3 Important Factors for Choosing a Mortgage
When buying your first home, choosing a mortgage can seem very overwhelming. Here is some basic terminology that you should know in order to make an informed decision.
- Term - The length you have to pay off a mortgage is called the term. Mortgage terms range between 10 years and 30 years. A mortgage is like any loan, the longer the term, the lower your monthly payments will be. However, an important mortgage tip to note - in many cases, a shorter-term mortgage will result in a lower interest rate.
- Rate - The "rate" is the interest rate, which is the amount you are charged by the lender to borrow money from them. Interest rates are determined based on your credit rating, the amount of your down payment, the amount of money you make and the value of your home.
- Cost - When dealing with mortgages, costs typically refer to closing costs. Just about every mortgage has closing costs associated with it, and if you get a no closing cost loan, it means the mortgage company is making a commission on your loan that is large enough to cover the closing costs for you. Closing costs include an appraisal, recording fees, deeds, and attorney or notary fees. Be on the look out for junk fees!
