Find information and articles about Mortgage Primer: A Quick Run Through of the Basics. Explore our information portal for homeowners and home enthusiasts.
Find information and articles about Mortgage Primer: A Quick Run Through of the Basics. Explore our information portal for homeowners and home enthusiasts.
New Home Loans Guide > Mortgage Primer: A Quick Run Through of the Basics
View New Home Loans Guide RSS feedAre you familiar with home loan terminology like adjustable rate, credit score and interest-only? Knowing this home loan jargon can help you become a savvy home buyer and allow you to better understand a realtor or lender. Read this article for explanations of these home loan terms.
A mortgage is probably the most confusing consumer loan. Tons of variations, knee-deep in lingo, the home loan world is dreadful for the first timer. Here is a quick run through.
A mortgage is consumer loan used to purchase real estate. According to reader edited encyclopedia Wikipedia.org, a mortgage is best described as 'the method of using property as security for the payment of a debt.' A mortgage is a collateral backed loan.
A mortgage rate is the basic cost of borrowing the cash from a lender. It is the interest rate you pay to use the money. Interest rates are divided into two main categories: variable rate and fixed rate. The rates are set by a number of factors, but mainly by consumer saving and borrowing.
Fixed rate mortgages are the most popular. The 30-year fixed mortgage holds to largest share of loan applications. A fixed rate loan carries the same interest rate over the life of the loan. Many people desire the security.
Adjustable rate mortgages (ARM) are really short term loans that fluctuate after a certain number of years. The Federal Reserve has a huge influence on ARMs. Each time the central bank makes a decision to raise rates, ARMs move accordingly.
Interest only loans became very popular in 2002-2003. These loans allow a borrower to pay only interest for the first few years of the loan, meaning lower payments. This option is popular with people who expect to make more money in the future, and with people who expect to own the home for only a few years.
Your credit score is very important when determining the cost of your loan. Lenders use your credit score to decide on your credit worthiness. A good score means you are less likely to default on the loan. A bad score means you are a risky borrower, so the lender is less willing to lend to you.
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