Monthly Payments

Be prepared for the payment size as well. Lenders generally expect you to be able to make a downpayment of between 10%-20% of the house's cost. Usually, by making a downpayment of less than 20%, a lender will require you to acquire mortgage insurance. The payments are determined by which type of mortgage that you have. To get a free quote click here.

There are two main types of mortgages: fixed payments and varying payments. Fixed payments are a set amount to pay each month. Varying payments change with changes in a set index (usually this index is the U.S. Treasury Bill rate). With fixed payments, an option may also be offered to have bi-weekly payments instead of monthly payments. Typically, these are higher interest rates because they pay off the loan quicker. For example, in the case of a 30 year mortgage, bi-weekly payments decrease the repayment time from 30 years to 19 years.

Remember: If you are able to make these bi-weekly payments, even though you are paying more interest per period, you will pay less interest over the entire life of the mortgage.

Adjustable rate mortgages (ARM) are the more common type of mortgage. These types of plans have payments that are lower than fixed rate mortgages in the beginning. These payments can change in value over the life of the mortgage. Generally, these changes are a direct result of a change in some sort of index. The indexes commonly used are the prime rate and the U.S. Government Treasury bill rate. These rates are found in the financial section of your newspaper (The Wall Street Journal is the best paper to find out about these rates). Some of these mortgages also have a feature to switch your payment to a fixed type of payment.