In the vast majority of cases, when a prospective homeowner is looking to purchase, the term “mortgage” is going to start popping up. In fact, a mortgage is the basis of how to purchase a new home or property in the first place—assuming you’re not going to shell out the entire cost of a home in one lump sum, which is something most of us simply cannot do.
Are you in need of help understanding and navigating a mortgage loan? The specialists at Southwest Mountain Realty can guide you through the essential need-to-know items. For additional help and guidance, feel free to contact our experienced agents at any time to get answers tailored to your unique situation!
If you have any questions about home mortgages, please contact us online or call 480-237-9979 today!
What Is a Mortgage?
A mortgage is a unique type of loan specifically used for purchasing land, property, or homes. Essentially, you’ll be using the home you are looking to buy as the collateral and entering a loan agreement with one of two entities: a bank/credit union or an independent lender.
The basic components of a mortgage loan are made up of these:
- Principal. This is the naked cost of the mortgage loan unadjusted for interest. Basically, if you borrowed 100,000, then your principal would be that amount. After ten years, if you had paid off 30,000, then the new principal would be 70,000.
- Interest. This is what the bank is charging you for the loan, usually expressed in percentage rates. An interest amount is owed per each payment and is adjusted accordingly.
- Property taxes. Property taxes are still paid by the recipient of the loan (you) and are calculated by local assessor’s offices based off of the value of the home.
- Insurance. Most mortgage loan providers will require that you get comprehensive homeowners insurance through your insurance provider. This is to protect the collateral (the property) in the interest of the bank.
There are quite a few types of mortgage loans available, but typically, they all branch off of two basic mortgage loan types: Fixed rate loans, in which the interest rate never alters, and adjustable rate loans, in which the interest is allowed to fluctuate according to current financial and credit markets.
The person looking to enter a mortgage loan will submit a considerable amount of information (credit scores, proof of income, current debt loads, and assets) and will wait for a decision. In the case of a denial of your loan, you’ll be told why the decision was made so that you can correct the complication and reattempt a mortgage loan.
What Are Mortgage Brokers?
Brokers are your third option when choosing to whom to go for your mortgage loan. A broker does not lend but instead works with numerous banks, institutions, and independent lenders in order to find you the best “deal,” or the loan that fits your needs the most appropriately. Working through a broker requires a fee, but this is very frequently offset through the benefits you’ll receive.
How Do I Know What I Can Afford?
This is an excellent question and one best answered before you go shopping for a home. In the simplest terms, you want a mortgage payment to be comfortable. There are numerous factors that will alter the interest of a mortgage loan, but most commonly you should be prepared to absorb two things: a minimum 20% down payment on the home, and the calculated interest rate estimate combined with the monthly principal payment.
The easiest method of getting a good idea of what you can afford is by taking advantage of an online mortgage calculator.
Find Real Estate Agents in Queen Creek, Phoenix & San Tan Valley
Are you looking for an expert real estate agency in Queen Creek, AZ? If so, Southwest Mountain Realty is here for you. Our professional real estate agents and property managers are well-equipped to answer your questions and assist with any of your property needs in the Phoenix area.
To speak with a real estate agent in San Tan Valley, please contact us online or call 480-237-9979 today!