Rarely are people able to actually pay cash for their home. It’s a wonderful idea, but most of us have to get a loan and make monthly mortgage payments. If you are ready to dive into the real estate market for the first time, here are some helpful facts concerning mortgages that might be of interest to you.

Your mortgage payment is divided into two parts, even though you write the check to just one entity. A portion of the monthly cost actually reduces the amount you own on the loan, and the other part is paying off interest on the loan. How much you pay for each chunk depends on your loan type and your rate of interest. In the early years of loan repayment, you might see that a large portion of your payment is used only for interest, but as time progresses, more of this monthly cost will go toward paying off the premium.

There are many different types of mortgage structures and each has its advantages and disadvantages. One type is a fixed-rate mortgage. This means your rate of interest is fixed the entire time you have the loan. Generally, you can get a 30-year fixed mortgage or a 15-year fixed rate mortgage, which means your house loan will be paid off in either 30 or 15 years. The rate of interest for these two loans might be similar, but you will pay a larger chunk of the principal each month with a 15-year loan. This is a great idea if you can afford it, but often this payment is too high for many families to manage so they opt for a 30-year fixed loan.

There also are variable rate loans. This means the rate of interest you pay can vary from year to year. The most common variable rate loan is called a 5/1 ARM. This means for the first five years of the mortgage, the rate is fixed. After that it adjusts every year. The advantage of a 5/1 ARM is that generally the initial rate is lower than the rate for a 30-year fixed loan, which means your monthly payment will be lower. If you sell the house or refinance the loan into a fixed-rate mortgage before the arm adjusts and potentially goes much higher, this can be a great deal. Otherwise, you risk having your mortgage cost go up and up and up every year, which certainly can happen and this can mean you spend hundreds of extra dollars each month.

When you buy a home, most people must come up with a down payment amount, but that is not the only expense that you will incur. While the person selling you their home will pay for the realtors‘ commissions, you will have to pay for home inspections and sometimes a home appraisal. There are also costs associated with getting a loan in the first place, such as a loan origination fee. You must pay to have a credit report run and you will have to pay for title insurance and other odds and ends. Sometimes you can see if a seller is willing to pay for some of these items or you can ask your lender if it can be rolled into your home loan as it might be easier to pay a little bit more each month than a big chunk when you buy the home.

Buying a home can be very stressful, especially if you have never done it before so it is wise to select a realtor with a great deal of experience. This is a trusted professional that can help explain many of the costs and details that most of us simply just don’t understand. Of course, your realtor also can find a great home that suits your needs, tastes and budget. Contact the realtors at Nixon Real Estate if you are looking to settle anywhere within Texas Hill Country. If you wish to buy Fredericksburg real estate, San Antonio real estate, Kerrville real estate or a home anywhere in the region, they can help you with the entire process.

Pammy McGrath enjoys reading about real estate blogs. If you are searching for licensed Fredericksburg TX real estate agents, or to discover Fredericksburg Texas homes for sale, please check out the NixonRealEstate.com site today.