Owning your own home is like have the keys to a world that is a new realm of possibilities and responsibilities. You have entered a world where you are now officially an adult. Prior to anything like this before the word mortgage was unfamiliar and foreign almost. Now it is something that will constantly be on the back of your mind, knowing that you are now responsible for a whole lot more than you were for. It is a huge undertaking when buying a home and the mortgage that comes along and needs to be taken care of each month.
What is a Mortgage?
The word mortgage comes from the French term “death contract” which funny enough feels like that some days. Signing over yourself for the long haul. It now stands as a generic term for describing the loan that is taken out to pay for the home you want to buy. This loan is the amount that is owed on the property. Everyone has a mortgage that is different from another. Depending on the amount the property is worth and what kind of mortgage loan is being taken out can determine what your monthly mortgage payment calculates out to be.
Another way to look at what a mortgage is to think of it as a lean on the property in question. You are essentially borrowing money from a bank or lender to pay for a property. That monthly payment is your mortgage. In the event the amount owed or what you pay each month is not met, you then owe that financial institution, in which the home is acquired back by the bank.
Mortgage Loan Types
Mortgage loans can be a tricky thing to figure when determining which option is best suited for you. There is a fixed rate mortgage and an adjustable rate mortgage. Looking at these two options can help you decide which is the best for you when taking on mortgage loan.
A fixed rate mortgage the payments and interest rate are locked in for the life of the loan. It can never go up or down, which is a nice thing to have knowing that your monthly mortgage cannot go up for the time you pay. Giving you a constant safety net knowing the amount each month you need for your mortgage payment, although, property taxes can and do up throughout this time frame.
An adjustable rate mortgage is where the rates are fixed within a certain amount of time, from there the numbers can go up or down depending on the market index. This can be risky yet doable, and is a good alternative when a fixed rate mortgage is not a possibility.
More on Mortgage
Depending on which route you choose to go, you still have a few things to go through when wanting to take on the mortgage payment of your very own house. Credit scores are looked at, your debt to income ratio and assets. This can give lenders an idea of what you are capable of taking on with the lifestyle you lead financially. Taking on your own mortgage can be a life altering event, your leap into adulthood. But one that can bring more life experiences and memories that will last a lifetime.