Making Sense of Mortgages

If you've been looking to get into the housing market or reading the news lately, then you may have heard that there has been a lot of fluctuation in mortgage rates as of late. Mortgage rates can change over time due to various economic and financial factors. Some factors that can affect mortgage rates include inflation, economic growth, unemployment rates, and the actions of the Federal Reserve. However, mortgage rates can also vary based on factors such as the type of mortgage, the term of the loan, and your credit score. In general, when the economy is doing well and there is low inflation and low unemployment, mortgage rates tend to be higher. Conversely, when the economy is struggling and there is high unemployment and/or inflation, mortgage rates may be lower.

Mortgages will ultimately apply to everyone buying and owning a home, but overall they can be a niche section of real estate knowledge. Here at Placer Title, we believe that knowledge is power. We want everyone involved in the home-buying process to understand what's happening every step of the way! Hopefully this will either serve as a refresher for your memory or get you up to speed on understanding mortgages.

A mortgage is a type of loan that is typically used to finance the purchase of a home or other real estate property. When you take out a mortgage, you borrow money from a lender (such as a bank or other financial institution) and agree to pay back the loan over a set period of time, along with interest and any other fees that may be charged. Three common mortgages are the assumable mortgage, fixed-rate mortgage, and the reverse or reverse-annuity mortgage. An assumable mortgage allows a new owner to take over its obligations by its pre-stated terms. The fixed-rate mortgage is a loan that carries an unchangeable interest rate over its entire term, which is typically a period of 15 to 30 years. And lastly a reverse or reverse-annuity mortgage has a borrower pledge the equity of the home in return for monthly payments and is repayable at the time the home is sold.

Understanding mortgages can help you make informed decisions when it comes to purchasing and closing on your new home. If you've got any questions, concerns, or you're looking for your next escrow officer, contact our team here at Placer Title. We're here for you!