Mortgage
A loan used to purchase real estate, where the property serves as collateral.
Definition
A mortgage is a type of loan used to purchase or maintain a home, land, or other types of real estate. The borrower agrees to pay the lender over time, typically in a series of regular payments divided into principal and interest. The property serves as collateral for the loan. Common mortgage types include fixed-rate (interest rate stays the same), adjustable-rate (ARM, rate changes after initial period), FHA (government-insured, lower down payment), and VA (for veterans). Mortgage terms are typically 15 or 30 years. The interest rate depends on credit score, down payment, loan type, and market conditions.
Related Tools
Related Terms
Amortization
The process of spreading loan payments over time, with each payment covering interest and principal.
EconomyInterest Rate
The percentage charged by a lender or paid by a borrower for the use of money over a period of time.
Real EstateDown Payment
An initial upfront payment made when purchasing an expensive item, typically a home.