3 Essential Things You Don’t Know About Mortgages

Before you go and visit any lending institution, you should first research about mortgages. If you are reading this, then you’re in the right place!

You might think you know a lot about mortgages, but there are a lot more than you don’t know about this word. When you want to apply for a mortgage loans Houston TX, here are three things you don’t know about it.

How Much of Your Payment Will Go to the Interest

Do you know what blended payments are? They are mortgage payments. These are combinations of the interest and principal repayments. When it comes to interests, a significant part of your payments is going towards it and not the principal contrary to what you know.

As time goes by, your principal loan will decrease. Why is that? The amount you owe the lender will drop too. Because of this, that portion from your payment that is going to the interest will also decrease while the amount going to the principal will increase over time.

This is one of the reasons why lump sum payments are making a big difference, especially regarding your mortgage. It directly goes to your principal while the usual mortgage payments will not. You can use a mortgage calculator to help show you how much you will need to pay in interest when paying for your loan.

Getting a Mortgage Doesn’t Mean a Good Investment

Buying a home is a good investment. Having a hefty mortgage will make most of your net worth tied to only one place. A good financial planner, however, will tell you that merely putting all of your eggs in one basket is not a great long-term strategy. It’s not recommended. It’s mainly the opposite of diversification.

Good read: 4 Best Investments For 2019 By Michael Shustek

But since people still need a house to live in, you will have equity in your home, but you should not assume that you can sell your home whenever you please. For so many decades now, housing markets go up and down.

If you are planning on buying a house, buy it when it fits into your long-term financial plan. Don’t buy it because you want to retire in a few years or want income when you sell it.

Lenders Will Not Always Give You the Best Deals When It Comes to Renewal

Most often, homeowners will go to the same lender who is holding their current mortgage when renewing it. There’s no problem when it comes to this one, but as much as 50% of homeowners have renewed his or her mortgage without needing to negotiate different terms as to what is presented on the renewal statement. This scenario was according to a survey on mortgage consumers back in 2015.

Lenders know that you’ll most likely go back to them for renewal, so they don’t do much to try to keep you. Well, if you are too busy to go shopping, you can opt to call your mortgage broker.

And that’s about it when it comes to what you don’t know about mortgages.