Are you ready to become a homeowner? If so, a mortgage can help make your dream of owning a home a reality. A mortgage is a loan from a bank or financial institution secured against the purchased property. In a recent YouTube video by wallstreetsurvivor.
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com, Mark and Lisa, a newlywed couple, were used as examples of how a mortgage works. They found their dream home but needed more money to pay it upfront.
To finance their purchase, Mark and Lisa put down $100,000 as a down payment, and the bank provided them with a $400,000 mortgage at a fixed interest rate of 5% for a five-year term and a 40-year amortization period. This means they will pay a 5% annual interest rate for the loan term. Every payment helps build equity, meaning they own more of their home.
Mortgages are an excellent option for those who want to own a home but can only afford to pay part of the amount upfront. By taking out a mortgage, homeowners like Mark and Lisa can turn their monthly payments into equity and own their homes outright. For more information on mortgages and other personal finance topics, talk to a financial advisor you can trust today.
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