A mortgage is a loan that provides finance for the purchase or refinancing of a home. The terms of the loan are usually fixed for a set period of time.
Mortgages are secured by the property being financed. This means that if the borrower defaults on the loan, the lender can foreclose on the property and get the money back.
Typically, a loan of this type is considered the largest debt a person may have. They are also considered the longest-term loans. However, the cost of a mortgage varies depending on the terms of the loan, as well as the interest rate.
What Are Your Mortgage Options?
Some types of mortgages may require mortgage insurance. Others may have a cap on how much the payments can increase or decrease. These caps are to prevent the payments from spiraling out of control.
Another form of mortgage is an adjustable-rate mortgage. An adjustable-rate mortgage is a type of loan that can adjust its rates over time based on market conditions. Most adjustable-rate mortgages are 30-year loans.
In the U.S., a regular payment mortgage is often referred to as a repayment mortgage. During the loan, the borrower pays interest and principal in a series of monthly payments. Eventually, the total balance of the loan is repaid in full.
There are several mortgage structures available to suit different types of borrowers. Many mortgages require a down payment. Having a large down payment can lower the mortgage payment.