Mortgage Loan Modification

Archive for the ‘Mortgage Terms’ Category

Before borrowing money from a bank, it’s essential to know the basic terms:

Mortgage / note: a loan that you get from a bank.

Lender: the bank loaning the money.

Mortgage payment: the amount that you pay to the bank.

Mortgage rate / interest rate: the rate of interest on the loan.

Foreclosure: the process that the bank takes if you don’t make your mortgage payments. It can result in the repossession of your house by the bank. Then they sell it, making sure they get the money you were not able to pay.

Term: the time it takes to pay back to loan (usually in years). In the U. S. it’s either 15 or 30 years.

15 or 30 year term?: There has been a debate going on, whether the 15 or 30 year term is the better. In fact, it cannot be stated objectively. The 15 year mortgage has an advantage in duration, as you pay it for a shorter period, although its rates are higher than that of the 30 year term. The 30 year mortgage however, is more flexible, and you pay less on a yearly basis. It is better to choose the 15 year option if you are sure that you will be able to pay it back in time, while you ought to choose the 30 year option if there are uncertainties about your job.