If you're not someone who deals with complicated financial matters very often, then it can seem like learning a new language when you're figuring out all of the details of getting a mortgage. Experts will tell you that it is just as important to pick the right lending agreement as it is to select the right home with real estate brokers. And if you're going to do that there there are likely some terms that you are going to need defined along the way. One that you might not have heard of before is amortization. (Find the definition here)

When referring to mortgages, amortization is the estimated length of time that it will take to pay off the loan in full. These can range from less than a year to as much as thirty years. The longer the amortization period is that you choose to go with your real estate, the lower your monthly payments will be. But, when you factor in paying interest, the longer you take to pay your mortgage the more you will end up paying in the end.

Another way to think of amortization is that it is the process of the loan principal decreasing throughout the time when the loan is being paid off. As you put money towards paying for your unit in pre-construction, a portion of that payment is going to be applied to reducing how much you still owe. The rest of the payment will go towards paying those interest fees and possibly other things like insurance. When you look at an amortization table you can see where all of you money is going with each payment and how quickly you are paying back your loan.

When you're looking for a mortgage or are interested in getting a home loan here in Texas Hills, it might be a good idea to take a look at the numbers when it comes to the amortization of different plans. While it might seem better to have lower payments over a longer period of time at first, you might see that it is in your best interest to sacrifice some other expenses to get your mortgage paid off faster. When you speak with a mortgage specialist (learn more here), you should get them to take you through all of this information before making a final decision.

Doug Thompson is Texas Hill Country Real Estate

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