| -> | | | | principal balance of the mortgage. This is why term |
| The amount you pay each month for your mortgage | | | | length is important to your loan amortization. |
| is based on a number of factors. These factors | | | | Mortgage loans with longer terms have lower monthly |
| include your interest rate and term length; here is what | | | | payments. This is simply because repayment is spread |
| you need to know about these two important aspects | | | | out over a longer period of time, such as thirty years. |
| of your mortgage. | | | | The downside of a thirty year mortgage versus a |
| Your mortgage payment amount is determined by the | | | | fifteen year mortgage is that you will pay more to |
| amount you borrow, the term length you select, and | | | | borrow the same amount of money. Your mortgage |
| the interest rate you choose. To understand how your | | | | lender wants their interest paid up front; with a thirty |
| mortgage is repaid you need to understand the way | | | | year mortgage less of your money is applied to |
| mortgage loans are amortized. | | | | repaying principal than with a fifteen year mortgage. |
| Amortization can be a scary word. Amortization | | | | This concept is easily demonstrated graphically using a |
| describes the process of repaying your mortgage loan. | | | | good mortgage calculator such as the one found on |
| A mortgage loan is front-loaded with interest | | | | To find the best mortgage for your situation you will |
| payments. This means in the beginning of the loan you | | | | need balance the needs of your budget with the |
| will pay more to interest than you will to repaying the | | | | optimal term length and interest rate. |