Mortgage
What Is a Mortgage?
A mortgage is a secured loan used to purchase real estate.
The property serves as collateral. If the borrower fails to repay the loan, the lender can initiate foreclosure.
A mortgage includes:
- Principal
- Interest
- Loan term
- Repayment structure
It is typically repaid over 15 or 30 years.
Why a Mortgage Matters
A mortgage impacts:
- Monthly cash flow
- Long-term wealth building
- Equity growth
- Housing stability
Mortgage rates are influenced by broader economic conditions shaped by institutions like the Federal Reserve.
Small changes in interest rates can significantly affect total repayment cost over decades.
How a Mortgage Works
Borrower provides down payment.
Lender funds remaining balance.
Borrower repays principal plus interest over time.
Failure to meet terms may result in foreclosure.
Mortgage vs. Rent
Mortgage → Builds equity
Rent → Provides housing without ownership
Ownership includes both benefits and responsibilities.
FAQs About Mortgages
How long do mortgages last?
Commonly 15 or 30 years.
Can mortgage rates change?
Fixed-rate loans stay constant. Adjustable rates may change.
Is a mortgage the same as a deed?
No. The deed shows ownership; the mortgage is the loan.
Related Terms
