Amortization

Amortization

Amortization is the process by which a mortgage loan is paid off over time through structured, regular payments. This process occurs within a specified time frame and varies based on the terms of your mortgage.

Your monthly mortgage payments are allocated to cover both the principal (the original loan amount) and the interest charged on the loan. The way these funds are distributed changes over the course of the loan. In the early stages of the mortgage, a larger portion of your payment goes toward interest. As time progresses, this distribution shifts, and a greater share of your payment is applied to the principal balance.

The amortization schedule provides a detailed breakdown of your monthly payments, indicating how much goes toward principal and interest. Understanding this breakdown can help you make informed decisions regarding prepayments or refinancing options. For instance, if you foresee a significant amount going toward interest, you may consider opting for a loan with a shorter amortization period. Therefore, reviewing and comprehending your amortization schedule is crucial for effective financial planning concerning your mortgage.

Reverse Mortgage

A reverse mortgage’s loan balance grows over time since payments start only when the borrower moves or dies. A popular choice for seniors to supplement income.

PMI

With conventional loans, you must pay for Private Mortgage Insurance (PMI). Lenders require it to protect against losses if a borrower defaults.

Closing Checklist

Closing checklists help you keep track of what needs to be done before closing on a home. They include items like payments to make and documents to sign.

Earnest Money

You pay the earnest money deposit after the seller accepts your offer. This deposit shows that you’re serious about buying the home and helps secure the deal.

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