By Rich Cosgrove, President Stark County Association of REALTORS®
A mortgage is a debt instrument, secured by the collateral of specified real estate property, that the borrower is obligated to pay back with a predetermined set of payments. The interest rate, number of payments and type of loan may vary, however, Ohio has a standard mortgage for all borrowers.
Having a mortgage makes purchasing property a reality to many individuals who cannot afford to pay for a property in full at the time of the sale. As with any loan, a mortgage consists of two elements, a principal, or how much you borrowed, and interest, the rate at which the lender has charged to borrow the principle. The amount you will pay monthly will depend on what the interest rate is, how long your loan term is, and how much you borrowed. Depending on the type of loan you use, your payments may also include homeowner’s insurance, property taxes, and principal mortgage insurance.
As a homeowner you may choose the company that you want to contract with for your homeowner’s insurance. Often times people choose the company they have a current policy with such as renter’s insurance or car insurance. Policy rates can differ between companies so it is a good idea to shop around for coverage and price.
Property taxes in Ohio are typically billed and paid every 6 months. If your monthly payment includes your property taxes, your lender will pay these each time they are due by taking money from your escrow account which is where they hold your homeowner’s insurance and property tax money.
PMI or principal mortgage insurance is typically required by the lender if your down payment is less than 20%. PMI typically cost between 0.5% and 1% of the mortgage annually.
You may qualify for more than one type of mortgage. You can have a fixed-rate mortgage which means your interest rate is locked in and remains the same throughout the life of the loan. Adjustable-rate mortgage, though not common are available which means your interest rate may adjust monthly or yearly. There are conventional, FHA, and VA mortgages. To know which you qualify for speak to a lender of your choice or you may ask a REALTOR® to recommend a lender.
This may all sound very confusing, and possibly hard to navigate alone. Thankfully you’re not alone. To get started with the process of buying, call a REALTOR®.
The Stark County Association of REALTORS® welcomes you to visit our website at www.starkrealtors.com for a complete listing of REALTORS® and Affiliate members who are sure to meet your professional needs. The Stark County Association of REALTORS® members are honored to service the Stark, Carroll and Trumbull Counties.
If you have any questions or comments on this article, please contact me by email at firstname.lastname@example.org.
The voice of real estate in Stark, Carroll, and Trumbull counties.