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| Name | What is My Mortgage Amortization & Mortgage Term? |
| Video Uploader | Video From MortgagesInVancouver |
| Upload Date | This Video Uploaded At 15-11-2010 17:47:24 |
| Video Discription | http://LeahCoss.ca Hi everyone, how are you? It's Leah Coss with the Mortgage Center. And I wanted to go over the difference between amortization of your mortgage and your term. Now in really, really layman's terms amortization is the really big number and the term is the really small number. In less layman's terms the amortization is basically if you take your mortgage or your loan amount and you were to divide it over a whole bunch of months, then you are basically saying well 25 years or 300 months, or 35 years and 420 months. We are going to stretch out that mortgage across that term and cut it up into a bunch of pieces. And whatever those pieces are is what is essentially your monthly payments are. That of course including your interest and all that kind of stuff. So that's what amortization is. Obviously, if you were to take a $100, 000 of a mortgage and stuff it into 10 years, it is going to be a lot bigger monthly payments than if you stretch it out to 25 years. And likewise, if you really stretch it out to 35 years, you are getting much, much smaller payments. So for those of you who are looking for cash flow, because it is a rental property, or if you are just wanting to really minimize the amount that's going out onto your house, perhaps your are banking on equity. Perhaps you just not really caring about putting money into your home, you prefer to save your money to put into other investments, your spending habits, then 35 years is definitely the way to go. Because for one, it's the maximum that you can go and for two, it is going to minimize your payments extremely. So that's what amortization is. How big or how long of a length of term are you going to have, that we can stretch your mortgage out into. And that's going to minimize your payments. Now, the 'term' is really the term that you are locking into with that one particular lender. So although you get a 25 or 35 year amortization, that doesn't mean that you are stuck with that one lender for 25 or 35 years. And also it doesn't mean that your mortgage is locked in for that long with that lender, and that you have to pay a penalty if you get out sooner than that. That's what the 'term' is. The term is the contract between you and the lender for how long of a mortgage you are going to have held with them specifically. So, five years tends to be the common one, the go to one. And so if you have a five year fixed mortgage what that means is, have a five year fixed mortgage with a 35 year amortization so that's what's dictated how big my payments are is the amortization. But the term is basically a contract between me and the lender saying this is how long I will loan this money from you for. At the end of five years I can either renew with you or change to a different lender if you are going to screw me on the rate. So those are the two terms, term, amortization, completely separate things. Only one of them is actually contracted with the lender. And the other one is basically dictating the length of your loan and the sizing your payments. So a lot of people do like to play out their amortization in that sense. But if you have questions about how long of an amortization you should have, the costs that are associated with getting a longer amortization, or about your term how long do you want to lock in with the lender, based on rates, based on terms, based on penalties and things of that nature. So as always, Leah Coss with the Mortgage Center. I am always happy to help you and answer any questions that you have. And hopefully I will be talking to you soon. Thanks so much. 5ozPGd3zrck |
| Category | Entertainment |
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