Facts on Mortgages

Mortgages are special loans given out to pay for real estate property. Mortgages are obtained from financial institution, usually banks, and are meant to be repaid within a pre-established period of time.

Types

The most common types of mortgages are fixed-rate mortgages (FRMs) and simple interest mortgages, but there are also many other options. Balloon mortgages (where the whole sum must be repaid in full after just a few years of small monthly payments) and wrap-around mortgages (where the lender takes a mortgage that already exists) are becoming increasingly popular.

Time Frame

Mortgages are usually offered as either 15- or 30-year loans.

Considerations

First-time home buyers are sometimes granted special benefits, such as subsidized interest costs, payment deferrals and no down payments. However, these special programs may restrict your choice of dwelling and force you to invest in cheaper properties.

Expert Insight

A high-risk mortgage is a good idea for those people who can afford the insecurity. The most common ones are adjustable rate mortgages, where your interest rate is not fixed but you have the benefit of being allowed to pay more or less of the mortgage every month, depending on how much you can afford.

Features

Lenders usually charge fees at the time of giving out a mortgage. Aside from the yearly interest rate, there are also fees associated with insurance, administration and settlement.