Mortgage Loans

Mortgage Loans - Types, Rates and Quotes

Mortgage loans
A mortgage loan will for most people, be the largest and probably the most important debt you will take on in your lifetime. Here at Guide4Home, we discuss the most common types of mortgages and their rates, as well as the best places online to get a quote.

A mortgage is a loan that finances the purchase of your property. As your home is used as collateral and as a mortgage is a legal contract, the lender has the legal right to repossess your home and sell it to repay the debt if you fail to make the necessary monthly repayments. It is therefore important to have a good understanding of what it takes to obtain a mortgage and to know what it means once you have one.

What are the main features of a mortgage loan? Basically, this product is an amount of money borrowed from a lender over a certain length of time. The amount, usually known as “the principle”, is the purchase price of the house, however, a down payment can be made to reduce the amount that you need to borrow. To pay off the debt to the lender, monthly installments are made. The monthly payment includes the principle, interest, taxes and insurance (known as PITI).

The interest amount, usually expressed as a percentage, is what the lender charges for the borrowed money. The lender may also charge you “points” in addition to the interest rate, which are represented as a one percent of the financed amount. There are two types of interest rates on loans, an adjustable mortgage rate (AMR) and a fixed interest rate. If a mortgage has a fixed interest rate, the monthly payment will not change for the term of the loan, which is great for those needing to know their exact monthly expenditure. However if an adjustable interest rate is chosen the monthly payment will vary throughout the term. The interest will decrease and increase according to the market interest rates; thus mortgage payments may go up and down.

Taxes are another cost and these are expressed as a percentage of the value of your property. These taxes are to help pay for the general running of the community in which you are going to live. The money will be ploughed into projects such as improving roads, developing infrastructure and building schools. These taxes must still be paid even after you stop paying your mortgage loan.

The bulk of your monthly mortgage payment will consist of principle and interest. During the early years, the monthly installments will pay mainly interest. Nearer the end of the term, the payments will be mainly principle. This type or repayment is known as amortization.

If you are looking for a loan to finance the purchase of a property, or if you are simply looking to change your existing loan, this web site aims to provide all the information you need to get you started. As mentioned before, taking out a mortgage is very serious business and should not be taken lightly. A good understanding of what is available within the context of your own financial status will help you find a mortgage loan that is suitable for you.















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