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9 Useful Facts about House Mortgage

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1. Amortization Period It is not always better to choose the longest amortization period on your mortgage. Although the payments will be lower with a longer amortization period, you will end up paying more in interest over the life of your mortgage. The following example shows this for a $250,000 mortgage with a 5% interest rate. Amortization period Monthly payment Total interest over the lifetime of the mortgage 30 years $1,334 $230,322 25 years $1,454 $186,204 20 years $1,643 $144,275 Amount saved with a shorter amortization period $86,047 2. Minimum Down Payment 5% In order to buy a home, you need a minimum down payment of 5 per cent of the purchase price (or appraised value) of the home. To purchase a house, the minimum down payment that is usually required is 5 per cent of the property lending value (which is equivalent to the accepted purchase price or appraised value, whichever is lower). However, some financial institutions may offer to finance your down payment. If you choose this option, you will increase your debt and pay more interest over the lifetime of your mortgage. In addition, the required mortgage default insurance premium will also be higher than if the [...]

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