A mortgage is a loan that is secured by a house or other real estate property. That means if you fail to fully repay the loan, the lender can take the property and sell it in order to pay off the loan.
Mortgage Description
A mortgage allows you to make payments in installments over a set period of time, such as 15, 20, or 30 years – this is known as the repayment term. There are several different types of mortgages. For instance, a fixed-rate mortgage comes with an interest rate that does not change during the life of the loan, while an adjustable-rate mortgage’s interest rate will fluctuate. There are also balloon mortgages, where you make monthly payments as though you have a 30 year repayment term, but the entire loan balance will be due in 5 or 7 years (depending on the loan).
Research your Mortgage
It is important to do as much research as possible before taking out a mortgage, because in addition to deciding which repayment term and type of mortgage will work best for you, lenders often charge differing fees and interest rates for the same types of loans. Also, for most people, a mortgage is the largest legally-binding financial obligation they will take on. Make decisions about mortgages very carefully.