Q&A: How do house payments and mortgages work?
Question by overwhelmed85: How do house payments and mortgages work?
I have always wondered how house payments and mortgages happen, and how they figure out your monthly house payment. What would I have to do in order to buy/build a home with money?
Best answer:
Answer by big stan
A mortgage is your montly payment for usually either 15 or 30 yrs. The interest is figured in and in most cases your insurance and taxes are paid from your mortgage as well from an escro acct.
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Go talk with a loan officer at a bank or mortgage company, they will geve you a ballpark figure you can qualify for and look at homes in that price range. Stay away from interest only loans, big scam for big risk borrowers.
People take courses and long seminars just to get a straightforward answer to your question. It would be impossible to explain on here in detail. But each bank has alot of formulas and factors that go into figuring out monthly payments. And each persons may be slightly different. When you sit down with a mortgage officer they will explain to you how your particular loan is going to work.
http://www.saveonrefinance.com/
You can put in the cost of the home you are looking for and the payment will come up. On http://www.realtor.com you can find a home. Sometimes it even lists the taxes. Mine run about 1400 a year and insurance is about 1200. That should help you out.
If your credit isn’t that great, you can get a loan to pay off debt first so that you can get a mortgage at http://www.prosper.com/public/groups/group_home.aspx?group_short_name=FCLN This is a site where people lend you money at a % that you pick to consolidate and pay off debt. It is excellent!
I bought my first house at 24 as a single parent who didn’t get child support. It was hard, but the BEST thing I ever did in my life! Get a fixer upper and put some work into it. You will make money when you sell it.
Good luck….
The money you borrow to buy a house is paid back over a period of time along with interest. The payment depends on how long your mortgage is for and what the interest rate is.
A mortgage is nothing more than the name for real estate loan. It’s the same as car payments, furtiniture payments, etc…The loans can be anywhere from 5-30 to whatever number of years you want if you can get a bank to underwrite such a loan. Most are from 15 year or 30 year mortgages. The lender makes their money off the interest you pay as you pay off the loan. Insurance and taxes are separate issues. You can have the mortgage company set up an escro account. That is basically a savings account they maintain where they make your insurance and property taxes for you with your money. You don’t have to do that but most people do. You do, like with a car, have to show proof of insurance before they will just hand you a house. Get pre-approved for a loan before looking at houses. Otherwise, you could be looking at houses you could never afford or houses below your standards. Be aware that banks and mortgage companies will approve you for more than you really should borrow. Your monthly house payment should be no more than 25% of your income each month as a 15 year fixed mortgage. That leaves you money to save for retirement, pay bills, prepare for kids college payments, eat, etc…. Also, at year 15 the house is yours. 30 year mortgages keep your resouces tied up in payments for too long, and the interest you pay over 30 years is much more than 15 year mortgages. Many people get a house they can’t afford and struggle their entire life. Read, “The total money makeover” by Dave Ramsey to understand the pitfalls of debt and how to set yourself up to be financially secure with just a little resolve.
Stay away from interest-only mortgage, ARM mortgages as well. They are non-prime mortgages set up to help the bank rather than you. They were suppose to be for few situations for few people-not the masses. Just ask someone in Los Angelus that bought that 800K house that is now worth about 600K.