O'Reilly logo

Home Buying For Dummies, 4th Edition by Ray Brown, Eric Tyson, MBA

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Chapter 6

Selecting a Mortgage

In This Chapter

Exploring the differences between fixed-rate and adjustable-rate mortgages

Understanding hybrid loans, balloon loans, and negative amortization

Selecting the loan that’s best for you

Looking at points, caps, and other mortgage mumbo jumbo

Finding a lender (or finding someone to find a lender for you)

Most of us need to take out a mortgage to buy a home for the simple reason that doing so is the only way we can afford a home that meets our needs. This chapter helps all nonwealthy folks comprehend mortgages and then choose one. (If you are wealthy and have a great deal of money to put into a property, this chapter can also help you decide how much of your loot to put into your home purchase.)

Start with the basics. What’s a mortgage? A mortgage is nothing more than a loan that you obtain to close the gap between the cash you have for a down payment and the purchase price of the home that you’re buying. Homes in your area may cost $70,000, $170,000, $470,000, or $770,000. No matter — most people don’t have that kind of spare cash in their piggy banks.

Mortgages require that you make monthly payments to repay your debt. The mortgage payments comprise interest, which is what the lender charges for use of the money you borrow, and principal, which is repayment of the original amount you borrow.

As noted in Chapter 3, the lender may also insist that you establish an impound account if your cash down payment is less than 20 percent of the ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required