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Home Equity Loans
Mortgage – the cost of doing business
There are 3 variables in the mortgage industry that determine how much you will pay the lender. They are:
- Principal
- Simple definition: the amount of $$ you borrowed.
- Example: If your house cost $500,000 and you placed $100,000 or 20% as a down payment then you would still need to fork over $400,000 – this is your principal
- Interest Payments
- Either a fixed or variable interest rate that you have agreed to pay.
- The interest rate will depend on the length of the term of the loan.
- The lower the interest payment the BETTER! – sorry, I just wanted to make this clear.
- The length of time it takes you to repay the loan
- Typical term loans are for: 5, 7, 10, 15 and 30 years.
- Almost always the shorter term loans are less expensive.
Shorter-term monthly loan payments are always higher, but you save a boatload of cash in the long run by paying less on your interest payments. Ask your mortgage professional for options.
