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If you're a first time homebuyer, the last thing you need is
a smoke and mirrors approach to home loans. At Accesable
Mortgage, we understand that clear, simple answers are required.
Although each customized home financing package has its own
variety of features, the concept of a mortgage is really quite
simple: a mortgage is a loan made to
help you finance a home. Your lender advances
you a certain amount of money, which you repay over
a specified period.
Rates, Points & Loan Fees
The total cost of your mortgage is determined by a
number of different factors, most notably the
interest rate, discount points, and loan fees. The
expenses that contribute to the cost of your loan
can be expressed as the annual percentage rate
(APR).
Interest Rate refers to the percentage of
your outstanding loan balance that you pay the
lender each month as part of the cost of borrowing
money. Your interest rate will be based on the
current overall rate environment, as well as your
financial profile and the specific features of your
loan.
Discount Points allow you to "buy down" your
interest rate at closing. One point equals 1% of
your loan amount, and the more points you pay, the
lower your interest rate will be, and the less you
will have to pay each month. How much your rate will
decrease with each discount point you pay will
depend on the specific features of your loan.
Loan Fees are up-front charges to cover the
cost of originating, processing, and closing your
loan, among other things. An origination point is a
loan fee that equals 1% of your loan amount.
Your Monthly Mortgage Payment
Mortgage payments can generally be divided into four
parts: principal, interest, taxes, and insurance.
These are often referred to with the acronym PITI.
Principal refers to the amount of money you borrow
to buy a home, and to the outstanding loan balance
at any point during the mortgage term.
Interest is the cost of borrowing money. As
noted above, the amount of interest you pay each
month is determined by your interest rate.
Taxes assessed by your local government will
likely be collected by your lender as part of your
monthly payments, and then paid annually or
semi-annually on your behalf. This process is known
as an escrow.
Insurance, like property taxes, is normally
collected by the lender in an escrow account.
Insurance offers financial protection, and has two
major components:
Homeowner's insurance, also called hazard
insurance, protects you against damage to your
property caused by fire, wind, or other hazards.
Mortgage insurance protects your lender in
the event that you fail to repay your loan mortgage.
Whether you must pay mortgage insurance usually
depends on the loan program and the size of your
down payment.
If you are new in the market for a new home, and not
sure how much you can afford, let us
analyze your needs
based upon current financing rates in the Ohio metro
area.
Some related help on forum!
Make no hasty decisions about mortgage. Get assistance from an experienced specialist about what you should do, as well as read articles on various topics relating to mortgage. You may get these benefits if you visit the MortgageFit Forums. |
