6

6.1 Mortgage Loan

Down payment: a percentage of the total cost of the house paid at the time of purchase.
Mortgage Loan (principal): the money you borrow.
Closing Costs: fees and taxes paid to complete the purchase.

Interest:
- Fixed rate mortgages: The same rate of interest is paid for the life of the loan.
- Variable rate mortgages: The rate of interest is not guaranteed and may be increased or decreased.
Mortgage Payment: Most mortgages are repaid gradually over the life of the mortgage in equal monthly payments.

Amortization Table: It is a table that shows the monthly payments needed to amortize mortgage loans over different periods of time using different interest rates.

Refinancing a Mortgage: When you refinance a mortgage, you take out a new mortgage and use that money to pay off the old mortgage.

Depreciation: It is the loss in value of property caused by aging and use.
Net Cost for a Home: $ Total Expenses – Tax Reductions = Net Cost for the First Year$
Costs of Property Rental: Security deposit is a one-time payment in addition to their rent when they sign a lease, or rental agreement.

Property taxes are taxes on the value of real estate such as homes, business property, or farm land.
The amount of property tax paid is based on the assessed value of a property.
$Amount to be raised by property tax = Total expense budget – Income from other sources$
Tax Rates in Mills or Cents per Dollar: $\frac{\$62}{\$1,000}=\frac{\$0.062}{\$1}$

Homeowners Insurance:
- A policy that covers your home and protects you against other risks is called homeowners insurance.
- The amount for which your home is insured is called the face value of the policy.
- Under replacement cost policies, the insurance company will pay the cost of replacing your property at current prices.
Premium:

The money paid to an insurance company for property insurance is the premium.
Renters Insurance Premiums:

If you rent a house or an apartment: You can buy a renters policy that provides nearly the same coverage as a homeowners policy except for loss of the dwelling and other structures.