When you’re looking to buy a home, one of your biggest expenses will certainly be mortgage payments. After all, a mortgage is really just a loan to buy a house, so it makes sense that you’ll need to pay a lot of money to get one. But not all mortgages are created equal. Some offer better interest rates, lower down payments, or even no down payment at all.
And because a lot of lenders offer these various benefits as incentives for getting a loan, it’s important to understand the differences and choose the right mortgage for your personal situation. If you’re looking to get a mortgage, but you’re unsure where to start, you’ve come to the right place. Below, we’ll explain the basics of td mortgage pre approval calculator and give you a few money-saving tips.
What are mortgages?
Mortgages are long-term loans, typically for between five and thirty years, that are used to purchase a home. The amount that you borrow is called the “mortgage principal” and it usually includes payments for interest and fees as well. Mortgages can be used for single-family homes, condos, or townhomes (although most of the time they’re used to buy a house).
In addition to the principal amount of money borrowed, you’ll also have to pay “principal and interest” (P&I) payments each month – which is essentially just a fancy way of saying that you’ll be paying back your mortgage with interest. In order to make sure you get the most out of your mortgage loan, it’s important to understand some basic terms.
Term: This refers to how long your loan will last – usually between five and thirty years. The longer the term of your loan, the more interest you’ll pay over time.
Interest Rate: This is how much you’ll pay in interest on your loan each month. When you apply for a mortgage, it will be obvious what rate you qualify for, but if you’re a first-time buyer and have never had a mortgage before, it will most likely be higher than what you qualify for.
Fees: These are fees that lenders charge in order to service your mortgage. They include things like origination fees, processing fees and document fees.