Mortgages

Determining which mortgage is right for you ultimately will require a mortgage specialist. Once you decide to move forward, I can provide a list of specialists for you to choose from. You can elect to work with one of these proven professionals or choose your own, it is up to you.

The following is a brief informative explanation of some of the various types of mortgages available.

Home mortgages may have a primary mortgage and a secondary mortgage. These are called First and Second Mortgages. Tthese terms relate to the priority on the title for a home in the event of default on making payments.

We are most interested in the First Mortgage or the principle loan. Home loans are structured to pay a combination of principal and interest each month.

The principle or balance is the total amount that you owe and pay monthly reducing this balance each month. So, over time the principle is reduced until there is a zero balance. This is usually structured to be paid off over a 30-year term. there are also 15 year terms and now some 40+ year terms available. However, different terms and faster payments can reduce the overall length of a mortgage.

The interest is the remaining portion of your mortgage payment. The interest is based upon the yearly rate and then applied to the outstanding balance. The combination of principle and interest are structured to keep a fairly level monthly payment. So, over time, your payments on your principle increase and payment toward interest decreases.

Home loans come in a variety of lengths like 10, 15, or 30 years or more. Normally, the shorter the loan period, the larger your monthly payment will be … and the greater the amount paid toward paying down the principal each month.

 

Own Your Home Faster – turn a 30 year into a 15 year payment

There are several ways to own your home faster, each one affects the principal balance.

You can:

Make two payments per month – but for half the amount. So if your mortgage payment is $2000, then make one payment on the 15th and the other on the 30th. Set this up with your mortgage company before you begin doing this to ensure that there are no prepayment penalties and that the payments will be applied correctly. By applying this method to a typical 30-year term, you will own your home in 21 years instead of 30.

Make extra payments per month. This directly affects your principle and if done consistently will turn a 30 year term into a 15 year term with as little as an extra $100 per month. Check with your mortgage company first.

One time during the year, when you have extra money, make an extra full mortgage payment. This can turn a 30-year term into a 12-year term. Check with your mortgage company first.

In all cases, check with your mortgage company first for restrictions, and to ensure the method you have chosen will do what you want it to do to work with the type of loan that you have.