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Mortgage 101: Terminologies You Need to Know

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If you have been looking for the ideal house for you and the whole family or for your business, you may have already encountered the word mortgage. This is the savior of every real property purchaser as it allows them to get what they need according to their budget and convenience.

Once you have explored the world of mortgages, you may also have encountered words that are so strange and foreign that you need a thousand dictionaries and an encyclopedia for you to fully grasp their meaning.

But here in Coldwell Banker Olympic, we make everything easier for our clients as we provide real estate services in E. Imperial Hwy. La Mirada California. So buckle up as we define to you some terminologies you need to know with regards to mortgages:

  • Loan amount
    “The amount specified in the mortgage contract that the borrower agrees to pay back. The amount of points included and various other costs make the loan amount different from the quantity of cash distributed by the lender.” – www.investorwords.com

    The amount you borrow needs to depend on your:

    • Income
    • Expenses
    • Down payment
    • Existing mortgage rate

    Do not pressure yourself by loaning an amount that is too high for you to pay.

  • Locking
    “An agreement between a borrower and a lender that allows the borrower to lock in the interest rate on a mortgage over a specified time period at the prevailing market interest rate.” – Investopedia
  • Monthly payment
    “Debt service or another liability one must pay on a monthly basis.” – www.financial-dictionary.thefreedictionary.com

    This is the amount the purchaser needs to pay every month up until the full payment of his or her mortgage. Your monthly payment is specified on documents including the following:

    • Calculations
    • Due date
    • Consequences

    We all have our own unique circumstances and the monthly payment you need to shell out should be one that you can make comfortably.

  • Mortgage features
    Home loans are not just black and white. In fact, there are a lot of other types that come with it. Let us discuss each.
    • Fixed Rate Mortgages (FRM)
      The rate of FRMs does not change. If your mortgage is $100,000, the amount will be divided into equal parts. So let us say you need 3 years to pay the whole amount, you are required to pay $2,777.78 every month.
    • Adjustable Rate Mortgages (ARM)
      This is a more adjustable rate as it changes according to the status of the economy. The rates of ARMs drop whenever the economy goes down and rises when it goes up.

    There are still other types of mortgage features and if you want to know more, contact our experts here at Coldwell Banker Olympic.

  • Mortgage rate
    “Mortgage rates are the rate of interest charged on a mortgage.” – Investopedia

    This is determined by the lender and can either be fixed or fluctuate.

  • Term
    Mortgage term refers to the number of years a property owner needs to pay for their mortgage. 15 and 30-year loans are the most popular ones. If you have a shorter term, your interest rate is lower but if your term is longer, it means that your interest rate is higher but your monthly payment is more affordable.
  • Closing Cost
    “Closing costs are fees paid at the closing of a real estate transaction. This point in time called the closing is when the title to the property is conveyed (transferred) to the buyer. Closing costs are incurred by either the buyer or the seller.” – Wikipedia

If you want to know the basics about mortgages or if you want to be assisted in buying a house or property with a mortgage, our real estate services in E. Imperial Hwy. La Mirada California is more than willing to help you out.

Reach out to us at www.cb-olympic.com and get the assistance you need and deserve from experts running our agency and making the services of Coldwell Banker Olympic possible. You can also call us at 800-409-5385 and do not forget to add and contact us on Facebook and share the information you just learned.

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