Payment Calculations
Be sure you understand how much your monthly payments will be and what they cover. Your
mortgage company should be able to give you this information in advance. With some loans,
you will be required to make monthly payments on
the principal and interest. With other loans, you may be required to pay interest only on
the borrowed amount. With these loans, your monthly payments will not reduce the principal
amount of the loan. With such a loan, you will be required to pay back the entire borrowed
amount at the end of the loan period. These loans are popularly known as "balloon
loans." If your loan has a balloon payment, you
should consider how you will arrange to repay the entire amount when it becomes due.
On "home equity lines," the mortgage company does not have to give you the exact
amount of the monthly payment, but must explain how it is figured. This is because the
borrowed amount will vary and your outstanding balance will change
if you use the line of credit. However, if your monthly payment term is 5% of the
outstanding balance and your outstanding balance is $5,000, your minimum monthly payments
would be $250. |
2nd Mortgages
Home Equity Credit Lines
Length of Second Mortgage
Payment Calculations
Loan Costs
Interest Rates |
