Mortgage Refinancing: How to Lower Your Monthly Payments
A mortgage is basically a means to apply for money with one’s own property as collateral for a loan. Real estate is often used to purchase the property that will be used to secure the mortgage. Many individuals do this in order to purchase the actual property that they use as collateral for the mortgage: once the mortgage is paid off, the individual can then lease the property to someone else. This allows the individual to use the property as collateral for a lease, and if the lease matures and there is still no mortgage payment outstanding, the individual can then take the property back from the person who holds the lease and resells it.
There are two types of mortgages that an individual can secure. The most common type of mortgage is the most simple mortgage. A simple mortgage is simply a term that is entered into a contract between the mortgage lender and the mortgagor: the lender pays the mortgagor a lump sum of money each month until the full amount of the mortgage is repaid. This type of mortgage usually has a fixed mortgage term; however, there is no legal obligation to repay the lender.
Another type of mortgage known as an Open End Mortgage is where there is an option to borrow money for a set period of time. During this time period, the borrower can borrow as much or as little as he or she would like. This is often done so that the borrower can secure a low interest rate when borrowing. The lender may require a minimum repayment amount. This can vary depending on the lender. In this type of mortgage, monthly payments are made to the lender until the entire loan has been repaid.
An Interest Only Mortgage is very similar to an Interest Only Mortgage. During the first months of this mortgage, the borrowers pay interest only on the principal balance. After this time period, the interest on the principal is changed to a fixed rate. There are advantages to interest only mortgages; however, some borrowers do not like the fact that at the end of the interest-only term, they will only have the principal balance remaining.
Many homeowners choose a Mortgage with taxes included in the payment. Although this arrangement will save the borrower money on interest and monthly mortgage payment, it may also result in loss of property taxes. If you purchase a home with property taxes included in your monthly mortgage payment, you will be responsible for paying the property taxes on your own. If your residence is located in a non-county area, you may be required to pay the property taxes on your own. If the lender’s standard mortgage interest rate is higher than the mortgage rate you acquired when you purchased your property, you could end up owing extra money on your mortgage if you decide to foreclose on the property.
Another option available to borrowers who need help controlling their monthly expenses is to use balloon payments. These are arrangements whereby the borrower pays interest rates for six months or more before making one final payment at a lower interest rate. However, if interest rates fall further down the road, borrowers may find themselves paying more than they were when they first took out the loan because the balloon amount will no longer apply. Balloon mortgage contracts should be used only as a temporary plan. It is always better to have lower monthly payment rates for a few years than to have a balloon payment at the end of the loan.