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What is a Mortgage?
A mortgage represents a loan or lien on a property/house that has to be paid over a specified period of time. Think of it as your personal guarantee that you'll repay the money you've borrowed to buy your home. Mortgages come in many different shapes and sizes, each with its own advantages and disadvantages. Make sure you select the mortgage that is right for you, your future plans, and your financial picture.
What is an amortization schedule?
The month-by-month allocation of your monthly payment to the loan's interest and principal is called an amortization schedule. With most loans you pay off the interest on the loan before you pay off the principal (or the actual amount you borrowed). Your lender will provide an amortization schedule to show you how the percentage of your principal paid off increases with every payment, while the percentage of interest decreases.
Choosing the right mortgage
Once you decide on the mortgage you want, do your homework. Different lenders offer different rates, points, and fees. Ask around and compare.
Understanding the benefits of different mortgage offerings can be a complex process. How do you figure it all out?
A mortgage loan is a loan used to buy a home. The home is the collateral for the loan and acts as a guarantee that the loan will be repaid.
There are many mortgage choices available to you. Selecting the right one that fits your needs is important.
Loans for first time homebuyers. These affordable financing programs can help make it easier to buy a home since they require little or no money down and offer flexible credit and income guidelines.
Fixed-rate loan.
The interest rate is set for the full length of the loan. Because the monthly payment for principal and interest stays the same for the life of the loan, it's easier to plan a budget.
Adjustable-rate loan. An adjustable-rate mortgage (ARM) usually starts with a lower initial interest rate than traditional fixed-rate loans. After a set initial payment period (usually 1, 3, 5, 7 or 10 years), the interest rate may change periodically based on market conditions. As the rate changes, your monthly payment changes. ARM loans feature an adjustment "cap" which limits how much the interest rate can go up. This helps protect you from large increases in your monthly payment. If you plan on being in your home for a shorter period of time, or expect your income to increase over the years, an ARM loan may be right for you.
Jumbo loans. These are loans for homebuyers who require larger loan amounts. Bank of America offers a variety of jumbo programs for up to $2 million. They are available in both fixed-rate and adjustable-rate mortgages. They generally have slightly higher interest rates because of the amount of money borrowed.
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