What are the basics of a mortgage?
There are two basic types of mortgages: • Fixed interest rate with fixed monthly payments. • Adjustable (ARM) with variable rates and changing monthly payments. Generally, lenders require 10% down for purchases, or 10% equity for refinances. To avoid mortgage insurance, the requirements are 20%. Also, you can expect to pay closing costs, generally three to four percent of the loan amount. For refinance loans, these closing costs can be financed into the loan amount so that you don’t have to contribute cash.
