Mortgages

Front

What is a mortgage?

Back

A mortgage is a loan specifically used to purchase real estate, where the property itself serves as collateral for the loan.

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What happens if you default on your mortgage?

Back

If you default on your mortgage, the bank may sell your home to recover its investment.

Front

What is a down payment?

Back

A down payment is the initial amount of money you pay when purchasing a home, which reduces the total amount of the mortgage.

Front

Why might someone choose a short-term mortgage?

Back

Someone might choose a short-term mortgage because it typically results in paying less interest over the life of the loan.

Front

What factors do banks consider when approving a mortgage?

Back

Banks consider factors such as your salary, credit score, and debt-to-income ratio when approving a mortgage.

Front

What is equity in a home?

Back

Equity is the difference between the market value of your home and the amount you owe on your mortgage.

Front

What is the purpose of mortgage insurance?

Back

Mortgage insurance protects the lender in case the borrower defaults on the loan.

Front

What is a fixed-rate mortgage?

Back

A fixed-rate mortgage is a loan where the interest rate remains the same throughout the term of the loan.

Front

What is an adjustable-rate mortgage (ARM)?

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An adjustable-rate mortgage (ARM) is a loan where the interest rate can change at specified times, usually after an initial fixed period.

Front

What is the significance of the interest rate in a mortgage?

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The interest rate determines how much you will pay in addition to the principal amount borrowed over the life of the loan.