Whats A Mortgage

What’s a​ Mortgage?
Buying a​ home is​ an​ exciting prospect .​
Choosing the​ location,​ the​ floor plan and finally sealing the​ deal .​
There is​ an​ important element that exists in​ most home sales and that is​ the​ mortgage .​
Whenever you​ purchase a​ home and you​ don’t pay the​ full price in​ cash,​ you​ have to​ obtain financing .​
This type of​ financing is​ a​ mortgage .​
When you​ take out a​ mortgage you​ are using the​ property as​ collateral .​
If you​ fail to​ repay the​ mortgage on​ the​ terms you​ agreed to,​ the​ bank or​ lending company has the​ right to​ take over possession of​ your property .​
Therefore it’s very important to​ choose a​ mortgage that will fit into your budget .​
There are several types of​ mortgages available today .​
One of​ these is​ the​ fixed rate mortgage .​
When you​ take out a​ fixed rate mortgage it​ means that you​ are taking out a​ mortgage for a​ specific amount of​ time,​ usually 10,​ 15,​ 20 or​ 30 years .​
When you​ apply for the​ mortgage loan,​ you​ agree to​ an​ interest rate .​
This interest rate will be in​ effect for the​ life of​ your mortgage .​
Your monthly payments will be set and you​ will repay the​ lending company for the​ agreed to​ term .​
Another type of​ mortgage is​ the​ adjustable rate mortgage .​
With this type of​ mortgage the​ interest rate applies for a​ shorter period of​ time .​
Once that time has passed,​ usually a​ year,​ the​ interest rate in​ effect at​ that time is​ applied to​ the​ mortgage .​
If interest rates are fluctuating when you​ are considering purchasing a​ home,​ it​ is​ advisable to​ consider an​ adjustable rate mortgage .​
The reason is​ that if​ you​ lock yourself into a​ fixed rate mortgage and then interest rates plummet,​ you’ll be paying much more than you​ would have otherwise .​
When you​ go to​ apply for a​ mortgage the​ loan officer will explain in​ detail the​ differences between the​ two kinds of​ mortgage .​
They will also advise you​ as​ to​ which one is​ better for you​ in​ terms of​ your financial goals .​
If you​ are already a​ homeowner and are older there is​ another type of​ mortgage that applies to​ you​ .​
It’s called a​ reverse mortgage .​
a​ reverse mortgage is​ when the​ homeowner wants to​ enjoy some of​ the​ equity they have already acquired in​ their home .​
Each month the​ homeowner is​ paid any amount of​ money .​
This money is​ charged interest .​
Once the​ homeowner passes away or​ sells the​ property,​ the​ bank takes the​ total of​ the​ reverse mortgage payments and any additional interest out of​ the​ proceeds of​ the​ home’s sale .​
This works very well for retired people who want to​ enjoy the​ rest of​ their live without having to​ worry about money .​
They are still able to​ live in​ their homes and at​ the​ same time,​ the​ reverse mortgage allows them to​ have the​ extra cash they wouldn’t have otherwise .​
Mortgages are essential to​ anyone buying a​ home and with some careful thought and consideration you​ can choose a​ mortgage that saves you​ money and allows you​ to​ own your own home that much sooner .​
Consult with a​ mortgage professional and with their advice and knowledge,​ you’ll have the​ mortgage you​ need.

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