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The Basics of Mortgages: The Things You Need to Know

Mortgage Application on paper

Mortgages in Salt Lake City are loans that allow you to buy a home right away at a fraction of the total cost of the property. By getting a mortgage, you’d be able to pay for your home in a way that suits your financial means. Before applying for one, however, there are a few things you need to know.

To better prepare yourself for the process of getting a mortgage, take note of the following:

Private Mortgage Insurance

Usually, you’d only need to come up with at least 20% of the home’s value as a downpayment to qualify for a mortgage. However, if you can’t meet the 20% threshold, you’d have to pay for a Private Mortgage Insurance (PMI). The PMI protects lenders from borrowers who stop making payments. This is often arranged by insurance companies. As soon as you could fulfill the 20% value of your home, you have the option of forgoing the PMI.

The Terms & Payment of Mortgage

The loan period is often determined based on the amount of the money you’ve borrowed as well as the time you could commit to paying it all completely. You usually have 15-30 years to pay of your loan, but you can also opt for advance payments to pay off the loan quicker. Just make sure that you inform and discuss these points with your lender. Those who choose to pay in advance often receive rebates although many companies don’t offer such.

How the Interest Rates Work

The interest works as the borrower’s payment to the lender for loaning them the money they need. The interest is a small percentage of the amount they’ve lent you. Interest rates are annually calculated. They are also referred to as the annual percentage rate (APR). Having a good credit score is one way of securing a mortgage with low interest.

Mortgages are a useful service that allows you to become a homeowner as soon as possible. By knowing these basic concepts, you can choose and find the mortgage that would perfectly match with what your means and aspirations.

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