What's a Mortgage?

Mortgage Financing 101

Buying a house in Okemos or trying to sell your home in Grand Ledge or Holt Michigan? There are a variety of loans catering to the needs of homebuyers like yourself. The titles and details of these plans can become frustrating. You can make sense of these loan types, however, if you understand the basic principles that govern all mortgage loans. 

Basic Principles of all Mortgage Loans

All mortgage loans have one of the following features:

As you learn more about the types of financing available, you will notice that some loans appear to have more favorable terms. That may indicate that those loans are, indeed, bargains (and it does pay to shop around), but usually it means that those loans could have some feature that is less appealing to borrowers. For example, shorter-term loans often have slightly lower interest rates compared to longer-term loans. However, the monthly payment for the same amount of principal may be higher because of the shorter term. Variable rate loans usually have much lower interest rates to compensate for the risk the borrower accepts that interest rates will rise in the future.

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