Peabody, Massachusetts is 18 miles North of Boston and as residents state, "It's a city that works!" Peabody has evolved into a diverse community and a wonderful place to live and raise a family. It has also become a tremendous economic success. Throughout history, Peabody, Massachusetts has been a regional employment center for the North Shore and is now quickly becoming prime property in the real estate market. If you are interested in mortgaging your first home, would like to refinance your existing mortgage, or would like to get a home equity loan, there are some things you should know that will help start the process.
Widely used by many first time homebuyers, a mortgage loan is money borrowed from a lender to pay for property. The mortgage is a legal document that secures the loan and gives the lender legal claim against your property if you default on the agreement. The term of your mortgage is the number of years over which you can pay back your balance. This will directly affect your monthly mortgage payments; the shorter your repayment period, the higher your monthly payment will be, but the total interest paid over the life of the loan will be considerably less, and vice versa. The most popular mortgage term is 30 years, but lenders offer terms for 10, 15, or 20 years also. Amortization is a repayment method in which interest is paid off in the early years of the loan and principal is primarily paid off toward the end of the term.
There are two main types of mortgage loans: those with fixed interest rates and those with adjustable interest rates. In a fixed rate mortgage, or FRM, the interest rate remains the same for the entire term of the loan. This gives the advantage of knowing that your rates cannot get any higher. In an adjustable rate mortgage, or ARM, the interest rate can vary during the term of the loan. Based on market interest rates, your interest can increase or decrease, and so can your monthly payments. To help in lowering the amount of money you will need to borrow for you mortgage loan, you can make a down payment in cash. Lenders usually view mortgages with larger down payments as more secure because the buyer has more of their own money invested in the property, but as little as 3 to 5 percent of the purchase price can be used.
If you already own your home, you have the choice to either refinance or take out a home equity loan. Choosing which is right for you depends on your financial goals. If you would prefer a lump some right now, you may opt for a cash-out refinance loan. With this, you would refinance your current mortgage to lower your rates and/or your monthly payment, and also take out additional cash. This could be used for anything from home renovations to paying off credit cards. The additional cash is based on the equity your home has already acquired. A home equity line of credit is an adjustable rate loan. This loan type is like having cash ready when you need it for a defined period of time. Making payments toward the balance you borrowed increases your available credit. You can use the cash at your own convenience, only pay for what you spend, and in some cases, the interest may be tax-deductible.
Now is the time to take advantage of the great real estate available in Peabody, Massachusetts. Fill out the form below to be contacted by a mortgage professional who can help you explore your options in home loans. If you want to get your first mortgage, refinance, or get a home equity loan, having a specialist available to help can ensure that you make the best decision possible.
