Purchasing a home is usually the single biggest investment consumers will undertake. It is essential that anyone looking to buy a home understands all the details and terms associated with mortgages.
Boston, MA (PRWEB)
September 21, 2017
Consumers looking to purchase a home should be very familiar with the different mortgage options available and the common terms used by lenders. Taking out a mortgage loan is a big decision, and if the consumer doesn’t pay it back on time, the lender can foreclose on the home and sell it to pay off the loan.
To assist with the home buying process, national nonprofit American Consumer Credit Counseling has compiled a list to help consumers better understand common mortgage and home purchasing terms.
“The home buying process can be confusing, especially when you have to deal with the technical terminology used by lenders,” said Steve Trumble, President, and CEO of American Consumer Credit Counseling, based in Newton, MA. “Purchasing a home is usually the single biggest investment consumers will undertake. It is essential that anyone looking to buy a home understands all the details and terms associated with mortgages.”
According to a survey by Bank of America, 86 percent of millennials believe that owning a home is more affordable than renting compared to 54 percent of first-time buyers of all ages. When it comes to the down payment, 78 percent of millennials and 75 percent of first-time buyers of all ages say they would pay for their down payment with savings set aside for a home. Almost all respondents (87 percent) say they would take advantage of assistance programs when purchasing a home, but only 47 percent believe they would qualify for these programs.
American Consumer Credit Counseling has compiled a list below to help consumers understand mortgage terms.
1. Adjustable rate mortgage (ARM): a mortgage in which the interest rate is not fixed but is tied to an index and is periodically adjusted as the rate index moves up and down. The initial rate is lower than the fixed mortgage. Such ARMs commonly provided for an option to convert to a fixed rate mortgage.
2. Amortization: a repayment method in which the amount you borrow is repaid gradually through regular monthly payments of principal and interest….