How to Understand Your Home Mortgage Loan
A home mortgage loan is one of the most complex and expensive investments you’ll ever make, so it’s important to fully understand what you’re getting into before you accept a loan from a bank or credit union in O’Fallon . There are numerous mortgage variations to choose from, and even more customizable terms. To help you understand your options, here’s a look at some of the most important factors to consider when shopping for a home mortgage.
Every mortgage carries interest, but how the interest is calculated and amortized over the life of the loan is different. There are two main types of interest: Fixed and variable. With fixed-rate mortgages, the interest rate remains the same for the life of the loan and the payment is split into equal monthly payments for the duration. The interest rate for variable mortgages, also known as adjustable-rate mortgages, can change from year to year.
The primary factors determining your monthly mortgage payments are the size and term of the loan. The “size” of the loan refers to the amount of money borrowed, and “term” refers to the length of the loan. Because longer terms result in smaller monthly payments, 30-year mortgages are the most popular type of mortgage.
There are a lot of terms and phrases used with home mortgage loans. To fully understand your options when shopping for a mortgage, it’s a good idea to brush up on some of the important mortgage terms used by lenders and borrowers. A few important ones to know upfront are escrow, closing costs, principal, and private mortgage insurance. You can find mortgage terminology resources online to help you better understand the lingo.
Whether you’re buying a new home or want to take out a second mortgage, GCS Credit Union can help. We are one of the leading credit unions in O’Fallon, and we can help you secure a competitive rate on a home mortgage loan . Visit our website to calculate your monthly payments and view our current mortgage rates. If you have any questions, please call us at (618) 219-7091.