Purchasing a home is a big decision. Homes are one of the biggest investments that a person is going to make in their lifetime. When applying for a mortgage it is important that a person understands the different types of mortgages and how much interest they are going to be paying.
Like other types of loans mortgage approval will be based on a person’s credit history as well as their income. A person has to have good credit to show that they pay their loans back on time. This will also help a person get lower interest rates. A person will have to show that they have steady employment and that they are able to make their mortgage payments every month.
There are different types of mortgages. Many people choose to take out a 30 year mortgage. This means they have to pay back the money that they borrowed for their home in a 30 year time period. Usually with this type of loan the monthly payments are lower but a person will be paying more in interest in the long run. The 15 year mortgage is also a popular choice. A person will have 15 years to repay their mortgage. While their monthly payments will be higher they will end up paying less money in interest than a 30 year mortgage.
There are two common types of interest rates of mortgage. There is the fixed interest rate. A person will pay the same percentage of interest for the duration of the mortgage. The flexible or variable mortgage rate will vary based on the economy. The interest rate can be low at times but it may also rise to a higher percentage. When applying for a traditional mortgage a person usually has to have twenty percent of the purchase price to put as a down payment. There are a number of programs that can help a person if they do not have this percentage available.
These is just some common information regarding a home mortgage. Rates and approval will vary based on the length of the loan, the amount being borrow, and a person’s credit score.