Home Loan Basics

Thinking about buying a home? Let’s break down mortgage basics to help you understand your financing options.

First, there are two main loan types: fixed-rate mortgages and adjustable-rate mortgages. Let me give you a practical example using $100,000.

With a fixed-rate mortgage, say the interest rate is 5% for 30 years. Your monthly payment would be about $537, and it stays the same every month for the whole loan term.

With an adjustable-rate mortgage, the starting rate might be lower, like 3% for the first 5 years, so your monthly payment would be around $422. But after that, the rate can change yearly, which means your payments could go up or down.

So, fixed-rate means steady payments, while adjustable-rate can start cheaper but might increase later.

Understanding these examples helps you see how your loan choice affects your budget. Ready to take the next step toward your new home?