What is a Mortgage?
Mortgages are a form of borrowing money to purchase a property. Mortgages often come with specific terms and conditions, such as how much you can borrow, what your interest rate or APR will be, and how long it will take to pay off the loan.
There are three different types of mortgages:
1) Fixed-rate mortgage: This is when you agree to a specific interest rate and repayment term in advance and your monthly payment remains constant throughout the life of the loan.
2) Adjustable-rate mortgage (ARM): With an ARM, your interest rate changes periodically following preset conditions.
3) Hybrid mortgage: This is when you get benefits from both fixed-rate and adjustable-rate mortgages.
Mortgage loans are often available for those with good credit scores and money to put down on the property they want to buy. If you have bad credit, be prepared to pay a high-interest rate on your mortgage.
Many people don't think about mortgages until they decide to buy their own homes. That's when they learn all of the ins and outs of what it takes to get a mortgage. Some people are lucky enough to have parents or other family members who can co-sign their application, but others will need to find someone else who has good credit and has never had any unpaid bills, like medical bills.
Understanding the Cost of Homeownership and Why FHA Loans Might be Right for You
FHA loans are usually reserved for borrowers who have a good credit history and a stable job. While this type of loan can be considered as an insurance against financial instability, it comes with the caveat that the borrower will need to pay back the loan in full at some point over the course of 30 years. Therefore, borrowers should make sure they understand exactly what they are getting themselves into before signing on the dotted line.