Check out the mortgage terms and descriptions that are used in the mortgage world Dictionary Terms >>
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Are you looking for real estate financing? How about help with refinancing your mortgage? You’ve come to the right place. At CDM Funding we make finding you the perfect home loan a priority.
Sure, all home loan programs serve the same function – to fund the purchase of a new home or refinance an existing mortgage. But home loan terms and conditions differ. The best loan for a young couple planning a family in a few years might not be a good choice for an investor planning on selling the property in a few years. An ARM with a fixed rate for only the first three years may not be the best option for a couple with children but may be perfect for the investor planning on selling the property in the first three years.
Please see below for information on how home loans work, and then contact CDM Funding for more information on the perfect home loan for your needs.
30-year fixed rate mortgages:
In any fully amortizing 30 year loan, the monthly required payment is the sum of the interest that has been charged and the amount of principal required to pay the loan off in thirty years. The first loan payment will pay the smallest amount of principal and each succeeding payment will pay a little more principal. In a fixed rate loan, the amount of interest paid each month decreases as more principal is paid.
Adjustable Rate Mortgages (ARM).
An ARM works the same way. The principal pay down each month must be the amount required to pay off the loan within 30 years. What is different in an ARM loan is that the interest being charged changes. If the rate increases 1%, the payment must increase by the amount necessary to pay the accrued interest at 6% and pay off the principal by the maturity date of the loan.
Learn more about the difference between fixed rate and ARM loans.