in school. Never give up. I didn’t go to college to do what I do now but had to work really hard to get to where I am. Be the best you can be always😀
There are all different types of loans you can obtain, but the bank will analyze your finances, spending, credit reports, bank accounts, etc. to determine whether they think you are a good candidate to receive the loan. If you have not been timely on other payments (car, credit cards, etc.) they may deny the loan.
Once you are ready to own a home you will go to a lender and borrow money to become a homeowner. There are different types of loans you can get for a mortgage. If you put a bigger down payment you can get what is called a conventional loan, for 3% down you can go FHA. The terms can vary depending on current interest rates. You can get 15 , 20 or 30 year loans. Any bank, credit union or actual mortgage company can do a mortgage