29 May What is a Mortgage?
Buying a home is almost certainly one of the largest financial transactions you will make in your lifetime. While it may seem overwhelming to borrow a large sum of money, purchasing a home is an excellent investment in your future. Buying a home requires a mortgage loan, which is a legal document signed when purchasing or refinancing a home that gives your mortgage lender the right to claim the property if you do not pay the loans agreed upon.
A mortgage is made up of several components, including:
Collateral: This is the signed legal document stating that you will repay the amount borrowed in addition to interest and other terms.
Principal: This is the total amount of money borrowed to purchase the home. The principal does not include interest, taxes, etc.
Interest: The interest rate is what the lender charges the homebuyer to borrow money. It is expressed in a percentage.
Taxes: A mortgage usually includes taxes, which can vary by the location and value of the home.
Insurance: Required by most mortgage lenders, homeowners insurance protects your home from damage or personal property loss. If you make a down payment of less than 20%, you will also be required to pay private mortgage insurance, which protects the lender if you default on your mortgage.
Interested in moving to Fort Lauderdale, refinancing or buying a new house? We are here to help you! Call us to set up a time when we can review your finances and goals to determine your ideal home loan program.
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