Understanding Your Mortgage

Understanding Your Mortgage

Understanding your Mortgage

In interviewing new clients, I have found that many are not as familiar with their mortgage as they should be. In considering how important it is to overall financial health, having a clear understanding of the terms of your home loan and the provisions within the mountain of paperwork can help save you money and avoid unexpected surprises that may arise.

Listed below are the key points that I feel every mortgage holder should know and understand about their home loan:

  • What is the interest rate of your mortgage?
  • What is the term of the loan and how much longer do you have to pay?
  • Who is your lender? NOTE: This is a different question than asking who you make your monthly payment to:
  • Is there a penalty if the loan is paid off early?
  • What is the penalty if you miss a payment or are late making a payment?
  • How is your home vested? Does the vesting protect you and your family against creditors and lawsuits?
  • Do you know who to contact if you have a problem with your mortgage?
  • In what situation, if any, could your loan be called due and payable?
  • What happens if you cannot make your monthly payments?
  • What happens in the event of death?
  • Most importantly, do you understand the documents that you signed at closing?

What Type of mortgage should you have?

In addition to understanding the terms and provisions of your mortgage, ensuring that your home loan is appropriate for your individual situation is also crucial. I see many clients in adjustable rate mortgages that would benefit from a fixed rate loan and others who have interest rates that are well above current market rates. Further, there are many homeowners who pay mortgage insurance who now have enough equity in their homes to remove the additional premium from their monthly payment. The process of a free mortgage review is simple and may end up saving you thousands of dollars in the long run.

A Tragic Case Study

I had a case a few years ago where a husband unexpectedly passed away. His wife assumed that the home they owned together would automatically be passed on to her. She was shocked to learn that their home was vested in a way where she owned 50% of the home and he owned 50% of the home. As heirs to his estate, his children from a prior marriage then had claim to his share of the equity. She ended up having to sell her home to pay off her step children. Through this tragic situation, she learned the hard way the importance of having an estate planner review their home’s vesting.

If you would like to learn more about your home loan, or if you are interested in a no-cost mortgage review, please call me at 801-501-7950 or e-mail me at mike@dev.citycreekmortgage.com.