This is How to Look at a Mortgage Under a Microscope

For first time home buyers, you may have an idea of what a mortgage is but you need to know how to look at a mortgage and learn little bit more about it in order make sure you can understand your process of getting one.

A Mortgage is More than a Home Loan

First, a mortgage is more than just a home loan. This type of loan has a security set on it by the home, or real estate, that you will be purchasing. A mortgage is necessary for anyone who will not be paying for a home in full, in cash. You should also keep in mind that every mortgage is not the same.

Most mortgages are paid in monthly installments but there are some that will require a lump sum payment at the end of the loan. Not paying on the loan during the required payment times will cause your loan to go into a default. This can lead to a home owner losing their home, or fore closure.

Terms of a Mortgage

Next, you need to be aware of some terms that are involved with all mortgages. The Principal is considered the total amount of the loan that you borrowed. This amount does not include the interest.

The interest is what the lender will charge a buyer for actually borrowing the loan. Interest rates can fluctuate depending on the type of loan that you choose. Taxes are actually property taxes that you would pay to the city or county that your property is located within.

Insurance is what you, as the buyer, would pay in order to cover any possible damages to your home. Insurance is an important and necessary item when you become a home owner.

It's important to consider all factors regarding your home loan so you won't have any surprises along the way!