In a discounted mortgage, the borrower pays lower interest rate in a set number of periods. So, the borrower pays lower mortgage payment until the number of period expires. After the set number of periods, the mortgage reverts back to the regular interest rate.

The discounted mortgage may be fixed or variable interest rate. For example, mortgage lenders offer one percent off the regular interest rate. And, the borrower pays lower mortgage payment with one percent off the regular interest rate. In a variable rate, the interest rate may deep lower. Hence, the mortgage payment deeps lower as well.

For the first time home buyer, the discounted mortgage may be an excellent idea. The initial expenses for the first home may be overwhelming. As a first time home buyer, the home buyer may need to furnish, repair, or renovate some parts of the home. And, the home buyer pays the mortgage financing closing costs. If the home buyer lives far away to the new home, the home buyer pays the moving expenses as well.

The closing costs on mortgage are fees to process the mortgage refinancing or financing. For example, the escrow fee, underwriter, document preparation, origination fee, appraisal, administrative fee, processing fee, wire transfer, mortgage broker fee, tax service fee, and flood certification are closing costs.

Since the borrowers pay lower mortgage payment, the borrowers can use the extra cash as they please. For example, they can renovate the kitchen, repair the bathrooms, or convert the garage to extra room. The renovations may actually help to increase the value of the home.

The mortgage lenders are constantly stream lining the mortgage application procedures to reduce the closing costs. At the same time, the mortgage application procedures improve the efficiency and simplicity of the whole procedures. In fact, the borrower can apply for pre-approval without extra costs, apply for discounted mortgage by phone, or apply for discounted mortgage by internet.

The borrowers may be allowed to pay lump sum to pay off the mortgage early without penalty. Penalty is a fee that is charge to the borrower for paying the mortgage too quickly. However, the mortgage lenders will charge penalty when the borrower pays off the total mortgage or switches to another mortgage financing.