Common Questions About Financing a Home

What is a mortgage?

A mortgage is a loan obtained to purchase real estate. The "mortgage" itself is a lien (a legal claim) on the home or property that secures the promise to pay the debt. All mortgages have two features in common: principal and interest. Principal is the amount you borrow to purchase the home. Interest in the percentage you pay the lender for lending you the funds.

Can I pay off my loan ahead of schedule?

Yes! By sending in extra money each month or making an extra payment at the end of the year, you can accelerate the process of paying off the loan. When you send extra money, indicate that the excess payment is to be applied to the principal.

How large of a down payment do I need?

There are mortgage options now available that only require a down payment of 2.00% of the purchase price. But the larger the down payment, the less you have to borrow and the more equity you will have. When considering the size of your down payment, remember that you will also need money for closing costs, moving expenses, repairs, and decorating.

What factors affect mortgage payments?

The amount of the down payment, the size of the mortgage loan, the interest rate, the length of the repayment term, and payment schedule will all affect the size of your mortgage payment.