Most, but not all, mortgage loans are “amortizing” and consist of payments that include both principal & interest.
When people refer to “mortgage payments”, they generally mean the total P & I amount.
Sometimes the “mortgage payment” also includes an escrow item (e.g., real estate taxes), as well.
By doing this, you can lower your total interest paid and shorten the time it takes to pay off your mortgage.
However, not all companies offer this option and be very cautious about any extra fees that may be tacked on for this type of payment plan. Fees could eliminate any benefits you gain.
The FHA insures mortgages on single family and multi-family homes.
The FHA is a government agency that is part of the U.S. Department of Housing and Development (HUD).
Unlike fixed rate mortgages, Adjustable Rate Mortgages (ARMs) have an initial interest rate that lasts only for a specific period of time. After that, the rate adjusts on a predetermined schedule usually every 1, 3 or 5 years.
So, for example, a 5/1 ARM, has an initial interest rate that is set for 5 years and then the rate adjusts annually each year after that. Similarly, a 5/3 ARM has an initial rate term of 5 years and then the rate adjusts every 3 years after that.
It’s important to note that this does not tell you anything about how much the rate can change or how high it can go. That’s a very important question to ask if you are considering an ARM, as there is great variety among ARMs.
Mortgage brokers often have more “alternative” mortgage options for borrowers with less than perfect credit or other mortgage qualifying challenges.
But both mortgage brokers and mortgage bankers have a variety of mortgage options, so shop around to find the best deal based on the terms, including interest rates, required documentation, down payment, fees, and credit scores.
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