Welcome back! This week we are tackling the topic of mortgages, a big topic of real estate. A big question surrounding purchasing a home is how to pay? Most of us don’t have the type of money to withdraw $200,000 to pay for a home. A mortgage is a type of loan to help you pay for that. Mortgages allow a lender to lend you money without having all the cash upfront, with a set interest rate.
All mortgages will come with an interest rate. Once you pay back the loan with the designated interest rate, the house is fully yours. Until then, if those payments are not made, the lender can take possession of your home or foreclose it.
Interest rates are created based on two factors, market rates, AND your credit. Therefore, the topic of credit is so vital to all financial decisions. The higher the credit score and fewer issues on your credit report will allow lenders to lower interest rates for you. The lower the credit score and more issues, the higher your interest rate will be.
Mortgage terms deal with how long it will take you to pay it off. Most frequently are 30 years and 15 years. Shorter-term such as 15 years means that you have large monthly payments than that of a 30-year term, however, you save a lot on interest. Again, it’s important that you become organized and intimate with your money so you can see long term which is more feasible for you.
There are many more topics of mortgage loans and if you want to read more check out this article. If you missed last week’s blog about how to get started saving for your home and mortgage, check it out here! Next topic… refinancing!
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