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Mal Eccles CPMB
These two words are the basis of some of the most important considerations that the prospective borrower must address.
Terms
A definition would be, the length of time that a borrower agrees to enter into a debt (mortgage) in the agreed upon term.
The term of the mortgage could be 6 months, 1 year, 2, 3, 4, 5, 7 or even 10 years. This would be the length of time that the agreement between the lender and the borrower is in force, with the privilege of the terms of the agreement.
The terms would be: interest rate, re-payment agreements, pre-payment privileges, payment options, pre-payment options, additional properties being collateralized portability features, guarantors, co-signers, etc.
Amortization
The word amortization refers to the gradual paying off of a debt in regular installments over a given period of time.
With regards to a mortgage a typical amortization period would be 25 years. In other words a 25 year amortized mortgage is a debt where regular equal monthly (or other optional payments) if made in a timely fashion will pay off the debt in 25 years.
The length of time of the amortization of the debt will determine the monthly payments. As a 10 year amortized mortgage will have a considerably higher fixed payment than a 25-year or 40 year amortized mortgage. Often times a borrower may enter into an agreement to pay bi-weekly or even weekly to reduce the debt quicker. This escalated payment option may put undue pressure on meeting the payment commitment, whereas just simply reducing the amortization of the mortgage by a few years and staying with a monthly payment will achieve the same results.
Choosing a 40-year amortized mortgage will create a smaller monthly payment thereby enabling the borrower(s) to qualify for a larger mortgage hence a larger house purchase.
So in summary the chosen amortization can be very instrumental in assisting the borrowers to realize their dreams.
Rates For
Tue, Mar 9, 2010
9:43 am
| 1 Year (Closed) | |
| CIR: 2.75 | Bank: 5.70 |
| 1 Year (Convertible) | |
| CIR: 2.75 | Bank: 5.70 |
| 1 Year (Open) | |
| CIR: 2.75 | Bank: 5.70 |
| 2 Years | |
| CIR: 3.05 | Bank: 3.26 |
| 3 Years | |
| CIR: 3.25 | Bank: 3.66 |
| 4 Years | |
| CIR: 3.69 | Bank: 5.10 |
| 5 Years | |
| CIR: 3.89 | Bank: 5.40 |
| 7 Years | |
| CIR: 5.30 | Bank: 6.0 |
| 10 Years | |
| CIR: 5.40 | Bank: 6.10 |
