West Covina, California is the 50 th largest city in California. Situated in Los Angeles County, there are approximately 105,000 people residing in West Covina.
The Basics of A Mortgage
If you are looking to buy a house, then you have a basic idea of what a mortgage is. A mortgage is money that a lender loans you to purchase a house, however it is also a savings program of sorts, as well as an investment program. Your home is the investment that you are making. Very seldom do houses lower in value because real estate markets have a much larger tendency to rise than fall. What you pay for your home today will be less than what it is worth five years from now. You can expect the market to raise the price of your home within those five years, even if you do not do any renovations.
Payments
When you pay your monthly, bi-weekly or weekly mortgage payment, you will be paying to two separate accounts: the bank’s interest account and against the principal of your mortgage. When you first start paying your mortgage payments a larger percentage of the payment goes to the interest with a smaller percentage going to the principal. Over the term of your mortgage, you will find the percentages changing to the other direction. After a few years, you will be paying more to the principal of the mortgage than to the interest. The money that is paid to the principal of the mortgage amount is known as home equity. This is money that you have saved by paying for your home and is an asset that you can borrow against.
Mortgages can be viewed as an investment in your future. The equity can save you from hardships in the future if you have to borrow against it. You can also view it as a savings plan for college tuition. You can take out a home equity loan to pay for your child’s college tuition in the future.
Home Equity Loans
Home equity loans come in two basic varieties: revolving credit and lump sum cash. Revolving credit home equity loans can be up to 100 percent of the equity in your home and are provided to you on a revolving basis. These are known as open home equity loans. Essentially, you have an account with the home equity amount in it. You use the money as you need it and pay at least the minimum monthly payment each month. If you pay more than the minimum payment, that money goes back into your home equity account for you to use again. Lump sum cash home equity loans, also known as closed equity loans, give you a lump sum of cash all at once up to 100 percent of your home’s equity amount. After that, you pay the sum of the home equity loan back to the bank, with interest, in monthly payments.
A home equity loan and mortgage are both secured with the house which means there is a lien on the house so that if you sell it, the bank gets its money back first. If you fail to make your payments, the lender can foreclose on your home and sell it to recoup their financial input.
Home equity loans and mortgages do not have to be difficult or intimidating. We can help you understand all the ins and outs of these financing and refinancing tools so that you understand the contract or contracts that you are getting yourself into. Start by filling out the form below with your information so that we can get started.
