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MortgageA mortgage is security for a loan on the property that you own. It is your personal guarantee to repay the loan as well as a pledge of the property as security for the loan. If you're shopping for a mortgage. You have options which consider the amount of your down payment, how much you can afford monthly, and the type of loan you are attracted to. There are two basic types of mortgages: Fixed interest rate with fixed monthly payments & Adjustable (ARM) with variable rates and changing monthly payments. Generally, lenders require 10% down for purchases, or 10% equity for refinances. To avoid mortgage insurance or PMI, the requirements are 20%. Also, you can expect to pay closing costs, generally three to four percent of the loan amount. For refinance loans, these closing costs can be financed into the loan amount so that you don't have to contribute cash if necessary. Probably the most important factor when shopping for a mortgage is the annual percentage rate (APR). The APR is the "bottom line" and includes all the costs of credit, such as interest, points, and other charges required as a condition to the loan. Under the Truth-In-Lending Act, lenders are required to disclose the APR to provide you with a uniform and simple way of comparing loans and to prevent hidden finance charges. Also important is to compare multiple mortgage quotes when shopping for a mortgage. When you have several offers in front of you, you can see where the savings are and the benefits of each lender.
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