What a General Mortgage Payment Consists of :-
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1) Principal: The repayment of the original amount borrowed on a monthly basis.
2) Interest: The cost of borrowing the principal amount, repaid on a monthly basis.
3) Taxes: Real Estate taxes paid to a local government agency.
4) Insurance: Homeowners insurance on the home. Also any mortgage insurance, which is paid to protect the mortgage company.
Prequalification is the initial step in securing a mortgage. A lender will analyze your current income, debt and basic credit history situation in order to qualify you for a maximum loan amount. This gives you a clear picture of your financial parameters and a maximum housing price (the mortgage amount plus your down payment). With pre approval, the lender verifies your income, debt and financial picture, approving the loan subject to a favorable appraisal of the property you select. See the discussion on mortgage prequalification and pre-approval for more information.
How much down payment is required in General Mortgage?
One of the first questions that home buyers ask is "how much down payment are we going to need?" Unfortunately, there is no standard answer. Down payments will vary from 0% (with a VA--Veteran's Administration loan) to upwards of 25% (with certain "non-conforming" loans). As an average, most home buyers make down payments in the 5%-15% range, although your own personal situation may dictate more or less down payment. When you are factoring money for a down payment, don't forget about closing costs, which will total in the 2-5% range, payable in cash at the time of closing.
Types of General Mortgages
Fixed: A fixed-rate mortgage has the benefit of having a fixed principal and interest rate which is determined up front. You then make regular monthly payments for a period of fifteen, twenty, or thirty years until the loan is paid off.
Adjustable: Adjustable Rate Mortgage or ARM. An ARM has a variable interest rate which changes on a regular basis, such as once a year, based on an established index. With an ARM, the total amount of the loan cannot be determined up front and your monthly payments may fluctuate throughout the life of the loan.
If you're a first-time homebuyer, contact lenders in your state to see if there are special programs available to you. The Federal Government also offers special programs such as Federal Housing Authority, or FHA (F-H-A) and Veterans Administration, or VA (V-A) loans. FHA and VA loans require low or no down payments. Another consideration when shopping for a general mortgage is the question of whether or not to pay points. A point is interest that you prepay when you close on your new home. Each point is one percent of the loan amount. If you can afford to pay more cash up front, consider paying a few points in return for a lower overall interest rate. For additional information, consult a mortgage lender. A General Mortgage is a pledge of property to secure the repayment of a debt.