The time has come for you to look into buying a home. One of the first things to consider is how to obtain the right 1st mortgage financing for you. The financing cost is just as important as the sale price of the home and deserves just as much attention.
The 1st mortgage is what is called the superior lien on your home. The lender for the 1st mortgage will be first in line if there is a default on the home. Any other secondary mortgages or liens will be paid off out of what is left over from paying the 1st mortgage lender.
This is the period of time between the distribution of funds and the moment that the mortgage reaches maturity and is to be repaid in full. For most homes the loan term is either 15 or 30 years, though other terms can be negotiated.
The amortization schedule is the amount of principle balance remaining on a mortgage at any given time. By looking over the amortization schedule you can see at what point you will reach certain markers in the loan term. Also, an amortization schedule allows you to compare the principle balance left on the mortgage to the appraisal value of the property at any given time.
The loan to value ratio is an important thing to know when reviewing your 1st mortgage. The loan to value ratio is simply the payoff of your loan compared to the appraised value of the home. This is a very important ratio in determining home equity lines, the need for PMI insurance, and other financing options you may seek in the future.
Your 1st mortgage financing is very important to your future personal finances. Understanding how the process works is important to making good financial decisions in the future, as many of your future credit decisions will be based on your home mortgage.
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