What Is a Home Loan or Mortgage?
If you’re like most of us, you likely don’t have the cash on hand to purchase a home outright. So, to make this purchase—one of the largest and most rewarding purchases of your life—you’ll need a mortgage or home loan in Corpus Christi, TX. Let’s walk through what exactly a mortgage is and how to obtain one.
When you, the borrower, obtain a loan to purchase a house from a lender like Supreme Lending, the loan is called a mortgage. Repayment of the mortgage is set up in monthly payments over a period time with interest. The most common mortgage term lengths are 15- or 30-year loans, but the duration may be customized depending on your lender and loan program you choose.
There are several mortgage options for homebuyers, some of which may be more suited for you than others. When choosing the right mortgage program for you, it’s important to be well-informed, which is why our team is dedicated to educating our customers so they know their options and can make educated decisions.
As with other types of loans, mortgage payments include interest charges. Interest rates are calculated as a specific percentage of the full amount of the total loan. But what’s the difference between a fixed-rate mortgage, an adjustable-rate mortgage (ARM), and an interest-only mortgage?
- Fixed-Rate Mortgage – The interest rate of a fixed-rate mortgage will stay the same for the duration of the loan, whether it’s 30 years or 10 years, and the monthly payments will remain the same.
- Adjustable-Rate Mortgage (ARM) – The interest rate of ARMs stay the same for an initial fixed period of time (like 5 or 7 years), and then may adjust up or down every year based on market conditions. This is a popular option when interest rates are high on fixed-rate loans.
- Interest-Only Mortgages – An interest-only mortgage allows borrowers to pay only the interest portion of their mortgage payment for a set number of years, without having to pay any of the principal. This is the least common type of loan.
Whether you’re buying your first home, up- or downsizing to your next home, or refinancing your current mortgage, know your options and choose the home loan type that is right for you.
Want to learn more about home loans in Corpus Christi, TX or any of the surrounding areas? We can help! Contact the Supreme Lending Pitarra Region to get started.