Financing Information
Negative Amortization
Have you ever heard of negative amortization? What does it mean?
Negative amortization happens when your monthly payments do not cover the amount of interest you're being charged for that period. When interest is not paid in any given time it's added to the loan amount itself; it's not just forgiven and does not just go away. The outstanding balance on the loan actually increases rather than decreases as it should.
Many who signed on for adjustable rate mortgages have found that ... Read More »
Amortization of Mortgage Interest
The amortization of a mortgage interest rate is also very difficult for many to understand but it too is very important when it comes to how much you pay every month and for the life of the loan.
Many mistakenly think that the interest amount of their mortgage is a set amount that is tacked onto the loan itself. They assume then that if the interest is 5% on a $100,000 loan then this $5,000 is added to the $100,000 and ... Read More »
Mortgage Caps
When an adjustable rate mortgage actually does adjust, caps are the limits set by the federal government for that adjustment. A lender cannot just adjust that mortgage to any number it wants but that change must stay under those caps. Caps also affect the monthly payment you may be required to meet as there are legal limits on those as well.
It might seem strange that there would be caps as set out by the federal government but it's important to ... Read More »
Interest Rates
Initial interest rate.
Adjustable rate mortgages often have an initial interest rate which is the rate at the time of closing the mortgage. Very often these rates are called "starter rates" or "teaser rates" because they are often very low during this initial time period for the very sake of luring in borrowers. Unfortunately these initial interest rates are often so very low that borrowers are taken in by the low monthly payments these would offer and sign on for mortgages ... Read More »
Mortgage Financing
You might think that you understand already how mortgage financing works; you get a mortgage from a bank, buy a home, and make your payments.
This is a very simplistic and somewhat shortsighted explanation of mortgages. Since the dollar amount for mortgages are so high, it only makes sense that they would be somewhat more complicated than all of that.
Interest rates.
The interest rate and how it's figured is one of the most confusing and yet most important aspect of how mortgages ... Read More »
Mortgage Interest Rates
When you hear about mortgage interest rates, you might have many questions. You may even be confused about certain aspects of mortgage interest rates or have a lot of misconceptions about how they're determined and how they affect your loan.
Have you ever found yourself wondering:
What exactly are mortgage interest rates and how are they different from interest rates for other loans?
How are these rates determined?
How do these rate affect a monthly payment and the amount you'll wind up paying for ... Read More »