If you’re buying your first home, chances are you don’t know the first thing about comparing mortgages or what ‘amortization’
means. Buying a house is probably one of the biggest decisions you will ever make and undoubtedly your biggest purchase. Heading into such a decision, it’s important that you know everything there is to know about what this purchase will mean and require of you both now and in the future.
Unless you won the lottery or come from a very wealthy family, you will likely be funding your home purchase with a mortgage. What is a mortgage? Basically, a mortgage is a loan specifically for financing the purchase of a home. When you sign the paper work for your mortgage, you’re agreeing to the terms of a legally binding contract that include your house as collateral for the loan and an agreement that you will repay the debt, with the addition of interest, over the course of a set number of years. In the end, your total mortgage cost is the principal, or the amount of money you needed to borrow to buy the house, plus the fee to the lender for loaning the money, as determined by the current interest rate.