What is a mortgage exactly?
Contrary to what you may think, a mortgage is not a loan. A mortgage is a lien on the property that secures the loan. Today, the terms mortgage and loan have come to be used interchangeably. They are related but, in fact, two different things. Lenders are well aware of this, so it is best that you are informed also.
Perhaps you are familiar with the terms mortgagor and mortgagee, but which is which? The term mortgagor refers to the party that borrows the money and grants, pledges, or gives a lien on his or her property as a security to the lender. The term mortgagee refers to the party that receives the lien as security, the lender
A mortgage loan has three components. Without them the loan would not be viable. Each component must have a value, or the loan cannot be calculated correctly. The components are, the size, the interest rate, and the terms.
The size of the loan simply refers to the amount of money you wish to borrow. The interest rate is the regular and recurring fee that the lender charges on the borrowed money. It has a direct baring on what your monthly payment will be. The lower the interest rate, the lower your payment. The term of the loan refers to how long it will take to amortize, or pay off the loan. It may be expressed in months or years. (30 years or 360 months)
Another term that needs to be addressed is points. A point is equivalent to one percent (1%) of the loan amount. On a loan of $100,000, a point would be equal to $1,000. There are two types of points, origination points and discount points. The origination points are fees that a lenders sometimes charges to process the loan transaction. Discount points are used to help buy down the interest rate. You can opt not to pay an origination or discount fee, but be prepared to pay a higher interest rate.
Academy National Mortgage Corporation
Denise Wing, C.E.O.
Certified Mortgage Lender
303-987-0622
Perhaps you are familiar with the terms mortgagor and mortgagee, but which is which? The term mortgagor refers to the party that borrows the money and grants, pledges, or gives a lien on his or her property as a security to the lender. The term mortgagee refers to the party that receives the lien as security, the lender
A mortgage loan has three components. Without them the loan would not be viable. Each component must have a value, or the loan cannot be calculated correctly. The components are, the size, the interest rate, and the terms.
The size of the loan simply refers to the amount of money you wish to borrow. The interest rate is the regular and recurring fee that the lender charges on the borrowed money. It has a direct baring on what your monthly payment will be. The lower the interest rate, the lower your payment. The term of the loan refers to how long it will take to amortize, or pay off the loan. It may be expressed in months or years. (30 years or 360 months)
Another term that needs to be addressed is points. A point is equivalent to one percent (1%) of the loan amount. On a loan of $100,000, a point would be equal to $1,000. There are two types of points, origination points and discount points. The origination points are fees that a lenders sometimes charges to process the loan transaction. Discount points are used to help buy down the interest rate. You can opt not to pay an origination or discount fee, but be prepared to pay a higher interest rate.
Academy National Mortgage Corporation
Denise Wing, C.E.O.
Certified Mortgage Lender
303-987-0622
posted by Academy National Mortgage at 2:24 PM
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