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.

Home Inspection

As a borrower, you might need a home inspection, where a professional checks the house’s condition. The report will highlight any issues found.

APR

The annual percentage rate (APR) is the full cost of borrowing money, shown as a percentage of your loan. It includes the interest rate plus all loan fees.

Jumbo Loan

Jumbo loan is a mortgage that exceeds Fannie Mae and Freddie Mac limits. It’s ideal for buying expensive homes if you have a large down payment and good credit.

Home Equity Loan

As a homeowner you can borrow money using your home’s equity as collateral. This is called a home equity loan or a second mortgage, as it adds to your main loan

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