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.

Mortgage Closing

The mortgage closing is the final step in buying a home. It’s when the property title transfers to you, and funds are exchanged with the seller.

FHA

The Federal Housing Administration (FHA) is a government agency that insures FHA-approved mortgage loans to promote affordable housing in the U.S.

Credit History

Lenders review your credit history, which reflects your borrowing and payment habits, to gauge your likelihood of repaying a mortgage loan.

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