Mortgage Newsletter - December 2024
Mortgage Interest: What It Is and How Does it Work?
When you're jumping into the world of home ownership, it's crucial to properly understand what mortgage interest is and how it will affect you over the life of your loan. In short, mortgage interest is simply the cost of borrowing money to purchase a home, but getting to know its many ins and outs can be daunting.
When you take out a mortgage, you're borrowing a lump sum, called the principal, which you must repay over time, usually in monthly installments. Along with repaying the principal, you also pay interest, which is a percentage of the loan balance. The interest rate you pay is determined by several factors, including your credit score, the loan term and the type of mortgage.
There are two common types of mortgages: fixed-rate and adjustable-rate. With a fixed-rate mortgage, the interest rate stays the same throughout the loan term, providing predictable monthly payments. Adjustable-rate mortgages (ARMs), on the other hand, start with a lower interest rate that can change periodically, depending on market conditions.
Interest is calculated based on the remaining loan balance, which means you pay more interest in the early years of your mortgage when the principal is higher. As time goes on and your principal decreases, a larger portion of your payment goes toward paying down the loan balance.
Mortgage interest is one of the biggest costs associated with buying a home, so securing a lower interest rate can save you thousands over the life of the loan. It's important to shop around, compare offers from different lenders and understand how factors like your down payment and loan term affect your interest rate. This ensures you get the best deal possible on your home loan.
6 Things To Look Out For When Viewing a Property
When viewing a potential new home, it's important to look past the surface and spot any hidden issues to make an informed decision. Here are six key things to keep an eye on.
See beyond the decor. It's easy to be distracted by the current residents' taste in decor, but focus on the layout, light and space instead. Remember, you can change paint colors and furniture, but structural elements are much harder to fix.
Check for water damage. Look closely at ceilings and walls and under sinks for any signs of water damage, such as stains, peeling paint or black mold. These can indicate leaks, plumbing issues or damp problems could lead to costly repairs later.
Inspect for cracks. Small hairline cracks can be harmless, but larger or zigzagging cracks could signal serious structural problems. Check around windows, doors and the foundation for any significant damage.
Test the windows. Make sure windows open and close smoothly and check for drafts, condensation or fog between double panes. Poor window conditions can lead to energy inefficiency and higher heating bills.
Sniff out strange smells. Unusual smells, such as mustiness or sewage, can indicate hidden problems such as mold or drainage issues. Be sure to ask about any odors that seem off.
Assess storage space. Don't forget to evaluate storage available. Open closets, check for attic or basement access, and ensure there's enough space for your belongings.
This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.