Mortgage Information

Want to buy that home of your dreams? Like most people, unless you have cash in the bank, we go to banks and mortgage lenders and borrow the money to buy our dream house. The bottom line? A mortgage is a loan that is to be used to finance the purchase of property. The property itself is used as security to ensure repayment and the lender holds the title or deed to the property either directly or indirectly (depending on where you live) until you have repaid the entire amount plus interest.

photoWe can't stress this enough! One of the most important things you can do before committing yourself to any type of mortgage is to sit down with a mortgage professional and examine all options available to you. This will enable you to determine which product is best suited to your current situation and your future plans. Let HABS Real Estate Group and HABS New Homes Group assist you in finding a local, knowledgeable, mortgage professional that will make you feel comfortable and provide you with solid advice. We work with these professionals on a daily basis and will be glad to provide you with recommendations.

Basic Mortgage Terms:

1. The Mortgage Amount
Your mortgage amount is the total amount of money to be borrowed by the purchaser and applied toward the price of the property. Basically, the mortgage amount plus the down payment equals the purchase price.

2. The Down Payment
Your down payment is the lump sum you pay upfront that reduces the amount of money you have to finance. You can put as much money down as you want, or you can sometimes pay as little as 3 to 5 percent of the purchase price. The more money you put down, though, the less you have to finance and the lower your monthly payment will be.

3. The Term of the Mortgage
The period of time during which the loan contract is active is the term of the mortgage. During the term the borrower makes periodic payments (usually monthly) to the lender and at the end of the term the balance of the loan is due and payable.

photo4. The Mortgage Payment
The mortgage payment is made up of:

  • Principal- This is the total amount of money you are borrowing from the lender (after you've made your down payment). It is the amount of money you are financing.

  • Interest - This is the money the lender charges you for the loan. It is a percentage of the total amount of money you are borrowing.

  • Taxes - Money to pay your property taxes is often put into an escrow account, meaning that the money is placed in the hands of a third party until it is time to pay or certain conditions are met. A portion of your property tax is added to your monthly mortgage payment and held in escrow until it is due.

  • Insurance - There are several types of insurance that can come into play when you obtain a mortgage. It is dependent upon where you live and the location of the property. Some types of insurance are hazard insurance to protect against losses from fire, storms, theft, etc., and if your home is in a flood risk zone it is possible you'll have to get flood insurance. Unless you have at least 20 percent equity in your home then private mortgage insurance (PMI) may be required.


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