Bothell Real Estate Mortgages - Understanding the Basics of A Mortgage

Understanding the Basics of A Mortgage

If you have never taken out a Bothell real estate mortgage  before you should understand the basics before applying for one. There are a lot of different types of mortgages with different features, and how can you really expect to understand all of these complexities if you don't really understand the basics?

Equity

When you make your payments on your Bothell real estate mortgage, part of it will go towards the interest payment and the other part will go towards the house directly. The portion that is being paid into the house is called the equity. Over the years this equity will build up until your payments are done and you own the home.

Pre-approved mortgages

Your real estate agent may advise you to get a pre-approved mortgage. This means that you have applied to a financial institution and they have approved you for a mortgage for a set amount. This lets you know ahead of time how much money you can spend on a house before you start shopping for one.

Frequency of payments

When you apply for a mortgage you will have the choice of making your payments biweekly or monthly. Making biweekly payments will shorten the term of your loan since you will be making two extra payments per year. Your mortgage lender can calculate how much money you can save in interest charges and how many years you'll have to make the payments.

Mortgage term

This is how long it will take you to pay off your mortgage assuming that the monthly payments are made and no extra money is put into the mortgage. In most cases you will have a 15 or 30 year term to choose from.

Fixed-rate and variable rates

These are the most common types of Bothell real estate mortgages. With a fixed-rate, the interest rate is fixed for the entire term of the loan while a variable rate will see the interest rate rise or fall depending on interest rate trends through the years. You should discuss these two options with your lender and find out the risks and benefits of both.

These are some of the real estate basics you should understand before applying for a Bothell real estate mortgage. Your real estate agent can also go over some of the other basic terms with you and explain the above terms in more detail.

For more information regarding buying or selling real estate in Bothell contact Adrian Willanger 206 909-7536