Mortgage - This is one word that we hear every now and then all over the news, social media and newspapers and probably ponder about the rigorous math and calculations it entails.
Taking a mortgage is such a huge step towards future home ownership. To some, it’s such a big priority in their lives that they start saving money for the loan periodically(monthly, quarterly etc) annually for quite a number of years.
Investopedia.com states that the most popular mortgages are a 30-year fixed and a 15-year fixed. Some mortgages can be as short as five years; some can be 40 years or longer.
Furthermore, stretching payments over more years reduces the monthly payment but increases the amount of interest to pay.
Mortgage Definition
According to Wikipedia, a mortgage loan or simply mortgage is a loan used either by purchasers of real property to raise funds to buy real estate, or alternatively by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged.
In other basic terms, it is a type of loan from a bank or a financial institution you can use to buy or refinance a home.
Like any other loan, mortgages require one to pay principal plus interest. There are 2 major types of interest rate types; fixed-rate mortgages and adjustable-rate mortgages.
For purposes of this post, we will only focus on the fixed-rate mortgages.\
To find out more about adjustable-rate mortgages, consider checking out the below link;
Mortgage
What Is a Fixed-Rate Mortgage Payment?
According to investopedia.com, “With a fixed-rate mortgage, the borrower pays the same interest rate for the life of the loan…If market interest rates rise, the borrower’s payment does not change. If interest rates drop significantly, the borrower may be able to secure that lower rate by refinancing the mortgage. A fixed-rate mortgage is also called a “traditional” mortgage”.
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