Jun 20 2008
Mortgage Loan 101: What You Need to Know
Doing your homework and shopping from a variety of mortgage lenders and brokers will save you thousands of dollars over the life of your mortgage. Here is a basic primer of mortgages and mortgage terminology.
A mortgage is basically a loan secured by your home. The lender charges you interest at a specified rate for use of their money. This interest rate can be fixed at a certain percentage for the duration of the loan, or it can be an adjustable interest rate. if you choose a loan with an adjustable interest rate your lender will periodically change the amount of interest rate it charges you at regular specified intervals. The interest rate you will be charged will be tied to some index, such as the prime interest rate for example, plus a premium amount charged by your lender.
The term of your mortgage is the duration the lender grants you to pay back the loan. Common term lengths are 5 years, 15 years, and 30 years. The longer the term length you select for your mortgage, the lower your monthly payments will be; however, you will pay a higher interest rate for longer terms than you would for shorter term lengths.
There are steps you need to take before shopping for a mortgage loan. You should make sure your credit is in order and take steps to protect your credit while shopping for a mortgage. A free mortgage guide can show you how to do this and could save you thousands of dollars.
You will also be able to avoid common mistakes many homeowners make while going through the mortgage process.
Louie Latour has twenty years of experience in the mortgage industry as a mortgage broker.
He is the owner of Mortgages Refinance Advisor, a mortgage help site devoted to saving homeowners money with a free guidebook Mortgage Refinance: What You Need to Know.
Sign up for your free guide today at: http://www.refiadvisor.com
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