Mortgage Basics
Understanding mortgage basics involves key terms that are important to understand. Mortgage - A loan used to purchase or refinance real estate where the property itself serves as collateral. Principal - The original loan amount borrowed. Interest Rate - The percentage at which interest is charged on the loan amount. Amortization -The process of paying off a loan through regular payments over time, with each payment covering both principal and interest. Term - The length of time over which the loan is scheduled to be repaid (e.g., 30 years). Down Payment - The initial payment made by the buyer, expressed as a percentage of the purchase price. Closing Costs - Fees associated with the purchase of a property, including loan origination fees, appraisal fees, title insurance, and more. Equity - The value of the homeowner's interest in their property after deducting outstanding mortgage amounts and other liens. Escrow - A financial arrangement wher...