No matter where you are in
the homeowners' journey, there are important terms
you should know during the mortgage financing process.
Let's start with a few common terms:
A mortgage loan is a loan from a lender (e.g. a bank), secured by real estate.
Home owners pay back the money borrowed over a set period of time, plus interest.
A down payment is the amount of money you put towards the price of your home, and is due on the closing date.
The remainder of what
you don’t put "down" is the amount you are borrowing from a lender (i.e., your mortgage).
Once you have a sense of what your mortgage and down payment amounts will be, it's important to know the difference between the amortization period and the term, as these are related but distinct.
The amortization period
is the number of years
it will take to pay off your mortgage loan completely, assuming the interest rate and payment amount stays the same. This period is agreed upon between
you and your lender.
The mortgage term is
the length of time you're committed to your mortgage interest rate, lender, and associated conditions. At TD, mortgage terms range from six months to 10 years, with five years being the most common option.