How Do Mortgages Work?
The general process for a mortgage can be divided into three phases:
A borrower and a lender execute a mortgage agreement in writing, stipulating key terms and requirements.
The borrower obtains the agreed-upon amount of capital from the lender, and uses it to purchase the property that secures the mortgage loan. The borrower agrees to repay the mortgage loan (principal and interest) in a timely manner according to the terms of the contract.
The mortgage normally ends when the borrower completes full repayment of the principal and interest of the mortgage loan. The mortgage may also end if the borrower repeatedly fails to meet the repayment, in which case the lender may take possession of the mortgaged property.
It's important to pay careful attention to the terms of the contract. Make sure you understand the circumstances that would lead to default and the consequences for defaulting on your mortgage payments.
- What Is a Mortgage?
- What Type of Loan Should I Get for My Home?
- What Are the Different Types of Mortgage Loans?
- What Is the Process of Applying for a Mortgage?
- What Is the Difference Between a Housing Loan and a Mortgage Loan?
- What Is the Difference Between Government-Insured Loans and Conventional Loans?
- What Is a Down Payment?
- How Much Down Payment Will I Need to Provide?
- Are There Any Mortgage Loans with No Down Payment?
- What Is an Escrow Account?
- What Is Home Equity?
- What Is the Difference Between a Loan and a Mortgage?
- Where Can I Get a Mortgage?
- What Should I Look for in a Mortgage?
- Should I Pay My Mortgage Early?
- What Is the Average Mortgage Length?
- What Are the Advantages of a 15-Year Mortgage over a 30-Year Mortgage?
- What Are the Advantages of a 30-Year Mortgage over a 15-Year Mortgage?