Sunday, November 9, 2008

How to Benefit from a Fixed-Rate Home Mortgage

(Home Mortgage)

The most prevalent of the various home mortgages is the fixed-rate mortgage which is the simplest to deal with. Since mortgage rates have been surprisingly low in recent years, home mortgages that offer the fixed rate have become more common.

There are two distinct features associated with fixed rate home mortgages. The first is that the payments and interest rate must remain the same during the life of the loan or mortgage. (Home Mortgage)The second is that at the end of the term of the mortgage, the loan must be completely paid up.

Loan Amortization
When an home loan is completely amortized it is a mortgage that has been completely paid for by the end of its term. Amortization means that the balance of the loan is being reduced through a monthly payment of interest and principal. It is calculated so that during a fixed time period the loan is completely paid off or amortized.(Home Mortgage)

Home Mortgage

When you have any home mortgage you can attain a amortization schedule which determines payments for the life of the loan. You can of the online to many web sites that will provide you with an amortization schedule.

You can find the monthly interest rate in this case by dividing the annual rate by a factor of twelve which comes to 0.583%. These numbers therefore a set since it is a fixed rate loan. They will not change during the term of the home mortgage.(Home Mortgage)

In order to determine the first month’s amortization calculation for an home fixed rate line you take the full amount of the loan and multiply it by the interest rate for the month. So the full amount of the loan is $100,000 multiplied by the monthly interest rate of 0.583%, gives us a monthly payment of $583.33, which is directed toward payment of the interest.(Home Mortgage)

To determine how much is actually going toward the payment of the principal it is necessary to subtract this amount from the total payment of $665.30, which gives us $81.97. To determine how much of the loan amount is due after payment of the first month’s payment, you simply subtract the $81.97 from the total loan amount of $100,00 and you get $99,918.03.

Home Mortgage

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