What is a mortgage?
Mortgage. It’s a word we have heard for most of our
lives, but do we really know what it means. From the commercials
on television, the refinancing ads in the newspaper, to the
conversations we heard our parents have but never really understood
– we have been inundated with information on mortgages
throughout our lives.
But when it comes down to it, most of us need help figuring
out the ins and outs of obtaining a mortgage, as well as,
figuring out, what the heck it really does for us. We hear
the term mortgage everyday, on television, in ads, on the
side of buses, even in the Yellow Pages.
In the simplest terms, a mortgage is the amount of money
we borrow from the bank or other financial institution to
finance the house we want to by for a set period of time at
a cost set forth by the terms of the mortgage contract. A
mortgage acts as a good-faith note that you will pay back
the money given to you to purchase a home on at least a monthly
basis until the terms of the contract are fulfilled. Most
simply, it’s the agreement that you will pay for your
home for a designated amount of time.
Most times a loan is taken out for anywhere from 15- to 30-years,
but generally it is either or. Not only do you pay back the
principal, but you pay back the interest and the taxes that
accrue on the borrowed amount of money. You can choose to
roll these costs over into your monthly payments or to pay
them prior to securing your loan.
Once you understand the basic premise of a mortgage you are
on your way to having the home you dreamed at a price you