What is a Mortgage?
A mortgage is a loan specifically designed to help individuals purchase real estate, typically a home. When you take out a mortgage, you borrow money from a lender, usually a bank, and agree to repay the loan with interest over a set period, often 15 to 30 years. The home itself serves as collateral, which means if you fail to make payments, the lender has the right to foreclose on the property. This system allows many people to afford homes without needing to pay the full price upfront.
Types of Mortgages Available
There are several types of mortgages available, each catering to different financial needs. The most common types include fixed-rate mortgages, where the interest rate remains the same throughout the loan term, and adjustable-rate mortgages (ARMs), where the rate can fluctuate based on market conditions. Other options include government-backed loans, such as FHA and VA loans, which are designed for specific groups like first-time homebuyers or veterans. Choosing the right mortgage depends on your financial situation, the amount you can afford to borrow, and your long-term plans for the property. What happens fixed rate mortgage ends