Income and Mortgage Mind Map

1. monthly payments can increase or decrease

2. designed to completely pay off the loan balance over a set amount of time

3. Amortization

3.1. interest cost are at a all time high at the beginning of the loan

3.2. loan payments do not change

3.3. A $200,000

4. Fixed Rate Mortgage

4.1. same payment for the entire term of the loan

4.2. 15 or 30 year loans

4.3. paying more than required will help eliminate debt faster

4.4. borrowers are protected from any sudden and potentially significant increases in monthly mortgage payments if interest rates arise

5. Adjustable Rate Mortgage

5.1. rates adjusts once a year at the end of a fixed rate period

5.2. the rise of interest rates will cause payments to increase

5.3. 30 year mortgages

6. Choose A Shorter Loan

6.1. could get a better interest rate

6.2. lots of money will be saved over the life of the loan

6.3. payments will be higher if a 15 year mortgage is chosen over a 30 year mortgage.

7. a $200,000 mortgage at 5% interest would carry a monthly payment of $1,073.64. The first month $833.33 would go to interest and $240.31 will go towards the principal

8. Installment Closed End Credit

8.1. a certain amount of credit is given to purchase a item or a few

8.2. a certain amount of credit is given to purchase a item or a few

9. Revolving Open End Credit

9.1. part of the used credit must be paid off at the end of the period

9.2. does not close unless the company closes it

10. Bigger Down Payments

10.1. the smaller the loan, the less interest will have to be paid

10.2. the private mortgage insurance will not have to be paid if 20% or more is put down.

11. Annual percentage rate

11.1. interest plus fees and any other one time costs associated with the loan

11.2. helps compare the different interest rates and costs of different lenders

12. Closing Cost

12.1. the amount of money needed to close the mortgage deal

12.2. could include title insurance, escrow fees, lender charges, real estate commission, transfer taxes and recording fees

12.3. total closing cost is expected to be between 2% and 5% of the purchase price.

13. equity builds up as the mortgage is paid down

14. mortgage insurance is generally required for borrowers who put down less than 20%, in case of default the mortgage insurance protects the lender.

15. private mortgage insurance can be requested to be cancel after 20% equity is reached in the home.

16. Noninstallment Credit

16.1. secured or unsecured

16.2. no monthly payments, payment is due in a lump sum for the full amount owed

16.3. due in a short period of time

16.4. no monthly payment