A mortgage is a loan that is used to buy a property, typically a house or a condo. The borrower (homeowner) borrows money from a lender (such as a bank) to purchase the property and then pays back the loan over a set period of time with interest.
There are several types of mortgages, including fixed-rate mortgages and adjustable-rate mortgages (ARMs). Each type of mortgage has different terms and conditions, so it's important to research and compare them to determine which one is right for you.
A down payment is a percentage of the home's purchase price that the buyer pays upfront. The down payment can range from 5% to 20% of the purchase price, depending on the type of loan and the lender's requirements.
A pre-approval is a preliminary evaluation of a borrower's creditworthiness, income, and financial status. It gives the borrower an idea of how much they can afford to borrow and what their interest rate might be, before they start shopping for homes.
The interest rate on a mortgage is determined by several factors, including the borrower's credit score, income, debt-to-income ratio, loan amount, and the type of loan. Interest rates can also fluctuate based on market conditions.
Closing costs are fees associated with the purchase of a home, including appraisal fees, title insurance, legal fees, and taxes. Closing costs can vary based on the purchase price of the home and the location.
If you can't make your mortgage payments, you may face foreclosure. Foreclosure is the process by which the lender takes possession of the property and sells it to recoup the money that was lent. It's important to communicate with your lender if you're having trouble making payments to explore options to avoid foreclosure.
Yes, you can pay off your mortgage early if you choose. However, some lenders may charge prepayment penalties for paying off the loan before the term is up. It's important to check with your lender to see what their policies are on early repayment.