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1. Mortgages usually peg housing costs anywhere from 28 - 30 per cent of a borrower’s gross income and a maximum of 36 per cent for existing debt payments which could be student loans, car payments and the like.
2. Mortgage terms could be 10, 15 or 30 years. Longer terms also mean lower monthly amortizations but higher interest rates. Shorter terms have bigger monthly amortizations but lower interest rates.
3. Sometimes, 30-year terms allow additional principal payments. Meaning, a 30-year loan could be reduced to 22 years by having one additional monthly amortization each year.
4. Mortgages have either fixed or variable rates. Fixed rates are advisable for buyers who plan to stay 10 years or more in their property, while variable rates are best for those who intend to stay there only within 5 years or less.
5. Home equity debts are normally tax deductible.