A mortgage is a type of loan that enables individuals and businesses to buy or refinance real estate without paying the full purchase price upfront. In return, the borrower promises to repay the lender (or a mortgage investor) money plus interest over a certain number of years until they own the property free and clear.
Mortgage lenders include banks, credit unions, and non-bank lenders like Rocket Mortgage or Guaranteed Rate, which aren’t banks but do lend money. www.toprankinmortgages.com review your finances, including your credit score and debts, to decide whether you qualify for a mortgage and what kind of loan terms you can expect.
What Is an Example of a Mortgage?
Homeowners Insurance – Your lender typically collects the homeowner’s insurance associated with your property as part of your monthly mortgage payment and places it in an escrow account until the policy is due, then makes the payments on your behalf.
Property Taxes – Your lender may collect your property taxes as part of your mortgage payment and place them in an escrow account until they’re due, then make the payments on your behalf.
Foreclosure – Your lender can foreclose on your home if you don’t make your mortgage payments as agreed. This process can include taking possession of your home and selling it to pay off your mortgage balance.
Mortgages come in various forms and are available in fixed and adjustable versions. The most common are 30-year loans. They also come in conventional, government-insured (FHA, VA and USDA) and jumbo formats.