Mortgage Review

Front

What is a mortgage?

Back

A mortgage is a loan specifically used to purchase real estate, where the property serves as collateral for the loan.

Front

What does 'down payment' mean?

Back

A down payment is the initial upfront payment made when purchasing a home, typically expressed as a percentage of the purchase price.

Front

What are points in mortgage terms?

Back

Points are fees paid to the lender at closing, expressed as a percentage of the loan amount, used to lower the interest rate.

Front

How is the total interest paid on a mortgage calculated?

Back

Total interest paid is calculated by taking the total amount paid over the life of the loan minus the principal amount borrowed.

Front

What is the significance of the interest rate in a mortgage?

Back

The interest rate determines the cost of borrowing money; a lower rate means lower monthly payments and less total interest paid.

Front

What is a 30-year mortgage?

Back

A 30-year mortgage is a loan that is repaid over 30 years, typically with fixed monthly payments.

Front

How do you calculate monthly mortgage payments?

Back

Monthly mortgage payments can be calculated using the loan amount, interest rate, and loan term, often using the formula: M = P[r(1+r)^n] / [(1+r)^n – 1].

Front

What is the purpose of a mortgage calculator?

Back

A mortgage calculator helps estimate monthly payments, total interest, and the overall cost of a mortgage based on various inputs.

Front

What does 'affordability' mean in the context of mortgages?

Back

Affordability refers to the ability of a borrower to make monthly mortgage payments based on their income and expenses.

Front

What is the impact of a higher down payment on a mortgage?

Back

A higher down payment reduces the loan amount, lowers monthly payments, and may eliminate private mortgage insurance (PMI).