What is a Mortgage?
A mortgage is a loan specifically used to buy property, usually a home. The borrower agrees to pay back the loan over a set period, often 15 to 30 years, with interest. The property itself serves as collateral, meaning the lender can seize the home if the borrower fails to repay. Mortgages are essential for most homebuyers, allowing them to purchase a home without having to pay the full price upfront. The loan amount, interest rate, and repayment schedule depend on various factors, such as the borrower’s credit score and the current economic conditions.
Types of Mortgages Available
There are several types of mortgages available, each designed to meet different needs. Fixed-rate mortgages have an interest rate that stays the same for the entire loan term, providing predictable monthly payments. Adjustable-rate mortgages (ARMs) have interest rates that can change over time, often starting lower than fixed rates but increasing after a set period. Other types of mortgages include government-backed loans like FHA, VA, and USDA loans, which offer lower down payments and more favorable terms for eligible borrowers. Choosing the right mortgage depends on individual financial situations and long-term goals. What happens fixed rate mortgage ends