Morgage: Basic Information

When you are ready to purchase a home there is more to it than going out with a real estate agent and picking out the house you want, signing the papers and it is yours. In today's society the main concern with buying a home is getting a mortgage to purchase the home. The first thing that you need to know before you start looking for a home is to find out just how much mortgage you would qualify for. Without having to contact a mortgage company you can do this yourself by multiplying your annual income by two, then by two and a half so you will get the general range for a mortgage. If your income is fifty thousand dollars a year, your mortgage range would be between one hundred thousand and one hundred twenty five thousand dollars.

There are also some other factors that mortgage lenders take into consideration when figuring the amount of mortgage that you might be eligible for. One is that your household expenses such as your mortgage payment, insurance, tax payments should not be more than twenty five percent of your monthly income before taxes. They will also check to see what your credit score is and your work history.

The next thing that you will need to know is what are an adjustable rate and a fixed rate.

• Adjustable rate mortgage is a type of mortgage that will cause your interest rate and mortgage monthly payment to fluctuate for the duration of the mortgage. Most of the time they will start out with a set mortgage payment and interest rate for one year and then adjust yearly.
• Fixed rate mortgage is the type of loan that has a set monthly payment that will be the same for the length of the mortgage and so will your interest rate.

There are also different types of fixed rate mortgage and adjustable rate mortgage programs that a buyer can choose from. Here are five of them.

• 1,3,5,7,10 Adjustable rate mortgages is the one that will let you have a fixed rate of interest for a certain length of time and when that time expires the buyer will for the balance of the loan assume an adjustable rate.
• 10/1, 7/1, 5/1. 3/1 Treasury adjustable rate mortgage is the one that provide a fixed rate for a certain duration of time and then the buyer will pay an interest rate that is variable and will have annual adjustment.
• Conventional loan programs are any type of loan that will let you borrow within the amount that is set by the Federal National Mortgage Association.
• 30-year fixed rate mortgage is the one that is considered a conventional loan that will provide the buyer a level payment and fixed interest rate for the thirty year life of your mortgage.
• 15-year fixed rate mortgage is also considered a conventional loan just like the 30-year fixed rate mortgage except the monthly payments is higher, but the mortgage is paid off sooner..

This is just some of the basic information about a mortgage. More can be found out when you talk to a mortgage specialist or by going online.