A Mortgage is a loan that you can get through a bank to finance a new home. This is different from other types of loans like student loans because the bank can take possession of your home if you don’t pay your mortgage. Mortgages are helpful if you find a home that is a little out of your price range.
To calculate what size mortgage you qualify for, you have to first see what you can put down as a downpayment. This amount gets paid upfront and is typically around 20% of the house you are trying to buy.
Whatever else is left on the price of the house is what you will need as a mortgage.
After a banker looks at your credit history, the bank decides if they can give you the loan, what the interest rate on the loan will be, and how long the term will be. Fixed interest rates are a safer choice but might be a little more expensive than a variable interest rate. Once the mortgage is officially paid off, the house legally belongs to those who took out the mortgage.
This is often a better solution than putting money into the pocket of a landlord. If you want to learn more, follow along with this Youtube video!
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