Simple Facts About a Mortgage

Published by julia | Filed under Buyer / Seller Tips, Market Trends, Real Estate

A mortgage is the term used to describe the loan acquired for the purchase of a home. Like any other form of credit, the lender agrees to pay for the home based on a set of rules and regulations regarding the repayment of that loan.

The mortgage for a home may be lower than the total price of the home depending on the down payment required by the lending agency. If the home is priced at $200,000 and the lender requires 10% down for the mortgage application to be approved, the homebuyer will pay $20,000 out of pocket and assume a mortgage for the remaining $180,000.

The repayment of the mortgage is a bit more complicated. With mortgage insurance and interest, the repayment amount upon the resolution of the loan may be far higher than the original amount of the loan. The fewer years the mortgage stays in repayment status, the less interest paid by the borrower.