Posted on: 22 August 2018
If you are buying your first home, you will more than likely need to get a loan in order to make the purchase. When buying property, the type of loan you'll get is called a mortgage. Basically, this means you'll be putting your home up for collateral in order to secure the funds. If you've never gotten a mortgage loan before, you may have some questions.
Here are the answers to three frequently asked questions when it comes to getting a mortgage loan.
1. What Is the Interest Rate on a Mortgage Loan?
Interest rates on mortgage loans are dependent on a variety of factors. Some of the most common factors that will affect your interest rate include:
- Your credit score
- The price of the home
- The amount of the down payment
- The location of the home
- The term or duration of the loan
One more thing that affects the interest rate on a mortgage is what type of loan it is. For example, if you are a first-time home buyer, you may qualify for a special type of mortgage that usually has a low interest rate.
2. What Is the Best Way to Pay off a Mortgage?
The most popular types of mortgage loans come in terms of 10, 15, or 30 years, with a 30-year term being the most popular. This means you will have 30 years to pay off your mortgage. However, this also means that by the time the 30-year period is up, you will have paid a lot of money in interest.
The average price of a home is $188,900. If you take out a 30-year mortgage at an interest rate of 3.75%, you will end up paying over $126,000 in interest. If you pay more than the minimum amount due each month, you can pay off your loan more quickly, thus saving thousands of dollars in interest. By paying just $50 more each month, you can pay off your loan four years early.
3. How Long Does It Take to Get a Mortgage?
Getting a mortgage can be a stressful process. Chances are, you have found a home to buy and you can't wait to get all moved in. However, because of all the paperwork that is involved, the process of getting a mortgage can take quite a few days.
On average, you can expect the entire process, from applying to securing the loan, to last about 30 days. In some instances, it's not out of the question for the process to take up to 60 days.Share