| With the numerous mortgage options being offered by | | | | adjustable rate. A fixed rate mortgage loan refers to a |
| mortgage lenders today, newcomers to the arena | | | | loan that features a fixed interest rate and fixed |
| may find the scenery just plain confusing. If you're | | | | monthly payments for the entire life of a loan. |
| planning to get a mortgage loan, and you don't know | | | | Mortgage lenders typically offer 15- and 30-year fixed |
| where to start, here is a list of the basics that you | | | | rate mortgage loans. An adjustable rate mortgage loan |
| need to know about. | | | | features lower initial rates, which may change as |
| Mortgage Defined | | | | frequently as every six months. Borrowers who prefer |
| A lot of people tend to use mortgage to mean a | | | | going the least expensive way can opt for the 15-year |
| mortgage loan. A mortgage refers to the document | | | | mortgage loan. However, this type of loan is suitable |
| that you, as a borrower, sign and entrust to a | | | | for those who can afford the higher monthly mortgage |
| mortgage lender in return for a mortgage loan. If you | | | | payments. For people who plan on moving to another |
| default on your mortgage payments, the mortgage | | | | home in less than eight years, may find it more |
| lender, through the document called mortgage, has the | | | | appropriate to settle for a 30-year mortgage loan, with |
| right to take possession of your property. The | | | | its lower monthly mortgage payments. |
| borrower, the one who applies for a mortgage loan, is | | | | Mortgage Loan and Down Payment |
| referred to as the mortgagor since it is the borrower | | | | The down payment made on a house is usually in the |
| who hands the mortgage over to the mortgage lender. | | | | range of five to 20 percent. The down payment |
| Mortgage Loan | | | | precedes the mortgage loan, or the amount borrowed |
| The basic premise of a mortgage loan is that it is a | | | | on the residual cost of the house. Thus a house that's |
| type of loan used to pay the difference between the | | | | worth $450,000, you will require a down payment of |
| purchase price and the cash available for a down | | | | $90,000 and a mortgage of $360,000. |
| payment. When mortgage lenders let you use their | | | | Basic Mortgage Interest |
| money, they will charge you a fee for it. The biggest | | | | Interest rates are prone to fluctuations, which make |
| fee is called the interest, which is expressed as an | | | | them highly unpredictable. There are two popular |
| annual percentage of the loan. Usually, it is in the range | | | | indices of short-term interest rates. The first one is the |
| of a low 5% and a high 12%. When you apply for a | | | | rate banks offer for six-month certificates of deposits |
| mortgage loan at one of these financial institutions, they | | | | (CDs). The second one is the interest on Treasury Bills, |
| will also charge you with an origination fee, which may | | | | or T-bills. Mortgage lenders operate by charging around |
| include application fees, credit report fees and appraisal | | | | 2.5% over the publicly quoted interest rate. Compared |
| fees. The annual percentage rate (APR) consists of | | | | to short-term rates, long-term rates are higher since |
| the base interest rate with points and other fees. | | | | they expose lenders to greater risk when lending |
| Mortgage Loan Rates | | | | money for a long time. |
| The mortgage loan comes in a fixed rate and | | | | |