495-Realty.Ru - Бесплатная доска объявлений по аренде квартир, комнат и общежитий в Москве



Поиск жилья по параметрам

Ресурсы по теме
Недвижмость, строительство, ремонт, обустройство загородных домов, дач и участков... Аренда, покупка и продажа недвижимости. В России и за рубежом...


What you should know about mortgage payments



The down payment on a mortgage is the lump sum you pay upfront that reduces the amount of money you have to borrow. You can put as much money down as you want. The traditional amount is 20 percent of the purchasing price, but it's possible to find mortgages that require as little as 3 to 5 percent. The more money you put down, though, the less you have to finance - and the lower your monthly payment will be.

The monthly mortgage payment is composed of the following costs, appropriately known by the acronym PITI:

  • Principal - The total amount of money you are borrowing from the lender (after your down payment)
  • Interest - The money the lender charges you for the loan. It's a percentage of the total amount of money you're borrowing.
  • Taxes - Money to pay your property taxes is often put into an escrow account, a third-party entity that holds accumulated property taxes until they're due.
  • Insurance - Most mortgages require the purchase of hazard insurance to protect against losses from fire, storms, theft, floods and other potential catastrophes. If you own less than 20 percent of the equity in your home, you may also have to buy private mortgage insurance, which we'll talk more about later.

With a fixed-rate mortgage, your monthly payment remains roughly the same for the life of the loan. What changes from month to month and year to year is the portion of the mortgage payment that pays down the principal of the loan and the portion that is pure interest. The gradual repayment of both the original loan and the accumulated interest is called amortization.

If you look at the amortization schedule for a typical 30-year mortgage, the borrower pays much more interest than principal in the early years of the loan. For example, a $100,000 loan with a 6 percent interest rate carries a monthly mortgage payment of $599. During the first year of mortgage payments, roughly $500 each month goes to paying off the interest; only $99 chips away at the principal. Not until year 18 does the principal payment exceed the interest.

The advantage of amortization is that you can slowly pay back the interest on the loan, rather than paying one huge balloon payment at the end. The downside of spreading the payments over 30 years is that you end up paying $215,838 for that original $100,000 loan. Also, it takes you longer to build up equity in the home, since you pay back so little principal for so long. Equity is the value of your home minus your remaining principal balance.

But that doesn't mean that fixed-rate, 30-year mortgages are a bad thing. Far from it. We'll look closer at fixed-rate mortgages on the next page.

Fixed-rate Mortgages

Not that long ago, there was only one type of mortgage offered by lenders: the 30-year, fixed-rate mortgage. A fixed-rate mortgage offers an interest rate that will never change over the entire life of the loan. Not only does your interest rate never change, but your monthly mortgage payment remains the same for 15, 20 or 30 years, depending on the length of your mortgage. The only numbers that might change are property taxes and any insurance payments included in your monthly bill.

The interest rates tied to fixed-rate mortgages rise and fall with the larger economy. When the economy is growing, interest rates are higher than during a recession. Within those general trends, lenders offer borrowers specific rates based on their credit history and the length of the loan. Here are the benefits of 30, 20 and 15-year terms:

  • 30-year fixed-rate - Since this is the longest loan, you'll end up paying the most in interest. While that might not seem like a good thing, it also allows you to deduct the most in interest payments from your taxes. This long-term loan also locks in the lowest monthly payments.
  • 20-year fixed-rate - These are harder to find, but the shorter term will allow you to build up more equity in your home sooner. And since you'll be making larger monthly payments, the interest rate is generally lower than a 30-year fixed mortgage.
  • 15-year fixed-rate - This loan term has the same benefits as the 20-year term (quicker payoff, higher equity and lower interest rate), but you'll have an even higher monthly payment.

There is a long-term stability to fixed-rate mortgages that many borrowers find attractive - especially those who plan on staying in their home for a decade or more. Other borrowers are more concerned with getting the lowest interest rate possible. This is part of the attraction of adjustable-rate mortgages, which we'll talk about next.

Adjustable-rate Mortgages

An adjustable-rate mortgage (ARM) has an interest rate that changes - usually once a year - according to changing market conditions. A changing interest rate affects the size of your monthly mortgage payment. ARMs are attractive to borrowers because the initial rate for most is significantly lower than a conventional 30-year fixed-rate mortgage. Even in 2010, with interest rates on the 30-year fixed mortgage at historic lows, the ARM rate is almost a full percentage point lower [source: Haviv]. ARMs also make sense to borrowers who believe they'll be selling their home within a few years.

If you're considering an ARM, one important thing to remember is that intentions don't always equal reality. Many ARM borrowers who intended to sell their homes quickly during the real estate boom were instead stuck with a "reset" mortgage they couldn't afford. Many of them never fully understood the terms of their ARM agreement. Here are the key numbers to look for:

  • How often your interest rate adjusts - A conventional ARM adjusts every year, but there are also six-month ARMs, one-year ARMs, two-year ARMs and so on. A popular "hybrid" ARM is the 5/1 year ARM, which carries a fixed rate for five years, then adjusts annually for the life of the loan. A 3/3 year ARM has a fixed rate for the first three years, then adjusts every three years.
  • There will also be caps, or limits, to how high your interest rate can go over the life of the loan and how much it may change with each adjustment. Interim or periodic caps dictate how much the interest rate may rise with each adjustment and lifetime caps specify how high the rate can go over the life of the loan. Never sign up for an ARM without any caps!
  • The interest rates for ARMs can be tied to one-year U.S. Treasury bills, certificates of deposit (CDs), the London Inter-Bank Offer Rate (LIBOR) or other indexes. When mortgage lenders come up with their ARM rates, they look at the index and add a margin of two to four percentage points. Being tied to these index rates means that when those rates go up, your interest goes up with it. The catch? If interest rates go down, the rate on your ARMs may not [source: Federal Reserve]. In other words, read the fine print.

Now let's look at some of the less common mortgage options, like government-sponsored loans, balloon mortgages and reverse mortgages.

Other Types of Mortgages

Let's start with a risky type of mortgage called a balloon mortgage. A balloon mortgage is a short-term mortgage (five to seven years) that's amortized as if it's a 30-year mortgage. The advantage is that you end up making relatively low monthly payments for five years, but here's the kicker. At the end of those five years, you owe the bank the remaining balance on the principal, which is going to be awfully close to the original loan amount. This "balloon" payment can be a killer. If you can't flip or refinance the home in five years, you're out of luck.

Reverse mortgages actually pay you as long as you live in your home. These loans are designed for homeowners age 62 and older who need an inflow of cash, either as a monthly check or a line of credit. Essentially, these homeowners borrow against the equity in their homes, but they don't have to pay the loan back as long as they don't sell their homes or move. The downside is that the closing costs can be very high, and you still have to pay taxes and mortgage insurance.

Дата: 11-12-2019

Вернуться в раздел статей 'Строительство и Ремонт'




© 2009-2023

Квартирная доска объявлений

 Все права защищены. Все логотипы, фотографии и торговые марки на сайте 495-realty.ru являются собственностью их владельцев.
С вопросами и предложениями обращайтесь к администратору сайта по почте:
Использование 495-realty.ru или подача объявлений на сайте означает принятие условий пользовательского соглашения 495-Realty.ru.