Mortgages

The modern mortgage market offers a variety of mortgage loans catering to the needs of homebuyers. The titles and details of these plans can become confusing, especially as new types are introduced continuously. You can make sense of these loan types, however, if you understand the basic principles that govern all mortgage loans. Again, you can look to your real estate professional for assistance.

Basic Principles of all Mortgage Loans

  • The home is used as security to back up the loan. A lender can force sale of the home if the borrower defaults by failing to make scheduled payments.
  • The larger the loan compared to the value of the home, the more risky for the lender and, often, the more expensive the loan will be.
  • Interest earned by the lender always is equal to the periodic interest rate times the outstanding principle balance of the loan. The periodic interest rate is the annual interest rate divided by the number of payments in the year (usually one per month).
  • The required payment usually is a bit larger than the interest due so that some of the loan principal is repaid with each payment. This process is called Amortization and is why most mortgage loans can be retired when all the monthly payments have been made.

All mortgage loans have one of the following features:

  • Fixed payment and fixed interest rate - fixed rate mortgages
  • Fixed rate but variable payment - graduated payment mortgages
  • Variable rate and variable payment - adjustable rate mortgages

As you learn more about the types of financing available, you will notice that some loans appear to have more favorable terms. That may indicate that those loans are, indeed, bargains (and it does pay to shop around), but usually it means that those loans could have some feature that is less appealing to borrowers. For example, shorter-term loans often have slightly lower interest rates compared to longer-term loans. However, the monthly payment for the same amount of principal may be higher because of the shorter term. Variable rate loans usually have much lower interest rates to compensate for the risk the borrower accepts that interest rates will rise in the future.

Contact Us

Don Fedrigon
Cell: (231) 218-8400
Office: (231) 264-5400
RE/MAX of Elk Rapids
614 US 31 S
Elk Rapids, MI 49629-0036
Office: 231-264-5400

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Congratulations on taking an important and key step in your home ownership experience. Using this website, you will be able to view homes for sale in Northern Michigan as well as surrounding areas. As the area's top selling, full time REALTOR®, I am qualified to assist you in buying or selling your property. I have a keen sense of the local market and know property values, appreciation of the market, and how to gain the best exposure for your property.

While looking for your new home, I will guide you through the process of understanding what home style is best for your family, as well as assist you with developing a purchase offer that makes sense and fits your needs. When selling your home, I will statistically calculate how to properly price and market your home, walking beside you through the entire transaction process and teaching you along the way. I look forward to helping you with all your real estate needs!