What is a Mortgage Amortization? 🏠

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Understanding Mortgage Amortization

Amortization periods refer to the overall length of your mortgage. Essentially, the amortization period determines your monthly mortgage payment. The longer the amortization period, the lower the monthly payment, and vice versa. For example, with a $300,000 mortgage at a rate of 2.99% amortized over 25 years, your monthly payment would be $1,421.07. However, if the same mortgage is amortized over 10 years, the monthly payment becomes $2,895.44. While a shorter amortization period reduces the mortgage life, it increases the monthly payment significantly.

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Interest vs. Principal Payments

Amortization periods also impact the amount of interest and principal paid over time. A 25-year amortization means paying more in interest compared to a 10-year amortization, where a larger portion of your payments goes towards the principal.

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Current Amortization Guidelines 📋

• 20% Down Payment or Less: The maximum amortization period is 25 years.

• More Than 20% Down Payment: You could have the option to amortize the mortgage over 35 years.

• First Time Home Buyers: Recent changes now allow amortization periods up to 30 years.

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Mortgage Term and Amortization 📅

The mortgage term is simply the duration for which your interest rate is set. Within a single amortization period, you could have multiple terms. For example, a 25-year amortization might consist of five 5-year terms. At the end of each term, you'll need to renegotiate your interest rate.

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Contact Me for More Information 📞

If you have any questions or need more information about mortgage amortization, feel free to reach out. I'm here to help you navigate your mortgage journey.