Mortgage lingo can seem like a foreign language to those who are not familiar with it. But don’t worry; we’re here to help! In this article, we will define some of the most common mortgage terms and explain what they mean. By understanding these terms, you will be able to make more informed decisions about your home-buying process. Let’s get started!
1. Mortgage
A mortgage is a loan that is used to purchase a property. The property serves as collateral for the loan, which means that if you default on the loan, the lender can take ownership of the property. Mortgages are typically repaid over a period of 10 to 30 years, depending on the loan terms. By finding a reputable company for a mortgage in Toronto, you can be sure of the best mortgage deal. Also, be sure to compare different mortgage options before making a decision.
2. Mortgage Rate
The mortgage rate is the interest rate charged by the lender on a loan. Mortgage rates can vary depending on a number of factors, such as the type of loan, the term of the loan, and the creditworthiness of the borrower. Mortgage rates are typically quoted as an annual percentage rate (APR) and can be fixed or adjustable. You just have to compare different mortgage rates before deciding on the best one and go for it.
3. Mortgage Term
The period of time you have to repay the loan is known as the mortgage term. Mortgage terms can range from 10 to 30 years, depending on the loan. The shorter the term, the higher your monthly payments will be, but you will pay less interest over the life of the loan. Conversely, the longer the term, the lower your monthly payments will be, but you will pay more interest over the life of the loan. Lastly, there are also some mortgage companies that offer flexible mortgage terms, which allow you to make extra payments or even pay off the loan early without any penalties.
4. Mortgage Payment
Your mortgage payment is the amount of money that you have to pay each month to repay the loan. Your mortgage payment consists of two parts: the principal and the interest. The principal is the amount of money that you borrowed from the lender, and the interest is the fee charged by the lender for lending you the money. Your mortgage payment also typically includes property taxes and insurance, which are usually escrowed by the lender and paid out of your mortgage payment each month.
The Bottom Line
Mortgage lingo can seem confusing, but it doesn’t have to be! By understanding these four common terms, you will be on your way to making more informed decisions about your home-buying process. And when you’re ready to start shopping for a mortgage, be sure to compare different lenders and mortgage rates to find the best deal for you.
