What's a Mortgage, Anyway?
Quite simply, a mortgage is a loan for the amount of money your home is worth. There are many different kinds of mortgages depending on your area, financial history, and credit score. Use this page as your guide to mortgages while buying a Lake Norman home.
First time homebuyer? We have a page for that, too.
Different Kinds of Mortgages
Just like there's more than one kind of house, there isn't just one catch-all mortgage. What type of mortgage you qualify for depends on your income, location, and credit history. When shopping for a mortgage, it's important to know your options. Make sure you talk to at least two or three different lenders before deciding on one.
A conventional mortgage is what most homebuyers think of when they think about mortgages. This is a loan offered by a bank or private lender. Typically, there are two kinds of conventional mortgages: fixed-rate and adjustable-rate.
A fixed-rate mortgage has the same interest rate for the entire repayment term. This is a great option if you want a consistent payment every month. An adjustable-rate mortgage has an interest rate that changes year after year. It starts off with lower rates in the beginning, and then slowly increases over time, making your payments less certain.
Depending on your financial situation, a conventional mortgage may not be right for you. That's where government-backed mortgages come in. There are three types of government-backed mortgages for homebuyers.
A Federal Housing Administration (FHA) mortgage is managed by the federal government. These loans are available to many kinds of buyers and typically come with low down payments. However, with FHA loans the buyer is required to purchase mortgage insurance, which may increase the size of monthly payments.
A VA Loan is a great option for active or retired military personnel. VA loans don't require a down payment.
A USDA Loan is managed by the U.S. Department of Agriculture. These loans are for rural-area buyers with low or modest incomes who do not qualify for conventional financing. You can learn more about USDA eligibility here.
How Much is a Mortgage?
It depends on your interest rate, and what kind of mortgage you have. There are four components to a typical mortgage payment. They are principal (this is the amount of your mortgage before interest or taxes), interest (the fee you pay to the lender for the mortgage), taxes (these are typically calculated on a yearly basis by the government, but can be paid as part of a monthly payment), and insurance (property insurance and/or mortgage insurance).
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