Atlanta Mortgages 101
Understanding Atlanta mortgages is just a matter of becoming familiar with a few key terms and concepts. Before you apply for quotes on Atlanta mortgages, you'll want to make sure you are well-versed in the basic mortgage terminology. Here is a helpful guide to prepare you for your decision.
Basic Mortgage Terms
When shopping for Atlanta mortgages, it is important that you take into consideration the total cost of the mortgage. Avoid focusing on one number, such as a monthly payment, as this can mislead you about the total cost of the loan. The three main terms you'll need to know for Atlanta mortgages are fees, interest rates, and discount points. All of these costs will be reflected in your APR, or annual percentage rate. Each is explained in more detail below.
- Mortgage fees - these are the up-front expenses you will pay on your Atlanta mortgages. Typical fees include closing, origination, and processing fees. Origination fees usually come in the form of points, which represent 1% of the total amount of the loan.
- Discount points - when you close on your mortgage, you will be offered discount points. Discounts points let you "buy" a lower interest rate. One discount point equals 1% of the total amount of the loan. Buying down your interest rate with discount points will lower your monthly payments in addition to your interest rates. Each mortgage has its own specifications as to how much your rate will be lowered with each discount point purchase.
- Interest rates - interest rates represent a percentage of the outstanding amount on the loan. Your interest rate is the cost of borrowing. This cost will be paid to your lender each month in the form of interest. Interest rates have three main determinants: your creditworthiness, the individual features of your Atlanta mortgages, and the current lending market.
Atlanta Mortgages: Monthly Payments
Once you decide among the Atlanta mortgages available, you will soon begin making monthly payments. Monthly payments have four main parts: principal, insurance, taxes, and interest.
- Principal - this is the amount of money you borrow with your mortgage. Principal may also describe the balance you have outstanding on your mortgage at any given point.
- Insurance - your lender will usually include insurance expenses in your monthly payment. Your payment may include homeowner's insurance, mortgage insurance, or both. Different lenders have different insurance requirements.
- Taxes - taxes will be collected in your monthly payments, and then paid on your behalf to the government by the lender every few months. In the meantime, the funds are usually placed in what is called an escrow account.
- Interest - this is the cost of borrowing. The amount you will pay in interest monthly is determined by your interest rate, which is influenced by your credit score, the market, and the features of your mortgage.
For helpful hints on buying your new home, see our Atlanta Homebuyer's Guide page.
