Starting the mortgage process is the first step toward purchasing a home. There are a variety of mortgages for each type of homebuyer. The best way to find out what will work best for you is to talk with a mortgage broker.
To understand the mortgage process better, here is a list of some of the basic principles of all mortgage loans. If you have any questions, or would like us to assist you, contact us today.
The home is used as security to back up the loan. A lender can force sale of the home if the borrower defaults by failing to make scheduled payments.
The larger the loan compared to the value of the home, the more risky for the lender and, often, the more expensive the loan will be.
Interest earned by the lender always is equal to the periodic interest rate times the outstanding principle balance of the loan. The periodic interest rate is the annual interest rate divided by the number of payments in the year (usually one per month).
The required payment usually is a bit larger than the interest due so that some of the loan principal is repaid with each payment. This process is called Amortization and is why most mortgage loans can be retired when all the monthly payments have been made.