All In One Mortgage Lending

Purchasing a home

What is a mortgage?

A loan that secures a property or real estate is called a mortgage. In exchange for funds to purchase a home or property received by the homebuyer, a lender gets a promise of the buyer to pay back the funds within an agreed set amount of time for a certain cost.  The mortgage is legally binding and securing the note by giving the lender the right to have legal claim against the borrower’s home if at any time the borrower defaults on the terms of the note. Basically, the borrower has possession of the property or the home, and the lender does not own the home until it is paid off in full.  

What is included in the mortgage? 

The mortgage is usually paid back in the form of monthly payments consisting  of interest and principal. The principal is repayment of the original amount borrowed, which reduces the balance with every payment. The interest, on the other hand, is the cost of borrowing the principal amount for the past month.

Normally a monthly mortgage payment includes the principal, the interest, local and state taxes, and home insurance. Taxes are remitted by the loan company to the local governments as a percentage of the value of the property. These tax amounts will vary based on where the borrower lives and are usually assessed each year on an annual basis. The home insurance payments go toward mortgage and hazard insurance. The property mortgage insurance (PMI) protects the lender from loss incurred if a borrower defaults, whereas hazard insurance protects both the borrower and the lender from property losses. These funds are usually held in escrow by the lender. PMI typically is not required if you put down 20% or more on your home. As long as you are not behind on payments, PMI payments are automatically terminated when either you are at the midway point of your loan in time, or when the loan-to-value (LTV) reaches 78%. You can request cancellation of PMI when you LTV reaches 80%.

OR - Try a Quick Estimate:

How much will you be borrowing?

What will be the term of this mortgage (in years)?

What will be the interest rate?

Instructions: Enter numbers and decimal points. No commas or other characters.

This is your principal + interest payment, or in other words, what you send to the bank each month. But remember, you will also have to budget for homeowners insurance, real estate taxes, and in some cases private mortgage insurance (PMI).