Step by Step Mortgage Guide What is a Mortgage? MortgageloansNJ.com

A mortgage is a 15 or 30 year loan that is obtained through the use of a mortgage broker who works with mortgage lenders. The purchase is used as collateral for the loan. The borrower agrees to make payments on the loan on time and in the event the borrower cannot make payments, the lender takes the home through a foreclosure.

A mortgage payment consists of the following:

• The Principal – the loan amount
• Interest – interest paid on top of the loan amount
• *Real Estate taxes – local taxes that pay for schools, infrastructure, fire departments, etc. This is different for every area.
• *Property Insurance – coverage that protects your investment (home) if a fire, accident, or some act of god damages your home.

 

* Can be paid in monthly payments or annually, borrower preference

How Interest Works?

The lender uses Amortization to spread out the interest owed over the term of the loan. Basically this makes the loan as affordable as possible for the lender. The majority of the interest is paid in the first years of the loan while the principal is paid towards the end of the loan.

A special note: Our brokers can show you how to reduce the term of your mortgage and save thousands on interest.

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