Whether or not you work in real estate, you probably have heard of a mortgage. Working with Newburyport real estate, you tend to learn the ins and outs of a basic mortgage and what is needed in order for you to keep your home. However, for many first time home buyers, the aspect of a mortgage is still very foreign to them; most likely this will either be their first home away from home, or their first house after an apartment. So to answer some questions (and prevent possible complications) here is a basic lesson in what your mortgage is.
As long as you buy a house, you will end up getting a mortgage. A mortgage is a fancy word for a loan that helps to finance your home. Unless you can pay for a home in full, (which happens very rarely), you will end up with a mortgage. One of the largest debts you will have after student loans, a mortgage is comprised of two main aspects: the collateral, and the principal and interest.
- The collateral of this loan is your home. If you cannot pay your mortgage it will be seized as a foreclosure. A foreclosure is the seizing of a home due to lack of payments on the mortgage; this will damage your credit score, so it is important to make sure that you can afford the monthly payments. If you end up foreclosing, it can harm your ability to buy a home in the future.
- Principal and Interest
- The interest in a mortgage can cause the cost of the house to rise drastically. Remember that you will be paying the mortgage every month for 15-30 years in order to pay for your new home. It is almost like rent, but the home is yours. In some areas you can work with a mortgage lender to make this monthly payment close to what you would pay for a rental agreement. It is vitally important to know that you have the means to afford your monthly payments: this is where talking to an agent that knows the Newburyport real estate market would be useful to confirm your price range, and to help you find out if it is a good idea for you to purchase a home in the current market.
There are many things to consider when you plan on purchasing a home, so it is best to contact a professional before you get too deep underwater and lose faith. Buying a house isn’t easy, but with the right help, you can find what you are looking for.