What is a Mortgage?
A mortgage is a loan specifically used to purchase property, typically a home. Borrowers agree to pay back the loan amount over a set period, usually 15 to 30 years, with interest. The property itself serves as collateral for the loan, meaning if the borrower fails to repay, the lender has the right to foreclose and take possession of the property. Mortgages are essential for most homebuyers, as they enable them to afford homes that would otherwise be out of reach.
Types of Mortgages Available
There are several types of mortgages, each catering to different financial situations. Fixed-rate mortgages offer a consistent interest rate throughout the loan term, providing stability for budgeting. Adjustable-rate mortgages (ARMs), on the other hand, have fluctuating interest rates, which may initially offer lower payments but can increase over time. Additionally, government-backed loans like FHA and VA loans are available to assist first-time homebuyers or those with less-than-perfect credit. Understanding these options is crucial to making an informed decision that best suits individual financial goals. What happens fixed rate mortgage ends