What’s up guys this is Teddy Smith here in Wilmington North Carolina and this video wouldn’t be talking about mortgages for dummies 101 or home mortgages explained simply.
So in today’s world there are a dizzying array of mortgages available and this sometimes makes. It confusing to people who are trying to learn about them but at the very heart of it just realize this a mortgage is nothing more than a loan that is secured by real estate at some point in your life. You’ve probably received a loan or given a loan to somebody maybe.
It was something very simple like loaning your bike or maybe loaning your friend 10 bucks but just realize a loan is a loan at the end of the day. So for examples, sake let’s just say that you needed to buy a moped for work. You needed a form of transportation. You had no money so you asked your roommate for the money to buy the moped all loans come with certain terms so let’s say that your roommates wanted his money back in one year at 4% interest with monthly payments of $50 and keypoint.
If you default he gets to keep your moped so a mortgage is no different except. It involves real estate if you violate the terms of the mortgage or the loan they’re going to take back the piece of real estate as opposed to a moped and although. There are many different types of mortgages they usually have these types of terms very long periods of time. Say 30 years at a certain yearly interest rates a 4% monthly payments and lastly they are amortized over this time period.
Amortization is one of the building blocks of the modern mortgage. it’s very ironic because amortization is very difficult to understand. It’s never taught in public schools or any personal finance courses in our moped example our roommate wanted us to pay the payments in equal payments each as opposed to paying the lump sum of the moped as well as the interest at the end of the term.
It is the key point of amortization essentially with amortization you’re paying off a little bit of the moped and a little bit of the interest over each month and hopefully by the end of the term you’re going to end up owning the moped and having paid the interest that your roommate wants you to pay with a non amortized loan you would have to pay the whole entire moped off and you’d have to pay all of the interest at the very end of the year when the loan came due so a very simple mortgage example would be this you are buying a $100,000 house you’re getting a yearly rate of three point nine two percent and is amortized over thirty years.
If you type in mortgage calculator on google search and you input those numbers it’s going to give you a monthly payment of four hundred and seventy three dollars each month personal loans moped loans home mortgages they’re all pretty much the same. If I can give anybody the best piece of advice when you are trying to get a loan is you want to negotiate the most favorable terms especially for a mortgage.
Which is very long and very expensive and the best way to negotiate a loan is number one put down the largest down payment that you possibly can and try to negotiate the rate down as low as possible the lower the rate the bigger the downpayment the less risky the loan and the lower the payment more than likely. If you’re watching this you are a first-time homebuyer.
I highly suggest you check into government subsidized loans which have very low rates loans amortized over 30 years and because they’re government subsidized there’s really no catch they’re government programs aimed at helping first-time homebuyers buy houses one thing you must take into consideration when getting a mortgage is that you’re going to have to apply for a mortgage through a bank or some type of lender these people are going scrutinize your financial history so in order to increase your negotiating power and increase the likelihood.
t you can get a good rate on a loan you need to impress banks and lending institutions with things like good credit a nice stable income and assets in a savings account 401k or some type of bank account in a post 2008 world bank’s lending institutions kind of have a sketchy past and mortgages to be honest. You have always had a sketchy history reckless mortgage lending has been the cause of many ills and society such as economic meltdowns bankruptcy and personal stress and financial burden of having mortgages that people can’t afford but mortgages.
When you respond simply have tons of upside as well over time you can build tons of wealth of real estate you can grow your real estate portfolio and you can generate passive income if you use mortgages wisely but anyway that is my video for today if you guys enjoyed. Make sure to smash that like button make sure to subscribe and as always thank you for watching