Buying and moving into a new home is one of life’s great experiences, especially if you’re buying your first home. From getting that pre-approval to the “yes!” response on an offer to closing and moving in, every step is exciting. And while the process is engaging and fun, it’s important to prepare for moving day […]
Understanding Fully Amortizing Mortgages in KC
Before you decide on what type of loan you are going to use for your new home, you may come across “fully amortizing” mortgages in KC. Fully amortizing mortgages cover a wide range of loan types.
The Payment Schedule of a Fully Amortizing Mortgage
A mortgage amortization schedule determines when a mortgage will be paid in full. Therefore, fully amortizing mortgages in KC have scheduled installments that fully pay both principal and interest over the life of the loan. Homeowners are required to pay these installments each month to ensure the remaining balance is paid by the end of the loan’s term.
Lenders sometimes offer loan programs that are not fully amortizing to make owning a home more affordable to borrowers with less income. For instance, interest-only mortgages in KC are not fully amortizing because they only require interest payments each month. These loans allow the borrower the flexibility to pay only interest or pay down the loan’s principal depending on what they can afford each month.
Fixed Rate Mortgages: Shorter Amortizing
A fixed-rate mortgage fully amortizes, or “is fully paid off” at the end of its term. For a 15-year fixed-rate mortgage, the loan is paid in full at the end of 15 years. If payments are made on schedule, a 30-year fixed-rate mortgage will be paid in full at the end of 30 years. Home mortgages in KC with shorter terms have less interest to pay because they amortize over a shorter period of time.
Adjustable Rate Mortgages: Longer Amortizing
Adjustable-rate mortgages in KC fully amortize even with a fluctuating interest rate. A 15-year adjustable-rate mortgage will still be paid in full at the end of the 15-year term if payments have been made regularly. The loan will still amortize regardless of whether or not interest rates have risen and fallen throughout the term.