What is a mortgage?

Greene
Greene July 20, 2022

What is a mortgage?

Here’s a simple breakdown of what it is and how it works for our first-time home buyers.

A mortgage is a loan that helps you cover the cost of a home.

Mortgage lending and terms can be quite confusing.

Here are some simple answers to questions we hear all the time.

Q: What is a down payment, and why do I need that?

A: It's an initial payment made when something is bought on credit or a loan. Typically, a percentage of the home’s value. Down payments can be a wide range of percentages depending on the loan type, the credit strength of the borrower, and the chosen lender. A larger down payment can help improve your chances of getting a lower interest rate

Q: How is a mortgage paid back?

A: It’s paid back in the form of a monthly payment.

Q: How do I get a mortgage?

A: Many people start with banks or financial institutions they already work with. Others work with non-bank lenders like mortgage brokers.  Mortgage can advise you through a larger variety of options to find a loan that’s right for you

Next steps?

Finding the right mortgage before finding the home.

Finding something that works for you and your financial situation is imperative.

First, get that pre-approval. This entails the mortgage broker or financial institution pulling your credit report, credit score and debt to income, and other details of your financial profile. This will all calculate the max price of the home you can afford.

There are several different mortgage loan types.

Fixed rate, adjustable rate, and conventional. 

Our Matt Perkins speaks to Melanie Boyajian from Acadamy Mortgage about the loan types. Here is is more now on our podcast GRGTalks

 

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Written by: Greene