Wednesday, October 23, 2019 / by Suyapa Sauceda
How Do Mortgages Work?
How Do Mortgages Work?
When you take out a mortgage, you borrow money from a lender to buy your home. A mortgage is a secured loan with your home as collateral, so the lender will hold the title to the property until the loan is paid in full. You will make payments on the loan each month, including interest, until it is paid off. At that point, you'll hold the title and own your home outright.
When you choose a mortgage, you have four major decisions to make: the lender, loan type, loan term and interest rate type.
Types of Mortgage Loans
There are two major types of mortgage loans: government-backed and conventional. Government-backed mortgage programs offer guarantees to lenders that reduce their risk and can make it easier for borrowers to qualify for a mortgage. Conventional loans do not offer the same guarantees but may have lower interest rates.
Government-Backed Mortgages
FHA loans. The Federal Housing Administration, part of the U.S. Department of Hou ...
When you take out a mortgage, you borrow money from a lender to buy your home. A mortgage is a secured loan with your home as collateral, so the lender will hold the title to the property until the loan is paid in full. You will make payments on the loan each month, including interest, until it is paid off. At that point, you'll hold the title and own your home outright.
When you choose a mortgage, you have four major decisions to make: the lender, loan type, loan term and interest rate type.
Types of Mortgage Loans
There are two major types of mortgage loans: government-backed and conventional. Government-backed mortgage programs offer guarantees to lenders that reduce their risk and can make it easier for borrowers to qualify for a mortgage. Conventional loans do not offer the same guarantees but may have lower interest rates.
Government-Backed Mortgages
FHA loans. The Federal Housing Administration, part of the U.S. Department of Hou ...
