Chances are you already know something about borrowing money. From car loans to credit cards, the basic concept is the same. When it comes to Mortgages though, there is more to consider. This information will help you to better understand and make sense of Mortgage Mortgage The conveyance of an interest in real property given as security for the payment of a loan. View Glossary Page loans and what to expect when you are ready to buy your new home.^†

How do I get a Mortgage?

Before you apply, assess your finances to make sure a Mortgage Mortgage The conveyance of an interest in real property given as security for the payment of a loan. View Glossary Page is right for you with these 5 Financial Steps. Do some research to find a reputable lender—large financial institutions, credit unions and community banks are all good options, and government Guaranteed Loans Guaranteed Loans A loan guaranteed by Veteran's Administration or Rural Development. The guarantee protects the lender against loss incurred by a mortgage default. View Glossary Page may be  available such as FHA (Federal Housing Administration) or VA (Veterans Affairs) if you qualify.

What types of Mortgages are there?

Fixed-rate Mortgages are the standard home loan: You pay a set amount every month and the Interest Interest A share or right in some property. Also, money charged for the use of money (principal). View Glossary Page rate never changes. They’re best for homebuyers who plan to stay for number of years and want predictable payments. A 15-year fixed-rate  Mortgage Mortgage The conveyance of an interest in real property given as security for the payment of a loan. View Glossary Page usually has lower Interest Interest A share or right in some property. Also, money charged for the use of money (principal). View Glossary Page than a 30-year, and is best for homebuyers who want to pay off the Mortgage Mortgage The conveyance of an interest in real property given as security for the payment of a loan. View Glossary Page quickly, and pay less overall with higher Monthly Payments. Fixed rate Mortgages are a great opportunity to lock in a low Interest Interest A share or right in some property. Also, money charged for the use of money (principal). View Glossary Page rate and save money over time.

Adjustable-rate Mortgages have Interest Interest A share or right in some property. Also, money charged for the use of money (principal). View Glossary Page rates that vary based on the market. They’ll often have a Fixed Interest Rate Fixed Interest Rate An interest rate that does not change during the loan term. View Glossary Page for the first 3, 5 or 7 years, and then adjust annually for the rest of loan’s duration. These Mortgages start with lower Interest Interest A share or right in some property. Also, money charged for the use of money (principal). View Glossary Page rates than fixed-rate Mortgages, which makes them more appealing, but once the adjustable rate kicks in, your Monthly Payment Monthly Payment Usually, the amount of PITI (principal, interest, taxes, and insurance) paid each month on a mortgage loan. View Glossary Page  could go up or down significantly.

What’s in a Monthly Payment?

Your monthly Mortgage Mortgage The conveyance of an interest in real property given as security for the payment of a loan. View Glossary Page payment includes an amount paid toward Interest Interest A share or right in some property. Also, money charged for the use of money (principal). View Glossary Page and an amount paid toward the  Principal Principal Amount of debt, not including interest. The face value of a note or mortgage. View Glossary Page . Lenders will often include property tax and homeowner’s insurance in your Monthly Payment Monthly Payment Usually, the amount of PITI (principal, interest, taxes, and insurance) paid each month on a mortgage loan. View Glossary Page , hold them in an Escrow Escrow Funds held by the lender, set aside for payment of taxes and possible property and mortgage insurance and other recurring charges against real property. (Monthly mortgage payments usually include principal, interest, and escrow amounts.) Also a procedure whereby a disinterested third party handles legal documents and funds on behalf of a seller and buyer. View Glossary Page account and then pay them on your behalf when they’re due. (Those amounts are reassessed annually.) If your loan requires  private Mortgage Insurance Mortgage Insurance Insurance protecting the mortgage lender against loss incurred by a mortgage default. View Glossary Page (PMI), that will be included in your Monthly Payment Monthly Payment Usually, the amount of PITI (principal, interest, taxes, and insurance) paid each month on a mortgage loan. View Glossary Page , too.

What are Closing Costs?

Purchasing a home involves a number of services: Appraisal Appraisal A report made by a qualified person setting forth an opinion or estimate of property value. The term also refers to the process by which this estimate is obtained. View Glossary Page , title services and so on. Those services and their associated fees are usually around 2-3% of the loan amount and are paid up front at Closing Closing The meeting during which the title to the property actually changes hands, documents are executed and the sale of the property and/or the loan is completed. View Glossary Page . Your lender will provide you with a good faith estimate of these costs after you apply for a loan. It is likely your lender may ask you to pay some costs, like the Appraisal Appraisal A report made by a qualified person setting forth an opinion or estimate of property value. The term also refers to the process by which this estimate is obtained. View Glossary Page and loan Application Application A printed form used by a mortgage lender to record necessary information concerning a prospective mortgage. View Glossary Page fee, not long after you have paid for financing.