Your guide to understanding home loans.

If you’ve ever Googled “best mortgage lenders in Alabama,” “mortgage broker near me,” “how to get a mortgage loan,” or “first-time homebuyer mortgage,” you’re not alone. But before you dive into rate comparisons and pre-approval forms, it’s essential to understand what a mortgage actually is—and how it works.

At the Edwin Mortgage Team at Edge Home Finance, we help homebuyers across Alabama, Florida, Georgia, and Texas navigate the mortgage process with clarity and confidence.

Let’s break it down.

What Is a Mortgage?

A mortgage is a loan you take from a lender—usually a bank or mortgage company—to buy a home. Most buyers don’t pay all cash, so the mortgage bridges the gap between your down payment and the full purchase price.

In short: You’re borrowing money to buy a home, and then repaying that loan over time—typically 15 to 30 years—with interest.

Key Mortgage Terms You Should Know

💰 Loan Amount

The total you borrow from the lender (purchase price minus down payment).

📈 Interest Rate

The cost of borrowing money, shown as a percentage. Lower rates = lower monthly payments.

🕒 Loan Term

Common terms include 15-year and 30-year mortgages. Longer terms mean lower monthly payments but more interest overall.

💵 Monthly Payment (PITI)

PITI stands for:

  • Principal – your loan repayment
  • Interest – what the lender charges
  • Taxes – local property taxes
  • Insurance – homeowners (and possibly mortgage insurance)

What’s Really in a Mortgage Payment?

Your monthly payment isn’t just the loan. It includes:

  • Principal – reduces the balance
  • Interest – lender’s charge
  • Taxes – paid monthly into escrow
  • Insurance – home protection + possibly mortgage insurance (PMI)

Together, these make up your full mortgage obligation—and help you budget more accurately.

Fixed vs. Adjustable Interest Rates

✅ Fixed-Rate Mortgage

  • Interest rate stays the same for the entire loan
  • Monthly payments are predictable
  • Great for long-term stability

🔁 Adjustable-Rate Mortgage (ARM)

  • Lower rate to start, adjusts after 3, 5, 7, or 10 years
  • Good if you plan to sell or refinance before rate adjusts
  • Carries risk of rate increases

APR: A Better Way to Compare Mortgages

Your APR (Annual Percentage Rate) includes the interest rate and certain fees like:

  • Origination charges
  • Discount points
  • Mortgage insurance (if needed)

APR gives you a more complete picture when comparing loan offers—not just the interest rate alone.

What If You Can’t Pay?

If you stop paying your mortgage, the lender may begin foreclosure—taking the home back to recover what’s owed. This damages your credit and affects future home loan or rental opportunities.

Most lenders offer support before foreclosure, so communicate early if you’re struggling. We also help buyers understand their options and responsibilities before signing.

Real-Life Example

Let’s say you buy a home in Oxford, AL for $300,000 with a 3.5% down payment. You borrow $289,500 on a 30-year fixed loan at 6.5%:

  • Your monthly principal and interest = approx. $1,840
  • Add in taxes, insurance, and mortgage insurance = full payment of $2,300–$2,500/month

Over the loan’s lifetime, you’ll pay back the original loan amount plus hundreds of thousands in interest—which is why choosing the right loan matters.

Wrapping It All Up

A mortgage isn’t something to fear—it’s a tool. One that helps you buy a home, build equity, and create long-term financial stability.

Now that you understand how a mortgage works, the next step is getting pre-approved—so you can confidently begin your home search.

Looking for a Mortgage Broker Near You?

At the Edwin Mortgage Team at Edge Home Finance, we help clients find home loans with low rates, fast closings, and personalized guidance.

📍 Visit us: 7 Snow Street, Oxford, AL 36203
📞 Call us: 256-371-6811
🌐 Learn more: www.edwinmortgage.com

✅ Fast Pre-Approvals
✅ Low Rate Loan Options
✅ First-Time Buyer Programs
✅ Trusted Local Expertise