New Home Source Pro
How do mortgages work?
The majority of homebuyers can’t afford to pay for their home upfront, so they work with lenders to take out a mortgage. A mortgage is loan you sign up for to borrow money to help with your home purchase. It’s a legal document – if you don’t adhere to terms of your loan or can’t keep up with your monthly payments, your lender has the right to seize the property and sell it to recoup their costs.
Your mortgage comes with two key components: the principal and the interest rate. The principal indicates how much you are borrowing from your lender to buy your home, while the interest rate refers to how much your lender is charging you on your outstanding balance.
Homeowners pay their mortgage back in monthly increments, which include the principal payment and interest charges. In most instances, other fees are worked into your mortgage too, such as your mortgage insurance and homeowner’s insurance.
Our mortgage payment calculator can help you estimate how much your monthly payments will be – simply plug in your loan amount, your interest rate and adjust for the length of your loan.