Mortgage Calculator is based on your principal and interest payments. Taxes, insurance and HOA dues will also need to be considered. Contact Ryan to help you determine these additional payments.
To ensure a smooth and timely transaction, it is important to work closely with your lender to meet all loan application and closing disclosure deadlines.
- Make sure your lender has ALL docs (paystubs, W2s, bank statements) from buyer BEFORE contract. The seller will require a solid pre-approval letter from your lender.
- When you receive documents from your lender, sign and return them the same day.
- When your lender requests other documentation from you, provide them to your lender within 24 hours.
- While shopping lenders is often beneficial, doing so after you are under contract with a property, will likely cause a typical 30 – 45 day closing period to start over, due to TILA-RESPA laws. So establish your lender early, and before going under contract.
The modern mortgage market offers a variety of mortgage loans catering to the needs of home buyers. The titles and details of these plans can become confusing, especially as new types are introduced continuously. You can make sense of these loan types, however, if you understand the basic principles that govern all mortgage loans. Again, you can look to your real estate professional for assistance.
Basic Principles of all Mortgage Loans
- The home is used as security to back up the loan. A lender can force sale of the home if the borrower defaults by failing to make scheduled payments.
- The larger the loan compared to the value of the home, the more risky for the lender and, often, the more expensive the loan will be.
- Interest earned by the lender always is equal to the periodic interest rate times the outstanding principle balance of the loan. The periodic interest rate is the annual interest rate divided by the number of payments in the year (usually one per month).
- The required payment usually is a bit larger than the interest due so that some of the loan principal is repaid with each payment. This process is called Amortization and is why most mortgage loans can be retired when all the monthly payments have been made.
All mortgage loans have one of the following features:
- Fixed payment and fixed interest rate – fixed rate mortgages
- Fixed rate but variable payment – graduated payment mortgages
- Variable rate and variable payment – adjustable rate mortgages
As you learn more about the types of financing available, you will notice that some loans appear to have more favorable terms. That may indicate that those loans are, indeed, bargains (and it does pay to shop around), but usually it means that those loans could have some feature that is less appealing to borrowers. For example, shorter-term loans often have slightly lower interest rates compared to longer-term loans. However, the monthly payment for the same amount of principal may be higher because of the shorter term. Variable rate loans usually have much lower interest rates to compensate for the risk the borrower accepts that interest rates will rise in the future.