A mortgage is a type of loan that is used to purchase a property, such as a house or a condominium. It is typically provided by a bank, credit union, or other financial institution, and is secured by the property being purchased.
When a person takes out a mortgage, they agree to repay the loan over a set amortization of 25-30 years, with interest, usually the term of the mortgage ( involves the contracted rate) goes from 1- 5 yrs. The mortgage lender will use the property as collateral to secure the loan, meaning that if the borrower fails to repay the loan, the lender has the right to foreclose on the property and sell it to recover their losses.
Mortgages can be either fixed-rate or adjustable-rate. A fixed-rate mortgage has a fixed interest rate for the entire term of the loan, while an adjustable-rate mortgage has an interest rate that can change over time based on market conditions.
Mortgages are a common way for individuals to purchase a home, as they allow the buyer to spread out the cost of the purchase over a long period of time. However, mortgages also come with significant financial obligations, including regular mortgage payments, property taxes, and home insurance, and failure to meet these obligations can result in foreclosure and the loss of the property.
It’s important to note that the mortgage application process can be complex and may involve additional steps, depending on your circumstances and the lender’s requirements. Working with a qualified mortgage broker or financial professional can help ensure that you understand the process and make informed decisions.